Published
# Brookfield Corporation (NYSE/TSX: BN) — Narrative, second quarter of fiscal 2026
Brookfield Corporation is a Canadian foreign private issuer. It files its annual report on Form 40-F and furnishes quarterly interim reports on Form 6-K. Its financial statements are prepared under IFRS Accounting Standards and presented in US dollars. A few amounts in the filings are stated in Canadian dollars or pounds sterling; this document converts those to US dollars and says where it has done so. All share counts and per-share amounts are on the basis after the three-for-two stock split completed on October 9, 2025. The FY2025 annual report and both 2026 interim reports already present them that way.
Sources: the fiscal 2025 annual report on Form 40-F (accession 0001001085-26-000006, filed March 18, 2026), consisting of Exhibit 99.1 (Annual Information Form) and Exhibit 99.2 (MD&A and audited financial statements); the Q2 2026 interim report furnished on Form 6-K (accession 0001001085-26-000021, filed August 17, 2026); and the Q2 2026 results press release furnished on Form 6-K (accession 0001171843-26-005474, filed August 13, 2026). Other 6-Ks are cited where used.
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## Business
*Source: FY2025 Form 40-F, accession 0001001085-26-000006 (Exhibit 99.2 MD&A Part 1; Exhibit 99.1 Annual Information Form). Ownership percentages and segment names are updated to June 30, 2026 from the Q2 2026 interim report, accession 0001001085-26-000021.*
Brookfield Corporation is a global investment firm. It owns controlling or large stakes in a family of listed and private businesses that manage money for others, write insurance and annuities, and own and operate real assets. Its own earnings come mainly from three sources. The first is the fee-related earnings and carried interest of its asset manager. The second is the investment spread earned by its insurance arm. The third is cash distributions from the infrastructure, renewable power, private-equity and real-estate businesses it controls. Management judges the company by **distributable earnings (DE)**, a non-IFRS measure of the cash earnings available to common shareholders, and by its target of 15%+ annualized returns to shareholders over the long term.
The business is organized as three core businesses plus corporate activities, which together make seven reporting segments:
- **Asset Management.** Brookfield owns 74% of Brookfield Asset Management Ltd. (BAM): 70% directly and 4% through its wealth solutions business. BAM is an alternative asset manager with over $1 trillion of assets under management across infrastructure, energy, private equity, real estate and credit. It manages long-term private funds, which typically have 10-year commitments and earn base management fees plus carried interest above a preferred return. It also manages perpetual strategies, which earn fees on the capitalization or NAV of the listed affiliates and core funds, plus incentive distributions from BIP and BEP, and liquid strategies. At December 31, 2025 BAM had over 2,400 clients, and the private wealth channel represented over 8% of commitments. The segment also holds Brookfield's own direct investments in and alongside BAM funds. These are mainly limited-partner stakes in flagship real-estate funds ("LP Investments") across logistics, multifamily, hospitality, office, retail, triple-net-lease, self-storage, student-housing and manufactured-housing assets.
- **Wealth Solutions.** This is an equity-accounted interest in Brookfield Wealth Solutions Ltd. (BWS), an investment-led insurer. BWS sells fixed-index and fixed-rate annuities, pension risk transfer and funding agreements, and specialty property and casualty insurance. It invests the float largely in Brookfield-sourced credit and real assets, aiming for a 15%+ return on equity. BAM manages most of BWS's assets. BWS Class A exchangeable shares are structured to be economically equivalent to BN Class A shares, and BN has signed a support agreement to maintain that equivalence. At December 31, 2025 insurance assets were $143 billion, and BWS IFRS capital of $12.7 billion was earning $1.9 billion of annualized cash flow.
- **Operating Businesses.** These hold about $35 billion of Brookfield's capital at June 30, 2026, held through listed "perpetual affiliates" that also serve as anchor investors in BAM's flagship funds:
- **Infrastructure:** a 26% interest in Brookfield Infrastructure Partners (BIP), or 27% including BWS's holding. Its assets span utilities, transport (rail, toll roads, ports), midstream and data (data centers, towers, fiber, and a partnership in U.S. semiconductor manufacturing facilities).
- **Energy:** