ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with BAM's consolidated financial statements and the related notes included within this Annual Report.
This section of the Annual Report discusses activity as of and for the years ended December 31, 2025 and 2024. For discussion on activity for the year ended December 31, 2024 and period-over-period analysis on results for the year ended December 31, 2024 to 2023, refer to Part II, “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended December 31, 2024, which specific discussion is incorporated herein by reference.
Business Environment
In 2025, global GDP growth is estimated to have risen by 3.2% compared to 3.3% in 2024. Economic activity continued to be supported by easing inflationary pressures, resilient employment conditions, and the gradual normalization of monetary policy across most advanced economies. Labor markets continued to rebalance, though unemployment rates generally remained low by historical standards. Headline inflation in most advanced economies remained near central bank targets, with services inflation and wage growth proving more persistent.
Divergences in economic performance across regions persisted in 2025. The U.S. and parts of Asia continued to outperform, supported by domestic demand and investment, while growth in the Eurozone, the United Kingdom, and China remained comparatively subdued due to structural constraints and weaker demand.
U.S. economic growth slowed modestly in 2025 to 2.1% from the elevated pace of 2.8% recorded in 2024. Inflation continued to ease, with core measures trending lower over the year. Labor market conditions cooled gradually, reflected in declining job openings and improved labor force participation. The unemployment rate increased modestly but remained low by historical standards, indicating a decelerating yet resilient labor market.
Monetary policy normalization continued across most developed markets in 2025. Following the initiation of easing cycles in 2024, central banks generally adopted a more measured pace of rate adjustments, balancing progress on inflation against financial stability considerations and elevated fiscal issuance. Policy rates across advanced economies ended the year below peak levels but remained above pre‐pandemic norms.
In the U.S., the Federal Reserve continued its easing cycle with 75 basis points of cuts in 2025, in line with improving inflation dynamics and moderating growth. Treasury yields remained volatile, reflecting shifting expectations for the terminal policy rate, fiscal supply dynamics, and global demand for safe assets.
Elsewhere, the European Central Bank and the Bank of England continued gradual easing, while the Bank of Japan proceeded cautiously following the exit from negative interest rate policy. Monetary policy outcomes in emerging markets varied, reflecting differences in inflation trajectories, currency pressures, and domestic growth conditions.
Credit market conditions remained constructive in 2025. Investment grade and high yield credit spreads stayed tight by historical standards, despite episodic volatility driven by macroeconomic data releases and geopolitical developments. Primary market issuance remained supported by refinancing activity and sustained investor demand for income‐oriented assets.
In 2025, equity markets delivered strong returns following the robust performance seen in prior years. The S&P 500 posted a total return of ~17.9% and reached new all-time highs, supported by easing monetary policy and resilient corporate earnings. The Nasdaq Composite and Nasdaq-100 also registered notable gains of about ~21%, driven by strength in technology and growth sectors. International equity markets outperformed U.S. benchmarks, with broad global indices such as the MSCI All Country World ex-U.S. and other developed market indices rising by ~30%.
Global merger and acquisition activity improved further in 2025, supported by lower financing costs and improved corporate confidence. The rebound was global, with strong growth in the number and value of deals in the U.S., Asia, Europe, the Middle East and Africa. The global initial public offering market showed signs of recovery and stabilization during 2025, with total proceeds increasing compared with the prior year across a broad range of sectors.
Political developments continued to influence the global macroeconomic backdrop in 2025 following political elections in 2024. Markets adjusted to evolving policy priorities in the U.S., Europe, and parts of Asia. While financial markets remained relatively resilient, uncertainty related to fiscal policy, geopolitics, and trade dynamics continued to affect investor sentiment and capital allocation decisions.
Our business is well-positioned within the evolving alternative asset management landscape by leveraging a strategic and agile approach to investment opportunities. As investors seek diversification and innovative solutions, we are equipped to navigate market complexities and government policies by delivering value through disciplined strategies. Our ability to adapt to shifting economic conditions and capitalize on emerging trends ensures we remain a trusted partner in achieving long-term financial outcomes.
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Review of Financial Results
Income Statement Analysis
Consolidated Statements of Operations
The following table summarizes the consolidated statements of operations for BAM for the years ended December 31, 2025, 2024 and 2023:
Revenues
Investment income
Carried interest allocations
Interest and dividend revenue of consolidated funds 31 — — 31 —
Expenses
Compensation, operating, and general and administrative expenses
General, administrative and other (56) (64) (56) 8 (8)
Carried interest allocation compensation
Total carried interest allocation compensation (146) (93) (86) (53) (7)
Interest expense of consolidated funds (28) — — (28) —
Other income, net of consolidated funds 47 — — 47 —
Net loss (income) attributable to:
Non-controlling interest in consolidated entities (369) (151) (36) (218) (115)
Non-controlling interests in consolidated funds (24) — — (24) —
BAM primarily generates revenue from fees earned pursuant to contractual arrangements with funds, publicly traded vehicles, and investors, as well as transaction and advisory fees. These fees include base management fees, incentive fees, and certain advisory fees. Base management fees are long-term, recurring in nature, and correspond to fundraising activity, NAVs of certain of our funds, and market capitalizations of our publicly traded vehicles, specifically BIP, BEP and BBU. Incentive fees are performance fees earned from BIP and BEP for exceeding predetermined distribution thresholds, are long-term, and are not subject to clawback. Incentive fees also include performance fees earned from BBU for exceeding the current high watermark threshold and are not subject to clawback.
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BAM is entitled to carried interest allocations assuming certain investment returns are achieved, as well as incentive management fees in certain of our structures where we are entitled to contractual fees from an investment fund based on achieving prescribed investment returns.
The composition of our revenues will vary based on market conditions and the cyclical nature of our businesses. Carried interest allocations generated by our funds and associated carried interest compensation are driven by the performance of the underlying investments, as well as overall market conditions. Fair values are affected by changes in the fundamentals of our investments, the industries in which they operate, the overall economy, and other market conditions. The impact of fair values of our underlying investments throughout market cycles may result in material increases or decreases to carried interest generated, net of expenses.
Expenses primarily include employee base compensation, bonuses, and share-based compensation. Period over period changes in employee base compensation and bonuses generally result from changes in headcount and annual salary changes. Share-based awards are granted in the first quarter of each year and generally vest over 5 years. Equity settled compensation awards vest on a graded basis over the vesting period and cash settled share-based compensation awards are recorded at fair value quarterly based on the trading price of BAM Class A Shares. Therefore, for cash settled share-based compensation, an increase or decrease in the share price of BAM will result in share-based compensation expense or recovery.
For the years ended December 31, 2025 and 2024
Net income for the year ended December 31, 2025 was $2.4 billion, of which $2.5 billion was attributable to common stockholders. This compares to net income of $2.1 billion for the year ended December 31, 2024, of which $2.2 billion was attributable to common stockholders.
Revenues
Revenues for the year ended December 31, 2025 were $4.8 billion, which represents an increase of $837 million or 21% compared to $4.0 billion of revenue for the year ended December 31, 2024.
Base Management and Advisory Fees
Base management and advisory fees for the year ended December 31, 2025 were $3.4 billion, which represents an increase of $427 million or 14% compared to the year ended December 31, 2024. Management fee revenues increased by $123 million from capital raised for the fifth vintage of our real estate flagship fund, $114 million from capital raised for the second vintage of our global transition flagship fund, and $65 million attributable to fundraising from our perpetual infrastructure complementary strategies. In addition, management fees increased $55 million from insurance capital inflows from BWS and $44 million from a higher trading price of BIP, BEP, and BBU. These increases were partially offset by $17 million of lower fees from earlier vintages of our real estate flagship funds and certain infrastructure funds as a result of monetizations.
Incentive Fees
Incentive fees for the year ended December 31, 2025, were $560 million, an increase of $136 million or 32% from the year ended December 31, 2024. This increase was primarily driven by BBU performance fees of $95 million as a result of the share price exceeding the previous high watermark. In addition, incremental incentive fees were recognized as a result of a 6% growth in BIP dividends of $24 million and 5% growth in BEP dividends of $17 million.
Carried Interest Allocations
Carried interest allocations are a performance fee arrangement which is earned from those arrangements where BAM has a general partner capital interest and is entitled to a disproportionate allocation of investment income. Each of these general partners is generally entitled to a carried interest that allocates to it 20% of the net profits realized by the limited partners from the fund’s investment subject to the return of contributed capital and a preferred return of typically 8% per annum to the limited partners. At the end of each reporting period, the Company calculates the balance of accrued carried interest that would be due to BAM for each fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized.
Realized carried interest allocations were $nil for the year ended December 31, 2025, which represents a net decrease of $25 million compared to the year ended December 31, 2024. Realized carried interest allocations in the prior year were predominantly due to dispositions within our first real estate flagship fund and certain other real estate fund strategies. All realized carried interest income for the year ended December 31, 2024, net of carried interest compensation related to mature funds and are attributable to BN through our redeemable preferred shares.
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The unrealized carried interest allocations of $209 million for the year ended December 31, 2025 represents an increase of $218 million compared to the year ended December 31, 2024. The gross increase of $943 million compared to the prior year reflects changes in fund valuations associated with the fifth vintage of our infrastructure flagship fund of $416 million and the first vintage of our global transition flagship fund for $297 million. In addition, $187 million of increases were associated with various private equity funds including the sixth vintage of our private equity flagship fund. This was partially offset by a decrease of $734 million compared to the prior year reflecting lower relative valuations across various mature real estate flagship funds.
Carried interest allocations generated by new funds are 66.7% attributable to BAM and 33.3% to BN. Within the consolidated statements of operations, carried interest allocations are presented on a 100% basis and the portion attributable to BN is presented in net loss (income) attributable to non-controlling interest in consolidated entities. Unrealized carried interest allocations attributable to BAM were $629 million for the year ended December 31, 2025, compared to $257 million for the year ended December 31, 2024.
The following table presents the carried interest in new funds, and related performance compensation by investment strategy.
Net New Fund Carried Interest
1. Carried interest generated within our partner managers in Credit is presented within the investment balance of our partner managers rather than accrued carried interest and as a result is excluded from the table above.
The following table presents the change in accrued carried interest in new funds by investment strategy.
1. Carried interest generated within our partner managers in Credit is presented within the investment balance of our partner managers rather than accrued carried interest and as a result is excluded from the table above.
Interest and Dividend Revenue
Interest and dividend revenue for the year ended December 31, 2025 was $98 million, which represents a decrease of $45 million compared to the year ended December 31, 2024. The decrease was primarily due to lower interest income earned on our deposit with BN.
Interest and Dividend Revenue of Consolidated Funds
Interest and dividend revenue of consolidated funds for the year ended December 31, 2025 was $31 million, which represents interest and dividends earned from investments held by BSI II in which BAM holds a sufficient interest to require the consolidation of the fund.
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Other Revenues
Other revenues are largely comprised of recoverables from BN related to share and performance-based compensation as defined by the Services Agreement, fund expense recharges, and incentive management fees earned on certain funds. Share-based and performance-based award expenses that are recoverable from BN are recognized in other revenues with the offsetting expense recognized in compensation and benefits, and carried interest allocation compensation, respectively. Other revenues were $535 million for the year ended December 31, 2025, an increase of $95 million compared to the year ended December 31, 2024. Of the total increase, $45 million was due to higher recoveries in share and performance-based compensation. In addition, the increase was also driven by $38 million of general operating cost recoveries from affiliates.
Expenses
Total expenses for the year ended December 31, 2025 were $2.0 billion, an increase of $364 million or 22% compared to the year ended December 31, 2024.
Compensation and Benefits
Compensation and benefits for the year ended December 31, 2025 was $1.4 billion, which represents an increase of $219 million compared to the year ended December 31, 2024. This was attributable to higher share-based compensation expense of $65 million on our share and performance-based awards reflecting additional existing cash-settled awards recognized upon the completion of the 2025 Arrangement. This increase was partially offset by a decrease in the trading price of Class A Shares during the year. The remaining increase is due to higher compensation costs from the ongoing growth of our business.
Other Operating Expenses
Other operating expenses are comprised of professional fees, facilities costs, as well as costs directly associated with our fundraising and investment functions. Other operating expenses were broadly consistent with the prior year at $354 million for the year ended December 31, 2025, compared to $347 million for the year ended December 31, 2024.
Carried Interest Allocation Compensation
Compensation expenses related to carried interest allocation compensation was $146 million for the year ended December 31, 2025, which represents a change of $53 million compared to the year ended December 31, 2024. This was primarily driven by higher relative valuations across certain renewable, infrastructure, and private equity funds compared to the prior year. The carried interest compensation expense associated with mature funds is fully recoverable from BN. Carried interest compensation expense on new funds was $53 million during the year.
Interest Expense
Interest expense for year ended December 31, 2025 was $87 million, which represents an increase of $65 million compared to the year ended December 31, 2024. This was primarily driven by BAM's increased borrowings from our senior note offerings completed during the year.
Interest Expense of Consolidated Funds
Interest expense of consolidated funds for the year ended December 31, 2025 was $28 million, which was primarily driven by borrowings made by BSI II in which BAM holds a sufficient interest to require the consolidation of the fund.
Other Expenses, net
Other expenses, net for the year ended December 31, 2025 was $297 million compared to $93 million in the prior year. This increase was driven by a mark-to-market loss of $180 million on our investment in BSREP III during the year ended December 31, 2025 compared to a loss of $82 million during the year ended December 31, 2024. The remaining increase was due to mark-to-market revaluations in put and call options to acquire additional interests in our partner managers.
Other Income, net of Consolidated Funds
Other income, net of consolidated funds for the year ended December 31, 2025 was $37 million compared to $nil in the prior year. This represents the underlying fair value changes of investments held by BSI II in which BAM holds a sufficient interest to require the consolidation of the fund.
Share of Income from Equity Method Investments
Our share of income from equity method investments was $402 million compared to $339 million in the prior year, an increase of $63 million. This increase was driven by $160 million of incremental earnings primarily from Castlelake and Concora as well as other partner managers, offset by $97 million of lower earnings from Oaktree.
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Income Tax Expense
Income tax expense was $527 million for the year ended December 31, 2025, which represents an increase of $89 million compared to the year ended December 31, 2024. The increase in income tax expense was predominantly driven by the impairment of deferred tax assets during the year.
Net Loss Attributable to Preferred Share Redeemable Non-Controlling Interest
BAM recognizes carried interest income and associated carried interest allocation expense on mature funds within our consolidated statements of operations on a gross basis. As the net carried interest generated on mature funds is attributable to BN, the net income or loss attributable to BN via the preferred shares primarily represents the change in carried interest, net of carried interest allocation expense and taxes on mature funds owing to BN.
Net loss attributable to preferred redeemable non-controlling interest was $480 million for the year ended December 31, 2025 primarily due to lower valuations in certain mature real estate funds.
Net Income Attributable to Non-Controlling Interest of Consolidated Entities
Net income attributable to non-controlling interest of consolidated entities was $369 million for the year ended December 31, 2025. BAM recognizes carried interest allocations on new funds within our consolidated statements of operations on a gross basis. On new funds, 33.3% of carried interest allocations are attributable to BN. This balance is primarily the carried interest generated on new funds that is attributable to BN and fluctuates depending on the carried interest generated on new funds during the year.
Net Income Attributable to Non-Controlling Interest of Consolidated Funds
For income earned by certain funds in which BAM holds a sufficient interest to require the consolidation of the funds, a portion of the income earned is attributable to other parties invested in the funds. Net income attributable to non-controlling interest of consolidated funds was $24 million for the year ended December 31, 2025.
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Balance Sheet Analysis
Consolidated Balance Sheets
The following table presents the consolidated balance sheets of BAM as at December 31, 2025 and 2024:
AS AT DECEMBER 31, (MILLIONS, EXCEPT SHARE AMOUNTS) 2025 2024
Assets
Cash and cash equivalents $ 1,583 $ 404
Accounts receivable and other, net 333 483
Investments held for sale — 242
Investments of consolidated funds 505 251
Property, plant and equipment, net 92 58
Intangible assets, net 234 38
Deferred income tax assets 572 586
Liabilities
Accounts payable and other, net $ 2,459 $ 1,349
Corporate borrowings 2,478 —
Borrowings of consolidated funds 462 251
Deferred income tax liabilities 169 46
Commitments and contingencies
Preferred shares redeemable non-controlling interest 1,398 2,103
Equity
Common Stock:
Additional paid-in capital 154 152
Accumulated other comprehensive income 188 162
Non-controlling interest in consolidated entities 773 336
Non-controlling interest in consolidated funds 21 —
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As at December 31, 2025 and 2024
Assets
Total assets were $17.0 billion as at December 31, 2025, an increase of $2.9 billion or 20% compared to December 31, 2024.
Cash and Cash Equivalents
Cash and cash equivalents were $1.6 billion as at December 31, 2025, an increase of $1.2 billion from December 31, 2024. This was largely driven by cash inflows of $2.5 billion from BAM's senior note offerings during the year. The increase was partially offset by cash outflows of approximately $555 million due to investments made in Oaktree, Concora, Primary Wave, Angel Oak and warehoused investments made by BAM to support its various strategies. Share repurchases made during the year resulted in a further decrease of $412 million in cash and cash equivalents.
Accounts Receivable and Other, Net
Accounts receivable and other, net of $333 million primarily consists of receivables from third parties and prepaid expenses. The decrease of $150 million from December 31, 2024 was largely driven by the timing of collections.
Financial Assets
Financial assets of $417 million primarily consists of call options to acquire additional interests in Primary Wave, Castlelake, LCM and Angel Oak in the future and financial instruments associated with various other investments. The increase of $186 million from December 31, 2024 was largely driven by mark-to-market valuation increases on certain call options.
Due from Affiliates
Due from affiliates of $3.3 billion primarily relates to management fees earned but not collected from our managed funds, receivables for expenses paid on behalf of certain of our funds, as well as reimbursements due from BN for long-term compensation awards. The movement of $780 million from December 31, 2024 reflects additional receivables owing from BN associated with existing share-based compensation and carried interest compensation awards upon the completion of the 2025 Arrangement.
Investments
Investments are mainly comprised of our:
•approximate 74% economic interest in Oaktree of $4.7 billion (2024 – $4.6 billion);
•limited partnership interest in BSREP III of $700 million (2024 - $1.0 billion);
•economic interest in Castlelake of $720 million (2024 – $538 million);
•accumulated unrealized carried interest in our mature and new funds of $197 million (2024 - $931 million) and $1.6 billion (2024 - $693 million), respectively;
•approximate 11% economic interest in Pretium of $330 million (2024 - $351 million);
•44% economic interest in Primary Wave of $261 million (2024 – $147 million);
•49.9% economic interest in LCM of $221 million (2024 – $186 million);
•51.3% economic interest in Angel Oak of $133 million (2024 - $nil); and
•limited partner interests in funds of $368 million (2024 - $29 million) including Pinegrove Fund (2025 – $230 million; 2024 – $25 million), BPE (2025 – $92 million; 2024 - $nil), BGTF II (2025 - $36 million; 2024 - $nil);
The investment in BSREP III and carried interest generated on mature funds are fully attributable to BN through their preferred shares redeemable non-controlling interest and does not impact net income attributable to common stockholders. Accrued carried interest in new funds, including current funds and open-ended funds, as defined therein, is attributed to BN at 33.3%. The remaining accrued carried interest in new funds, net of associated compensation is attributable to common stockholders.
During the year, net investment increases of $682 million were primarily due to investments made by BAM during the year in Castlelake's acquisition of Concora ($197 million), Pinegrove Fund ($172 million), Angel Oak ($149 million), and Primary Wave ($84 million). In addition, investments also increased due to changes in value of accumulated unrealized carried interest on new funds ($943 million), partially offset by a decrease in accumulated unrealized carried interest on mature funds ($734 million).
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Investments Held for Sale
Investments held for sale was $nil at December 31, 2025. The decrease of $242 million compared to December 31, 2024 was a result of BAM's disposition of its interest in Redwood Evergreen Fund LP for approximately $257 million during the year ended December 31, 2025.
Investments of Consolidated Funds
Investments of consolidated funds represents investments held in BSI II in which BAM holds a sufficient interest to require the consolidation of the fund. Investments in BSI II are measured at fair value. The increase of $254 million compared to December 31, 2024 was driven by additional investments made by BSI II.
Intangible assets, net
Intangible assets, net was $234 million as at December 31, 2025 and was recognized upon the completion of the 2025 Arrangement.
Liabilities
Total liabilities were $6.7 billion as at December 31, 2025, an increase of $3.8 billion or 127% compared to December 31, 2024.
Accounts Payable and Other, Net
Accounts payable and other, net primarily consists of accrued bonus compensation, performance and cash-settled share-based compensation. The increase of $1.1 billion compared to December 31, 2024 reflects additional existing cash-settled awards recognized upon the completion of the 2025 Arrangement.
Financial Liabilities
Financial liabilities of $449 million primarily consists of contingent consideration associated with our investment in Castlelake and the mark-to-market of derivatives associated with put options on certain of our other partner managers. The increase of $221 million compared to December 31, 2024 predominantly reflects the change in value of the Castlelake options during the year.
Due to Affiliates
Due to affiliates of $720 million reflects amounts payable to related parties for share and cash-based compensation, as well as for services received in the normal course of business including operating expenses payable. The decrease of $372 million or 34% relative to December 31, 2024 was due to the elimination of certain amounts owing as a result of the 2025 Arrangement and payments made on certain amounts payable to related parties.
Corporate Borrowings
Corporate borrowings increased by $2.5 billion as a result of BAM's senior note offerings during the year ended December 31, 2025.
Borrowings of Consolidated Funds
Borrowings of consolidated funds represents borrowings used to finance investments within BSI II where BAM is required to consolidate the fund due to our economic interest. These increased borrowings of $211 million compared to December 31, 2024 was driven by borrowings made by BSI II to fund additional investments.
Preferred Shares Redeemable Non-Controlling Interest
BAM recognizes carried interest generated and associated carried interest allocation expense on mature funds within our consolidated statements of operations. As the net carried interest generated on mature funds is all attributable to BN, this balance primarily represents the accumulated unrealized carried interest, net of carried interest allocation expense and taxes on mature funds owing to BN.
Preferred shares redeemable non-controlling interest was $1.4 billion as at December 31, 2025, a decrease of $705 million compared to $2.1 billion as at December 31, 2024. This movement was due to a decrease in unrealized carried interest on mature real estate flagship funds, as well as settlements of amounts owed to BN during the year ended December 31, 2025.
Non-Controlling Interest in Consolidated Entities
Non-controlling interest in consolidated entities was $773 million as at December 31, 2025, an increase of $437 million compared to $336 million as at December 31, 2024. This increase was primarily due to carried interest generated across the latest vintages of our flagship funds of which 33.33% is owed to BN, non-controlling interests associated with our equity-settled share-based compensation and other non-controlling interests associated with various entities within BAM.
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Cash Flow Statement Analysis
Review of Consolidated Statements of Cash Flows
Refer to the following table that summarizes the consolidated statements of cash flows for BAM for the years ended December 31, 2025, 2024 and 2023:
Change in cash and cash equivalents $ 1,172 $ (2,251) $ (878)
This statement reflects activities within our consolidated operations and therefore excludes activities within non-consolidated entities.
For the years ended December 31, 2025 and 2024
Operating Activities
During the year ended December 31, 2025, the Company's operating activities generated cash inflows of $2.1 billion, compared to cash inflows of $1.6 billion in the prior year. Cash flows from operating activities primarily include the receipt of base management and advisory fees, incentive fees, realized carried interest, and interest and dividend revenue, offset by the payment of operating expenses incurred in the normal course of business, including compensation, operating and general and administrative expenses, and income tax payments.
Investing Activities
Net cash outflows from investing activities totaled $339 million, compared to outflows of $1.7 billion in the prior year. Net outflows of $339 million during the year ended December 31, 2025 were primarily attributable to approximately $1.0 billion of investments, including BAM's participation in Castlelake's acquisition of Concora, our step-up in ownership of Oaktree and Primary Wave, and an investment in Angel Oak. These outflows were partially offset by $619 million of proceeds from investment dispositions and distributions received from certain investments. The $1.7 billion net cash outflows in the prior year were largely attributable to $1.9 billion of investments related to Castlelake, Pretium, Redwood Evergreen Fund LP and GEMS Education.
Financing Activities
Net cash outflows from financing activities totaled $590 million, compared to outflows of $2.1 billion in the prior year. Net cash outflows of $590 million during the year ended December 31, 2025 were primarily attributable to $2.8 billion (2024 - $2.5 billion) of dividend distributions and $412 million of share repurchases, which was partially offset by $2.5 billion of senior note issuances during the year.
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Key Financial and Operating Measures
BAM prepares its financial statements in conformity with U.S. GAAP. This report discloses a number of non-GAAP financial and supplemental financial measures which are utilized in monitoring our asset management business, including for performance measurement, capital allocation and valuation purposes. BAM believes that providing these performance measures is helpful to investors in assessing the overall performance of our asset management business. These non-GAAP financial measures should not be considered as the sole measure of BAM’s performance and should not be considered in isolation from, or as a substitute for, similar financial measures calculated in conformity with U.S. GAAP financial measures. These non-GAAP financial measures are not standardized financial measures and may not be comparable to similar financial measures used by other issuers. The financial results of BAM includes the asset management activities of Oaktree, an equity accounted affiliate, in its key financial and operating measures for our asset management business. See “Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of U.S. GAAP to Non-GAAP Measures”, in this report.
Non-GAAP Measures Utilized by BAM
Fee Revenues
Fee Revenues is a key metric analyzed by management to determine the growth in recurring cash flows from our asset management business. Fee Revenues include base management fees, incentive distributions, performance fees and transaction fees. Fee Revenues exclude carried interest and revenues of consolidated funds, but include Fee Revenues earned by Oaktree. The most directly comparable measure of Fee Revenues disclosed in the financial statements is base management and advisory fees. See “Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of U.S. GAAP to Non-GAAP Measures” for our reconciliation of Fee Revenues.
Fee-Related Earnings
Fee-Related Earnings is used to provide additional insight into the operating profitability of our asset management activities. Fee-Related Earnings are recurring in nature and not based on future realization events. Fee-Related Earnings is comprised of Fee Revenues less direct costs associated with earning those fees, which include employee compensation and professional fees as well as business related technology costs, and other shared services costs. Fee-Related Earnings exclude revenues and expenses of consolidated funds. The most directly comparable measure of Fee-Related Earnings disclosed in the primary financial statements is net income. See “Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of U.S. GAAP to Non-GAAP Measures” for our reconciliation of Fee-Related Earnings.
Distributable Earnings
BAM intends to pay out at least approximately 90% of its Distributable Earnings to shareholders quarterly and reinvest the balance back into the business.
Distributable Earnings provides insight into earnings that are available for distribution or to be reinvested by BAM. It is calculated as the sum of its Fee-Related Earnings, realized carried interest, returns from our corporate cash and financial assets, interest expense, cash taxes, and general and administrative expenses excluding equity-based compensation expenses. The most directly comparable measure disclosed in the primary financial statements of our asset management business for Distributable Earnings is net income. See “Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of U.S. GAAP to Non-GAAP Measures” for our reconciliation of Distributable Earnings.
Supplemental Financial Measures Utilized by BAM
Assets Under Management
AUM refers to the total fair value of assets managed, calculated as follows:
•Investments that Brookfield, which includes BAM, BN, or their affiliates, either:
◦Consolidates for accounting purposes (generally, investments in respect of which Brookfield has a significant economic interest and unilaterally directs day-to-day operating, investing and financing activities), or
◦Does not consolidate for accounting purposes but over which Brookfield has significant influence by virtue of one or more attributes (e.g., being the largest investor in the investment, having the largest representation on the investment’s governance body, being the primary manager and/or operator of the investment, and/or having other significant influence attributes),
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◦Are calculated at 100% of the total fair value of the investment taking into account its full capital structure — equity and debt — on a gross asset value basis, even if Brookfield does not own 100% of the investment, with the exception of investments held through our perpetual funds, which are calculated at its proportionate economic share of the investment’s NAV.
•All other investments are calculated at Brookfield’s proportionate economic share of the total fair value of the investment taking into account its full capital structure — equity and debt — on a gross asset value basis.
Our methodology for determining AUM differs from the methodology that is employed by other alternative asset managers as well as the methodology for calculating regulatory AUM that is prescribed for certain regulatory filings (e.g., Form ADV and Form PF).
Fee-Bearing Capital
Fee-Bearing Capital represents the capital committed, pledged, or invested in our perpetual affiliates, private funds and liquid strategies that we manage which entitles us to earn Fee Revenues. Fee-Bearing Capital includes both called (“invested”) and uncalled (“pledged” or “committed”) amounts.
When reconciling period amounts, we utilize the following definitions:
•Inflows include capital commitments and contributions to our private and liquid strategies funds, and capital issuances in our perpetual affiliates.
•Outflows represent distributions and redemptions of capital from liquid and perpetual capital.
•Distributions represent quarterly distributions from perpetual affiliates as well as returns of committed capital (excluding market valuation adjustments), redemptions and expiry of uncalled commitments within our private funds.
•Market valuation includes gains (losses) on portfolio investments, perpetual affiliates and liquid strategies based on market prices.
•Other includes changes in net non-recourse leverage included in the determination of the permanent capital vehicle capitalizations and the impact of foreign exchange fluctuations on non-U.S. dollar commitments.
Uncalled Fund Commitments
Total Uncalled Fund Commitments includes capital callable from fund investors, including funds outside of their investment period, for which capital is callable for follow-on investments.
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Fee-Bearing Capital Diversification
AS AT DEC 31 (BILLIONS)
Long-term Private Funds
As of December 31, 2025, we managed approximately $285 billion of Fee-Bearing Capital across a diverse range of long-term private funds that target opportunistic (20%+, gross), value-add (15%-16%, gross), core and core plus (9%-13%, gross) returns. These funds are generally closed-end and have a long duration, typically committed for 10 years with 2 one-year extension options.
On these products, we earn:
•Diversified and long-term base management fees, typically on committed capital or invested capital, depending on the nature of the fund and where the fund is in its life,
•Transaction and advisory fees on co-investment capital that we raise and deploy alongside our long-term private funds, which vary based on transaction agreements, and
•Carried interest or performance fees, which entitle us to a portion of overall fund profits, provided that investors receive a minimum prescribed preferred return. Carried interest is typically paid towards the end of the life of a fund after capital has been returned to investors and may be subject to “clawback” until all investments have been monetized and minimum investment returns are sufficiently assured. BN is entitled to receive 33.3% of the carried interest on new sponsored funds of BAM and will retain all of the carried interest earned on our existing mature funds.
Permanent Capital and Perpetual Strategies
As of December 31, 2025, we managed approximately $241 billion of Fee-Bearing Capital across our permanent capital vehicles, perpetual core, and core plus private funds.
On these products, we earn:
•Long-term perpetual base management fees, which are based on the market capitalization or NAV of our permanent capital vehicles and on the NAV of our perpetual private funds.
•Stable incentive distribution fees from BEP and BIP, which are linked to the growth in cash distributions paid to investors above a predetermined hurdle. Both BEP and BIP have a long-standing track record of growing distributions annually within their target range of 5-9%.
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•Performance fees from BBU are based on unit price performance above a prescribed high watermark price, which are not subject to clawback, as well as carried interest on our perpetual private funds.
Liquid Strategies
As of December 31, 2025, we managed approximately $77 billion of Fee-Bearing Capital across our liquid strategies, which included capital that we manage on behalf of our publicly listed funds and separately managed accounts, with a focus on fixed income and equity securities across real estate, infrastructure, and natural resources.
On these products, we earn:
•Base management fees, which are based on committed capital or fund NAV, and
•Performance income based on investment returns above a minimum prescribed return.
Analysis of Key Non-GAAP Financial and Operating Measures
The following section contains a discussion and analysis of key financial and operating measures utilized in managing our business, including for performance measurement, capital allocation, and valuation purposes. For further detail on our non-GAAP and performance measures, please refer to “Part II—Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Financial and Operating Measures”, in this report.
Fee-Bearing Capital
The following tables summarize Fee-Bearing Capital as at December 31, 2025, 2024 and 2023:
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The changes in Fee-Bearing Capital are set out in the following tables for the years ended December 31, 2025, 2024 and 2023:
For the year ended December 31, 2025
Fee-Bearing Capital was $603 billion as at December 31, 2025 compared to $539 billion as at December 31, 2024, representing a net increase of $64.2 billion, or 12%:
•Inflows of $90.8 billion include capital commitments and contributions to our long-term private funds and liquid strategies, and issuances from our perpetual affiliates. During the year ended December 31, 2025, infrastructure inflows of $5.9 billion were predominantly attributable to fundraising from our co-investment vehicles and perpetual strategies as well as the issuance of debt from BIP. Renewable power and transition inflows of $10.4 billion were primarily attributable to closes on the second vintage of our flagship global transition fund and our catalytic transition fund, inflows from other long-term private funds and perpetual strategies, and the issuance of debt from BEP. Private equity inflows of $5.3 billion were driven by new commitments to our co-investment vehicles as well as fundraising from complementary strategies and other long-term private funds. Real estate inflows of $16.2 billion were attributable to capital deployment and fundraising from our real estate flagship funds including co-invest capital as well as opportunistic debt repayment within our permanent real estate vehicle. Credit inflows of $53.0 billion were primarily driven by insurance capital inflows from BWS, fundraising and capital deployed across long-term, perpetual, and liquid strategies, and fundraising associated with our partner managers.
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•Outflows represent distributions and redemptions of capital from liquid and perpetual strategies. During the year ended December 31, 2025, outflows of $22.2 billion were predominantly driven by outflows of related to BWS insurance capital as well as redemptions within certain of our liquid and perpetual strategies.
•Distributions represent quarterly distributions from our perpetual affiliates as well as returns of committed capital and redemptions and expiry of uncalled commitments within our private funds. During the year ended December 31, 2025, distributions of $26.8 billion were driven by $8.9 billion from Oaktree long-term private funds, $6.3 billion from infrastructure, private equity, and real estate flagship funds, $4.7 billion from our listed affiliates and BPG, $2.6 billion attributable to partner managers, and the remainder attributable to certain complementary strategies as well as various earlier vintages of our long-term private funds.
•Market valuation includes gains (losses) on portfolio investments, perpetual affiliates and liquid strategies based on market prices. During the year ended December 31, 2025, increases of $24.8 billion were driven by $12.0 billion as a result of higher market prices of BEP, BIP, and BBU, $10.0 billion attributable to liquid and perpetual credit strategies, $2.2 billion attributable to certain credit long-term private funds, and $1.3 billion attributable to perpetual infrastructure strategies.
•Other includes $2.5 billion of changes in net recourse leverage included in the determination of the permanent capital vehicle capitalizations and the impact of foreign exchange fluctuations on non-U.S. dollar commitments. Private equity movements of $3.4 billion primarily relate to lower valuations within earlier vintages of our flagship funds and co-investment vehicles and debt repayment by BBU. Credit movements of $3.3 billion were primarily attributable to the addition of Angel Oak partially offset by changes in fee-basis associated with certain perpetual and long-term private fund vehicles. Renewable power and transition changes of $3.0 billion were as a result of a one-time rebalancing of Fee-Bearing Capital between infrastructure and renewable power and transition strategies based on investment mix as well as debt repayment by BEP. Infrastructure increases of $1.8 billion were driven by a rebalancing of Fee-Bearing Capital between infrastructure and renewable power and transition based on investment mix. Real estate changes of $1.1 billion primarily related to lower valuations within an earlier vintage flagship fund. The impact of foreign exchange contributed to certain movements of Fee-Bearing Capital within long-term private funds across the business.
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Distributable Earnings
Performance fees 95 — —
Transaction and advisory fees 30 49 47
Less: Fee-Related Earnings not attributable to BAM (82) (114) (126)
Add back: equity-based compensation costs4 44 38 39
Add back: Investment and other income (net of interest expense)5 33 170 160
1.Base management fees and direct costs are presented on a 100% basis for BAM and BAM's investment in Oaktree.
2.Direct costs include compensation expense, other operating expenses and general, administrative, and other expenses, and related Oaktree direct costs at 100%.
3.Fee-Related Earnings include Oaktree’s Fee-Related Earnings at our approximate 74% ownership interest (December 31, 2024 – 73%).
4.This adjustment adds back equity-based compensation costs.
5.This adjustment adds back other income associated with our portion of partly owned subsidiaries’ investment income, realized carried interest, interest income and interest expense.
For the year ended December 31, 2025
Fee Revenues for the year ended December 31, 2025 were $5.5 billion, an increase of $781 million or 17% compared to the prior year. This increase was predominantly due to an increase in base management fees of $663 million or 16%, driven by $123 million of incremental fee revenue from the fifth vintage of our flagship real estate fund and $114 million from the second vintage of our flagship global transition fund. Additionally, $235 million of incremental Fee Revenues were primarily as a result of earnings from partner manager acquisitions during the year which are not reflected in the comparative year. BAM also realized additional fees of $174 million from fundraising and growth across our private funds and complementary strategies and $48 million of higher Fee Revenues from our listed affiliates as a result of higher share prices of BIP, BEP, and BBU as well as a higher NAV of BPG. In addition, we recognized incremental fee revenue of $55 million from BWS due to the AEL Mandate. These increases were partially offset by $86 million in lower fees from certain credit strategies and earlier vintages of flagship funds due to distributions made to clients during the year.
Incentive distributions increased by $42 million or 10% as a result of an increase in BEP and BIP's quarterly dividend over the prior year of 5% and 6%, respectively.
Performance fees of $95 million for the year were earned from BBU as BBU's share price surpassed its high watermark threshold above which a performance fee based on $31.53 is earned by BAM. This increase in the share price set a go forward high watermark of $33.81 per unit. BBU's high watermark threshold was not reached in 2024, thus no performance fees were earned in the prior year.
Transaction and advisory fees also decreased by $19 million as the prior year reflected higher fees from our renewable power and transition, and private equity strategies offset by higher transaction revenues from infrastructure in the current year.
Direct costs increased by $274 million or 13% from the prior year as we continue to scale our business.
Fee-Related Earnings not attributable to BAM decreased by $32 million due to lower Fee-Related Earnings from Oaktree.
Distributable Earnings were $2.7 billion for the year ended December 31, 2025, an increase of $332 million or 14% compared to the prior year. The increase was primarily driven by $539 million of higher Fee-Related Earnings, partially offset by $137 million of lower investment income primarily due to higher interest expense as a result of our corporate debt as well as lower interest income earned on our cash deposit with BN, and $76 million of higher cash taxes on Fee-Related Earnings.
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Investment Strategy Results
In each of our product categories, we invest globally in various investment strategies, each benefiting from strong secular tailwinds that provide an expanding multi-trillion dollar investable universe. Our investment strategies are (a) infrastructure, (b) renewable power and transition, (c) private equity, (d) real estate, and (e) credit.
The following tables summarize Fee-Bearing Capital and Fee Revenues by investment strategy:
Fee-Bearing Capital
Fee Revenues
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Infrastructure
Summary of Key Financial and Operating Measures
The following charts provide the Fee-Bearing Capital of our Infrastructure investment strategy as at December 31, 2025, 2024 and 2023, and Fee Revenues for the years ended December 31, 2025, 2024 and 2023.
Fee-Bearing Capital Fee Revenues
AS AT DEC 31 (BILLIONS) FOR THE YEARS ENDED DEC 31 (MILLIONS)
The following provides explanations of significant movements in Fee-Bearing Capital for the years then ended.
Fee-Bearing Capital
Outflows — (11) (6)
For the year ended December 31, 2025
During the year ended December 31, 2025, Fee-Bearing Capital increased by $9.3 billion or 10% to $106 billion. The $5.9 billion of inflows were primarily driven by perpetual strategies of $2.9 billion, long-term private funds of $2.2 billion, and debt and equity issuances from BIP of $730 million. In addition, Fee-Bearing Capital increased by $4.7 billion from a higher market capitalization of BIP due to increases in its share price and $1.3 billion of favorable market valuations associated with certain perpetual strategies. Other increases of $1.8 billion predominantly related to the rebalancing of Fee-Bearing Capital between infrastructure and renewable power and transition within the latest vintage of our infrastructure flagship fund based on investment mix. These increases were partially offset by distributions of $4.4 billion paid to investors in our long-term private funds and perpetual strategies as well as BIP unitholders.
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Fee Revenues
Management and advisory fees
Long-term private funds
Co-investment and other funds 1 6 18
Perpetual strategies
Catch-up fees — 1 37
Transaction and advisory fees 16 5 24
Total management and advisory fees 967 907 950
1.BIP Fee-Bearing Capital as at December 31, 2025 is $35.1 billion (December 31, 2024 – $31.9 billion) and includes $5.4 billion of net debt (December 31, 2024 - $4.9 billion).
2.Consists solely of incentive distributions earned from BIP.
For the year ended December 31, 2025
Fee Revenues increased by $85 million or 7% for the year ended December 31, 2025 relative to the year ended December 31, 2024. The increase was primarily driven by $39 million of higher Fee Revenues due to capital raised and deployed from certain perpetual strategies and $21 million related to BIP as a result of a higher share price during the year. In addition, Fee Revenues benefited from $11 million of higher transaction and advisory fees associated with our flagship infrastructure funds and an increase in incentive distributions of $25 million due to a 6% increase in BIP's quarterly dividend. These increases were partially offset by a $10 million decrease in Fee Revenues as the prior year reflected higher fees from earlier vintages of flagship funds and complementary strategies.
Segment Earnings
Segment Expenses
Other operating expenses (92) (71) (73)
For the year ended December 31, 2025
Segment Earnings increased by $19 million for the year ended December 31, 2025 relative to the year ended December 31, 2024. The increase in Segment Earnings was primarily due to higher Segment Revenues driven by BIP due to a higher share price during the year and our complementary perpetual strategies, partially offset by higher Segment Expenses as we continue to scale our business.
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Renewable Power and Transition
Summary of Key Financial and Operating Measures
The following charts provide the Fee-Bearing Capital of our Renewable Power and Transition investment strategy as at December 31, 2025, 2024 and 2023, and Fee Revenues for the years ended December 31, 2025, 2024 and 2023.
Fee-Bearing CapitalFee Revenues
AS AT DEC 31 (BILLIONS) FOR THE YEARS ENDED DEC 31 (MILLIONS)
The following provides explanations of significant movements in Fee-Bearing Capital for the years then ended.
Fee-Bearing Capital
Outflows — — —
For the year ended December 31, 2025
During the year ended December 31, 2025, Fee-Bearing Capital increased by $9.4 billion or 16% to $67 billion. This increase was predominantly driven by $10.4 billion of inflows of which $5.4 billion was from the final closes within the second vintage of our flagship global transition fund, $2.1 billion of fundraising and capital deployments within our long-term as well as permanent and perpetual fund strategies, and $1.8 billion from fundraising for our catalytic transition fund. In addition, Fee-Bearing Capital increased by $5.5 billion predominantly from a higher market capitalization of BEP due to an increase in its share price during the year. These increases were partially offset by $3.5 billion of distributions to BEP's unitholders and investors in our long-term private funds and perpetual strategies. Movement of $3.0 billion in other was predominantly due to a rebalancing of Fee-Bearing Capital between infrastructure and renewable power and transition within the latest vintage of our infrastructure flagship fund based on investment mix as well as debt repayment by BEP.
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Fee Revenues
Management and advisory fees
Long-term private funds
Co-investment and other funds 39 2 11
Perpetual strategies
Co-investment and other funds 39 20 9
Transaction and advisory fees 6 19 9
Total management and advisory fees 682 513 483
1.BEP Fee-Bearing Capital as at December 31, 2025 is $25.8 billion (December 31, 2024 – $21.5 billion) and includes net debt of $3.7 billion (December 31, 2024 - $3.9 billion).
2.Consists solely of incentive distributions earned from BEP.
For the year ended December 31, 2025
Fee Revenues increased by $186 million for the year ended December 31, 2025 relative to the year ended December 31, 2024. Total management and advisory fees increased by $169 million anchored by long-term private funds which generated $78 million of higher fee revenues from subsequent closes of the second vintage of our flagship global transition fund and $36 million of incremental fee revenues from certain complementary strategies, partially offset by $9 million of lower fee revenues from older vintages of certain long-term private funds. In addition, our perpetual strategies earned $37 million of higher fee revenues primarily driven by an increase of $19 million from certain of our complementary strategies and $18 million of higher fee revenues from BEP as a result of a higher average market capitalization in the current year. Catch-up fees increased by $37 million as a result of subsequent closes in the second vintage of our global transition fund and catalytic transition fund, which were partially offset by $13 million of lower transaction and advisory fees in the current year. In addition, incentive distributions from BEP increased by $17 million due to a 5% increase in distributions compared to the prior year.
Segment Earnings
Segment Expenses
Other operating expenses (63) (35) (31)
For the year ended December 31, 2025
Segment Earnings increased by $105 million for the year ended December 31, 2025 relative to the year ended December 31, 2024. The increase in Segment Earnings was primarily due to higher Segment Revenues driven by additional closes of the second vintage of our flagship global transition fund and inflows from perpetual funds resulting in incremental fee revenues. In addition, increases to Segment Revenues were as a result of a higher average market capitalization of BEP in the current year. These increases were partially offset by higher Segment Expenses to support the scaling of our business.
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Private Equity
Summary of Key Financial and Operating Measures
The following charts provide the Fee-Bearing Capital of our Private Equity investment strategy as at December 31, 2025, 2024 and 2023, and Fee Revenues for the years ended December 31, 2025, 2024 and 2023.
Fee-Bearing CapitalFee Revenues
AS AT DEC 31 (BILLIONS) FOR THE YEARS ENDED DEC 31 (MILLIONS)
The following provides explanations of significant movements in Fee-Bearing Capital for the periods then ended.
Fee-Bearing Capital
Outflows — — —
For the year ended December 31, 2025
During the year ended December 31, 2025, Fee-Bearing Capital increased by $2.8 billion or 6% to $48 billion. The increase was primarily driven by inflows of $5.3 billion associated with certain long-term private funds and co-investments made within our complementary strategies. In addition, market valuation increases of $2.0 billion were primarily driven by BBU due to a higher share price during the year. These increases were partially offset by other changes associated with write-downs from earlier vintages of our flagship funds and co-investment vehicles resulting in a decrease of $1.5 billion. In addition, changes in other included $1.8 billion from the impact of changes in fee-basis and foreign exchange on certain co-investment vehicles and lower corporate debt at BBU. Distributions of $1.1 billion were driven by our fourth flagship fund, other long-term private funds, and BBU.
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Fee Revenues
Management and advisory fees
Long-term private funds
Co-investment and other funds 9 10 10
Perpetual strategies
Catch-up fees — 7 16
Transaction and advisory fees 8 24 11
Total management and advisory fees 461 470 475
Performance fees2 95 — —
1.BBU Fee-Bearing Capital as at December 31, 2025 was $9.1 billion (December 31, 2024 – $8.1 billion) and includes net debt of $1.3 billion (December 31, 2024 - $2.1 billion).
2.Consists solely of performance fees earned from BBU.
For the year ended December 31, 2025
Fee Revenues increased by $86 million for the year ended December 31, 2025 relative to the year ended December 31, 2024.This increase was primarily driven by performance fees of $95 million earned as a result of the share price of BBU exceeding the previous high watermark threshold, attributable to an increase in the volume weighted average unit price during the year. The high watermark threshold to earn additional performance fees as at December 31, 2025 was $33.81 per unit, reflecting the adjusted high watermark. In addition, incremental fee revenues from our complementary strategies and a higher share price of BBU contributed to $21 million of higher fee revenues. These increases were partially offset by $6 million of lower fee revenues from our earlier vintages of our flagship funds as a result of the end of the investment period. Furthermore, catch-up and transaction and advisory fees decreased by $23 million as the prior year reflected higher catch-up fees from the sixth vintage of our flagship fund and higher transaction and advisory fee revenue.
Segment Earnings
Segment Expenses
For the year ended December 31, 2025
Segment Earnings decreased by $40 million for the year ended December 31, 2025 relative to the year ended December 31, 2024. Segment Earnings were lower in the current year as Segment Revenues reflected lower management fees from flagship funds as a result of monetizations and distributions during the year as well as higher transaction and advisory fees and catch-up fees recognized in the prior year. These decreases were offset by higher Segment Revenues associated with our complementary strategies. Segment Earnings also decreased as a result of higher Segment Expenses associated with growth in the business .
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Real Estate
Summary of Key Financial and Operating Measures
The following charts provide the Fee-Bearing Capital of our Real Estate investment strategy as at December 31, 2025, 2024 and 2023, and Fee Revenues for the years ended December 31, 2025, 2024 and 2023.
Fee-Bearing CapitalFee Revenues
AS AT DEC 31 (BILLIONS) FOR THE YEARS ENDED DEC 31 (MILLIONS)
The following provides explanations of significant movements in Fee-Bearing Capital for the years then ended.
Fee-Bearing Capital
For the year ended December 31, 2025
During the year ended December 31, 2025, Fee-Bearing Capital increased by $8.1 billion, or 9% to $102 billion. The increase was predominantly driven by $16.2 billion of inflows of which $5.6 billion was attributable to the opportunistic repayment of debt within BPG, $4.7 billion from the fifth vintage of our flagship fund, as well as $3.6 billion from co-investment capital and capital deployments across other flagship funds. In addition, $2.3 billion of inflows were attributable to certain long-term private funds and complementary strategies. These increases were partially offset by $6.7 billion of distributions from BPG, flagship funds and other long-term private funds. In addition, other changes of $1.1 billion were as a result of lower valuations within an earlier vintage flagship fund as well as the net impact of foreign exchange.
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Fee Revenues
Management and advisory fees
Long-term private funds
Perpetual strategies
Co-investment and other funds 89 74 93
1.BPG Fee-Bearing Capital (of which BPY represents substantially all of the balance) as at December 31, 2025 is $19.0 billion (December 31, 2024 – $16.6 billion).
For the year ended December 31, 2025
During the year ended December 31, 2025, Fee Revenues increased by $122 million or 13% relative to the year ended December 31, 2024. This increase was driven by $76 million of higher Fee Revenues predominantly from the latest vintage of our flagship fund, partially offset by $24 million of lower Fee Revenues from our earlier flagship fund vintages due to realizations. In addition, Fee Revenues from BPG and other perpetual strategies increased by $21 million as a result of the aforementioned growth in Fee-Bearing Capital. Furthermore, Fee Revenues included higher catch-up fees of $49 million primarily from follow-on closes for our fifth flagship fund.
Segment Earnings
Segment Expenses
For the year ended December 31, 2025
Segment Earnings increased by $96 million for the year ended December 31, 2025 relative to the year ended December 31, 2024. The increase in Segment Earnings was primarily due to higher Segment Revenues associated with subsequent closes of our fifth flagship fund, partially offset by higher Segment Expenses due to scaling of our business.
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Credit
Summary of Key Financial and Operating Measures
The following charts provide the Fee-Bearing Capital of our Credit investment strategy as at December 31, 2025, 2024 and 2023, and Fee Revenues for the years ended December 31, 2025, 2024 and 2023.
Fee-Bearing CapitalFee Revenues
AS AT DEC 31 (BILLIONS) FOR THE YEARS ENDED DEC 31 (MILLIONS)
The following provides explanations of significant movements in Fee-Bearing Capital for the years then ended.
Fee-Bearing Capital
For the year ended December 31, 2025
During the year ended December 31, 2025, Fee-Bearing Capital increased by $34.6 billion or 14% to $279 billion, primarily due to $24.5 billion of capital deployed within long-term private funds as well as perpetual and liquid credit strategies, $22.5 billion of insurance capital inflows from BWS, $3.7 billion of capital raised within our partner managers, and $2.3 billion of fundraising from our real estate and infrastructure debt strategies. In addition, we recognized $11.3 billion of market valuation increases associated with our liquid and perpetual strategies as well as certain long-term private funds which further increased Fee-Bearing Capital. These increases were partially offset by $11.0 billion of redemptions within certain of our liquid and perpetual strategies and $10.9 billion of outflows associated with BWS insurance capital. In addition, distributions of $8.5 billion from our long-term private funds and complementary strategies, and $2.6 billion from our partner managers partially reduced Fee-Bearing Capital. Credit changes in other primarily related to the acquisition of Angel Oak as well as the impact of foreign exchange revaluation across perpetual and liquid strategies partially offset by changes in fee-basis associated with certain perpetual and long-term private fund vehicles.
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Fee Revenues
Management and advisory fees
Permanent and perpetual strategies 463 400 266
Transaction and advisory fees — 1 —
1.Represents open-end funds within our credit strategies, and Oaktree's investment in a fixed income manager, as well as in publicly listed securities.
2.Across the various categories, Fee-Bearing Capital from BWS as at December 31, 2025 was $108 billion which generated $234 million of Fee Revenues under the investment management agreement for the year ended December 31, 2025 (December 31, 2024 - Fee-Bearing Capital of $92 billion and Fee Revenues of $167 million).
For the year ended December 31, 2025
Fee Revenues increased by $302 million or 21% for the year ended December 31, 2025 relative to the year ended December 31, 2024. Fees from our long-term private funds increased by $221 million primarily due to higher fees earned in our partner managers, most notably Castlelake, as well as other complementary strategies. Fees from permanent and perpetual strategies increased by $63 million as the current year reflected an additional quarter of fees from the AEL Mandate relative to the prior year, and capital deployed across our private credit strategies. In addition, liquid strategies generated incremental fee revenues of $19 million driven by net inflows and positive valuation changes resulting in higher Fee-Bearing Capital.
Segment Earnings
Segment Expenses
For the year ended December 31, 2025
Segment Earnings increased $180 million for the year ended December 31, 2025 relative to the year ended December 31, 2024. The increase in Segment Earnings was driven by higher Segment Revenues as a result of incremental earnings from our partner managers, most notably from Castlelake relative to the prior year, partially offset by higher Segment Expenses as a result of growth in the business.
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Reconciliation of U.S. GAAP to Non-GAAP Measures
Reconciliations of Distributable Earnings, Fee-Related Earnings and Fee Revenues to the most directly comparable financial measures calculated and presented in conformity with U.S. GAAP are presented below. In addition to net income and revenue, management assesses the performance of its business based on these non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, and not as a substitute for or superior to, net income or other financial measures presented in conformity with U.S. GAAP.
Reconciliation of Net Income to Fee-Related Earnings and Distributable Earnings
The following presents a reconciliation of net income to Fee-Related Earnings and Distributable Earnings for the years ended December 31, 2025, 2024 and 2023.
Add or subtract the following:
Depreciation and amortization(b) 68 14 14
Carried interest allocations(c) (209) (16) (399)
Carried interest allocation compensation(c) 146 93 86
Interest and dividend revenue(e) (129) (143) (172)
Share of income from equity method investments(g) (402) (339) (167)
Fee-related earnings of equity method investments at our share(g) 494 330 271
Compensation costs recovered from affiliates(h) 298 218 156
Non-recurring restructuring costs(i) — — 35
Other adjustments(j) 9 10 20
Investment and other income (net of interest expense)(k) 33 170 160
Equity-based compensation expense(l) 44 38 39
(a)This adjustment removes the impact of income tax provisions on the basis that we do not believe this item reflects the present value of the actual tax obligations that we expect to incur over the long-term due to the substantial deferred tax assets of BAM.
(b)This adjustment removes the depreciation and amortization on property, plant and equipment and intangible assets, which are non-cash in nature and therefore excluded from Fee-Related Earnings as well as certain capital depreciation costs recharged from BAM's affiliates.
(c)These adjustments remove the impact of both unrealized and realized carried interest allocations and the associated compensation expense. Carried interest allocations and associated compensation costs are included in Distributable Earnings once realized.
(d)This adjustment removes other income and expenses associated with fair value changes for consolidated entities and funds.
(e)This adjustment removes interest and charges paid or received by consolidated entities and funds.
(f)This adjustment removes other revenues earned that are non-cash in nature.
(g)These adjustments remove our share of equity method investments' earnings, including items (a) to (f) above and include its share of equity method investments' Fee-Related Earnings.
(h)This item adds back compensation costs that will be borne by affiliates.
(i)This item represents non-recurring restructuring costs that are not considered as part of the ongoing asset management business
(j)This adjustment adds base management fees earned from funds that are eliminated upon consolidation and other items.
(k)This adjustment adds back other income associated with our portion of partly owned subsidiaries’ investment income, realized carried interest, interest income received and interest expense.
(l)This adjustment adds back equity-based compensation costs.
(m)Represents the impact of cash taxes paid by the business.
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Reconciliation of Revenues to Fee Revenues
The following presents our reconciliation of base management and advisory fees to Fee Revenues for the years ended December 31, 2025, 2024 and 2023.
Fee Revenues from equity method investments(b) 1,569 1,335 1,240
Other adjustments(c) (27) (10) (1)
(a)This adjustment adds incentive distributions and performance fees that are included in Fee Revenues.
(b)This adjustment adds Oaktree management fees at 100% ownership and our proportionate share of earnings from other partner managers excluding Oaktree.
(c)This adjustment involves base management fees earned from funds that are eliminated upon consolidation and other items.
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Fee Revenues by Geography
The majority of our revenues are earned in the U.S. The following tables set out Fee Revenues disaggregated by investment strategy and geography.
Management and advisory fees, net
Management and advisory fees, net
Management and advisory fees, net
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Liquidity and Capital Resources
Liquidity
BAM maintains sufficient liquidity at all times, enabling it to participate in investment opportunities as they arise, withstand sudden adverse changes in economic conditions, and sustain distributions. Typical cash flow activities include earning fees on assets managed, paying operating expenses, and paying cash dividends to shareholders. From time to time, BAM may draw on a revolving credit facility to bridge timing differences between the receipt and outflow of funds. It may also issue additional debt to finance growth through strategic investments. The primary sources of liquidity, which we refer to as corporate liquidity, consist of cash, short-term financial assets, as well as the undrawn portions of the revolving credit facilities.
As at December 31, 2025, corporate liquidity for BAM is $3.0 billion. This consists of $1.6 billion in cash and short term financial assets that are convertible to cash within twelve months, as well as $1.4 billion in undrawn credit facilities. This liquidity can be deployed for use without any material tax consequences to support BAM in funding strategic transactions as well as seeding new investment products.
•On November 18, 2025, BAM completed a debt offering, issuing $600 million of 5-year bonds at a fixed annual coupon of 4.653% and $400 million of 10-year bonds at a fixed annual coupon of 5.298%. BAM previously issued $750 million of 30-year bonds at a fixed annual coupon of 6.077% on September 9, 2025 and $750 million of 10-year bonds at a fixed annual coupon of 5.795% on April 24, 2025.
•On August 29, 2024, a $750 million five-year revolving credit facility was established through bilateral agreements with a group of lenders. On September 5, 2025, BAM finalized the upsize of the facility from $750 million to $1.1 billion. U.S. dollar draws are subject to the U.S. Base Rate or SOFR plus a margin of 110 basis points, while Canadian dollar draws are subject to the Canadian Prime Rate or CORRA plus a margin of 110 basis points. As at December 31, 2025, the facility is undrawn.
•On November 8, 2022, a $300 million revolving credit facility was established, with BN as lender. U.S. dollar draws are subject to the U.S. Base Rate or SOFR plus a margin of 165 basis points, while Canadian dollar draws are subject to the Canadian Prime Rate or CORRA plus a margin of 165 basis points. As at December 31, 2025, the facility is undrawn.
The following table presents our deployable capital:
Corporate(a) Group(b)
(a) Corporate deployable capital represents the corporate liquidity of BAM.
(b) Group deployable capital consists of: (1) corporate liquidity of BAM, consolidated funds, and the perpetual affiliates, and (2) uncalled private fund commitments, which are third-party commitments available for drawdown in the private funds of BAM.
Uncalled Fund Commitments
The following presents our Uncalled Fund Commitments as of December 31, 2025 by period and December 31, 2024:
Approximately $63 billion of the Uncalled Fund Commitments are currently not earning fees, but will become fee-bearing once the capital is invested. Once invested, we expect these commitments will earn approximately $630 million of additional Fee Revenues.
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Capital Resources
Clawback Obligations
Performance allocations are subject to clawback to the extent that the performance allocations received to date with respect to a fund exceed the amount due to BAM based on cumulative results of that fund. The amounts and nature of our clawback obligations are described in Part II, Item 8, Note 2 “Summary of Significant Accounting Policies” of the consolidated financial statements of BAM as at December 31, 2025, and 2024, and for the years ended December 31, 2025, 2024, and 2023.
Capital Requirements
Certain U.S. and non-U.S. entities of BAM are subject to various investment advisor and other financial regulatory rules and requirements that may include minimum net capital requirements. See "Part I—Item 1. Business—Regulatory Matters". These requirements have been met for the year ended December 31, 2025.
Contractual Obligations
On January 31, 2019, a subsidiary of BAM committed $2.8 billion to BSREP III, of which $2.2 billion has been funded as at December 31, 2025 (December 31, 2024 – $2.1 billion). The remainder of the commitment will be funded by BN.
In the normal course of business, BAM enters into contractual obligations which include commitments to provide bridge financing and other equity commitments. As at December 31, 2025, the Company had $6.6 billion of such commitments outstanding (2024 – $3.3 billion).
BAM established a $750 million five-year revolving credit facility on August 29, 2024 through bilateral agreements with a group of lenders. The facility is available in U.S. and Canadian dollars, where U.S. dollar draws are subject to the U.S. Base Rate or SOFR plus a margin of 110 basis points, while Canadian dollar draws are subject to the Canadian Prime Rate or CORRA plus a margin of 110 basis points. During the year ended December 31, 2025, BAM increased the facility from $750 million to $1.1 billion. As at December 31, 2025, the facility is undrawn.
The following table presents the contractual obligations of BAM by payment periods:
Payments Due by Period of BAM
1. Excludes deferred financing costs
Accounts payable and other, net of BAM represents amounts due to employees for equity-based compensations costs and carried interest compensation costs. Most awards have a vesting period of up to 5 years. Due to affiliates represents amounts owed to related parties associated with share-based compensation as well as carried interest compensation. Lease obligations represent expected payments associated with current leases entered into by the Company.
Exposures to Financial Instruments
As discussed elsewhere in this report, we utilize derivatives and other financial instruments in our business to manage risk and optimize the use of our capital. The notional and fair values of these instruments are disclosed in Part II, Item 8, Note 6 “Fair Value Measurements of Financial Instruments” and Note 8 “Derivatives,” to the consolidated financial statements of BAM as at December 31, 2025, and 2024 and for the years ended December 31, 2025, 2024, and 2023.
Off-Balance Sheet Arrangements
BAM may from time to time enter into guarantees given in respect of co-investments in which there is carried interest. The amount guaranteed is up to the carried interest amount paid to the General Partner, net of taxes. No known amounts are currently due or owed under these guarantees.
Related Party Transactions
BAM entered into a number of related party transactions with BN and other affiliates. See Part II, Item 8, Note 20 “Related Party Transactions” of the consolidated financial statements of BAM as at December 31, 2025, and 2024 and for the years ended December 31, 2025, 2024, and 2023.
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BAM Dividends
The dividends paid by BAM on outstanding securities for the years ended December 31, 2025, 2024, and 2023 are summarized in the table below.
Distribution per Security
Per Class A Share and Class B Share $ 1.75 $ 1.52 $ 1.28
Subsidiary Public Issuers
BAM Finance LLC (the “U.S. Finco”) is a Delaware limited liability company formed on March 26, 2025 and is a subsidiary of the Company. As at December 31, 2025, the U.S. Finco had no debt outstanding.
BAM Finance (Canada) Inc. (the “Canadian Finco”) was incorporated on March 26, 2025 under the Business Corporations Act (Ontario) and is a subsidiary of the Company. As at December 31, 2025, the Canadian Finco had no debt outstanding.
The U.S. Finco and Canadian Finco (together the “Finance Debt Issuers”) have no independent activities, assets or operations other than in connection with any securities that they may issue. Any debt securities issued by the Finance Debt Issuers will be fully and unconditionally guaranteed as to payment of principal, premium (if any), interest and certain other amounts by the Company.
During the year ended December 31, 2025, BAM's $750 million senior notes due 2035, $750 million senior notes due 2055, $600 million senior notes due 2030 and $400 million senior notes due 2036, were all issued directly by BAM.
The following tables contain summarized financial information of the Company, U.S. Finco, Canadian Finco and non-guarantor subsidiaries:
Preferred shares redeemable non-controlling interest — — — 1,398 — 1,398
Preferred shares redeemable non-controlling interest — — — 2,103 — 2,103
Preferred shares redeemable non-controlling interest — — — 2,166 — 2,166
1. This column accounts for investments in all subsidiaries of BAM other than the Finance Debt Issuers, on a combined basis.
2. This column includes the necessary amounts to present BAM on a consolidated basis.
3. Reflects the completion of the 2025 Arrangement.
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Summary of Significant Accounting Policies
Critical Accounting Policies, Critical Accounting Estimates and Judgements
BAM prepares consolidated financial statements in conformity with U.S. GAAP. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates that affect the amounts reported. Management believes that estimates utilized in the preparation of the consolidated financial statements are presented fairly, in all material respects. Such estimates include those used in the valuation of investments and the measurement of deferred tax balances (including valuation allowances) and the determination of control or significant influence. Actual results could differ from those estimates and such differences could be material. BAM believes the following critical accounting policies could potentially produce materially different results of BAM, if underlying assumptions, estimates and/or judgments were to be changed. For a full description of accounting policies, see Part II, Item 8, Note 2 “Summary of Significant Accounting Policies” of the consolidated financial statements as at December 31, 2025 and December 31, 2024 and for the years ended December 31, 2025, 2024, and 2023.
Equity Method Investments
Investments in which BAM is deemed to exert significant influence, but not control, are accounted for using the equity method of accounting. BAM has significant influence over our partner managers and therefore accounts for these investments under the equity method.
The carrying value of equity method investments is determined based on amounts invested by BAM, adjusted for the equity in earnings or losses of the investee allocated based on the relevant agreements, less distributions received. Under the equity method of accounting, BAM's share of earnings from equity investments is included in the share of income from equity investments in the consolidated statements of operations. BAM evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.
Refer to Part II, Item 8, Note 4 “Investments” of the consolidated financial statements for further details of our equity method investments.
Control or Level of Influence
When determining the appropriate basis of accounting for BAM's investees, BAM makes judgments about the degree of influence that it exerts directly or through an arrangement over the investees’ relevant activities. This may include the ability to elect investee directors or appoint management. Control is obtained when BAM has the power to direct the relevant investing, financing and operating decisions of an entity and does so in its capacity as principal of the operations, rather than as an agent for other investors. Operating as a principal includes having sufficient capital at risk in any investee and exposure to the variability of the returns generated as a result of the decisions of BAM as principal. Judgment is used in determining the sufficiency of the capital at risk or variability of returns. In making these judgments, BAM considers the ability of other investors to remove BAM as a manager or general partner in a controlled partnership.
Carried Interest Allocations - Unrealized
The change in the fair value of investments is a significant input into carried interest allocations - unrealized. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds. See “Fair Value” below for further discussion related to significant estimates and assumptions used for determining fair value of the underlying investments.
Fair Value
BAM uses fair value throughout the reporting process. For details of our accounting policies related to fair value refer to Part II — Item 8. Note 2. “Summary of Significant Accounting Policies — Fair Value of Financial Instruments” and “Summary of Significant Accounting Policies — Revenue Recognition” in the “Notes to the consolidated financial statements”. The following discussion is intended to provide supplemental information about how the application of fair value principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment.
The fair value of the investments held by BAM's funds is the primary input to the calculation of certain of our management fees, incentive fees, performance fees and the related compensation we recognize. In the absence of observable market prices, we utilize valuation methodologies applied on a consistent basis and assumptions that we believe market participants would use to determine the fair value of the investments. For investments where little market activity exists management’s determination of fair value is based on the best information available in the circumstances, which may incorporate management’s own assumptions and involves a significant degree of judgment, and the consideration of a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks.
Management has elected the fair value option for certain equity method investments. Additionally, management is required to measure specific financial instruments at fair value, including debt instruments, equity securities, and freestanding derivatives.
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Our primary approach to determining the fair value of our investments is generally the income approach, which estimates fair value based on the present value of expected future cash flows generated by a business. The most commonly used method within this approach is the discounted cash flow method, which incorporates key assumptions about the investment’s projected net earnings or cash flows, discount rate, capitalization rate, and exit multiple.
Alternatively, management uses the market approach as a secondary methodology. This approach primarily relies on valuations of comparable public companies, transactions, or assets, requiring judgment in selecting appropriate comparables. Depending on the specific facts and circumstances of the investment, alternative primary and secondary methodologies may be applied, including option value, contingent claims or scenario analysis, yield analysis, projected cash flow through maturity or expiration, discount to sale, probability-weighted methods, or recent financing rounds.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Risk Disclosures
Our exposure to market, foreign currency, interest rate and credit risk is driven by its equity interest in our asset management business. There have been no material changes to BAM’s financial risk exposure or risk management activities since December 31, 2024. Please refer to Item 1A of this report for a detailed description of BAM’s financial risk exposure and risk management activities.
Market Risk
The primary market risk exposure of BAM relates to its role as an asset manager of the publicly listed permanent capital vehicles and the sensitivity of base management fees earned from these affiliates due to movements in their underlying trading price. Specifically, with respect to the market risk related to base management fees earned based on the market capitalization of BEP, BIP and BBU.
Foreign Currency Risk
We have very limited exposure to foreign currency risk as a majority of our private funds are denominated in USD. This means that a majority of the Fee Revenues that we earn are paid in USD, irrespective of the local currency of our underlying investment base. Additionally, the majority of our revenues are earned in the U.S. We may from time to time reduce foreign currency risk by employing hedging techniques, including using forward contracts to reduce exposure to future changes in exchange rates when a meaningful amount of capital has been invested in foreign currencies.
Interest Rate Risk
BAM has interest rate exposure through balances held with affiliates and external parties, as well as its internal revolving credit facility with BN and its external $1.1 billion revolving credit facility, of which none is drawn as at December 31, 2025. BAM earns interest income on amounts held on deposit with BN and incurs interest expense on its external and internal revolving credit facility borrowings. Interest income and expenses on these balances are at variable rates. BAM's $750 million senior notes due 2035 have a fixed annual coupon of 5.795%. BAM's $750 million senior notes due 2055 have a fixed annual coupon of 6.077%. BAM's $600 million senior notes due 2030 have a fixed annual coupon of 4.653%. BAM's $400 million senior notes due 2036 have a fixed annual coupon of 5.298%.
Credit Risk
Investors in our private funds make capital commitments to these vehicles via subscription agreements. When a private fund makes an investment, these capital commitments are then satisfied by our investors via capital contributions as prescribed under these subscription agreements. Investors in our private funds may default on their capital commitment obligations, which could have an adverse impact on our earnings or result in other negative implications to our businesses such as the requirement to deploy our own capital to cover such obligations. This impact would be magnified if the investor that does so is in multiple funds. Given the diversity and creditworthiness of our over 2,400 clients, including some of the world’s largest institutional investors, sovereign wealth funds and pension plans, we are of the view that there is not a material credit risk present in our asset management business.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Brookfield Asset Management Ltd. Consolidated Financial Statements
Consolidated Balance Sheets as at December 31, 2025 and 2024 89
Notes to the Consolidated Financial Statements 96
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Brookfield Asset Management Ltd.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Brookfield Asset Management Ltd. and subsidiaries (“BAM”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, BAM maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as at and for the year ended December 31, 2025, of BAM and our report dated March 2, 2026, expressed an unqualified opinion on those financial statements.
As described in Management's Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Brookfield Asset Management ULC, which was acquired on February 4, 2025, and whose financial statements constitute 96% and 81% of total and net assets, respectively, 99% of revenues, and 96% of net income of the consolidated financial statement amounts as of and for the year ended December 31, 2025. Accordingly, our audit did not include the internal control over financial reporting at Brookfield Asset Management ULC.
Basis for Opinion
BAM’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on BAM’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to BAM in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
March 2, 2026
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of Brookfield Asset Management Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Brookfield Asset Management Ltd. and subsidiaries (“BAM”) as at December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of BAM as at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), BAM’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 2, 2026, expressed an unqualified opinion on BAM’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of BAM’s management. Our responsibility is to express an opinion on BAM’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to BAM in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Accrued Carried Interest - Refer to Notes 2 and 4 to the financial statements
Critical Audit Matter Description
Carried interest is a performance fee arrangement in which the Company receives a percentage of investment returns from a fund and is based on cumulative fund performance, once returns exceed a fund’s contractually defined performance hurdles. The Company calculates the accrued carried interest at the end of each reporting period that would be due to the Company, based on the terms of the relevant fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, adjustments to accrued carried interest are recorded in the consolidated statements of operations as carried interest allocations. Carried interest allocations are recorded as unrealized income or loss attributable to the Company until the underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the preferred return or, in limited instances, after certain thresholds for return of capital are met.
We identified the calculation of accrued carried interest as a critical audit matter because of the significance of this balance to the Company’s financial statements. This results in a high degree of auditor judgment and subjectivity to perform our audit procedures and evaluate the audit evidence obtained.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the accrued carried interest included the following, among others:
•Evaluated whether the accrued carried interest calculations were performed in accordance with the terms of the fund agreements; and
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•Agreed underlying fund investments’ financial information used in the accrued carried interest calculations to information received directly from external third parties.
Oaktree – Investment - Refer to Notes 2 and 4 to the financial statements
Critical Audit Matter Description
The Company has an approximate 74% economic interest in Oaktree, which the Company has accounted for under the equity method of accounting as it is deemed to exert significant influence, but not control, over the investee. The carrying value of the equity method investment is determined based on the amounts invested by the Company, including a step-up investment in the current year, adjusted for the equity in earnings or losses of the investee allocated based on the relevant agreements, less distributions received, amortization of historical basis differences and impairment losses, if any.
We identified the accounting for the Oaktree equity method investment as a critical audit matter because of the significance of the equity method investment and earnings impact to the Company’s financial statements. This audit matter required an increased extent of audit effort, including the need to involve fair value specialists and senior members of the engagement team.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to accounting for the equity method investment in Oaktree included the following, among others:
•Tested the effectiveness of controls related to accounting for the equity method investment in Oaktree, which includes management’s receipt and review of Oaktree financial information;
•Evaluated whether the consideration paid for the step-up investment was calculated in accordance with contractual agreements and, with the assistance of fair value specialists, assessed whether the methodology used by management to value the step-up investment was appropriate;
•Evaluated significant judgments and estimates at the underlying equity method investment through oversight of the auditor of Oaktree by obtaining and assessing information relating to the audit of Oaktree to understand significant judgments and estimates, significant findings or issues identified, actions taken to address them, and conclusions reached; and
•Agreed the underlying information related to the changes in the equity method investment to the audited financial statements of Oaktree.
/s/ Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
March 2, 2026
We have served as BAM's auditor since 2022.
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BROOKFIELD ASSET MANAGEMENT LTD.
CONSOLIDATED BALANCE SHEETS
AS AT DECEMBER 31,(MILLIONS, EXCEPT SHARE AMOUNTS) 2025 2024
Assets
Cash and cash equivalents $ 1,583 $ 404
Accounts receivable and other, net 333 483
Investments held for sale — 242
Investments of consolidated funds 505 251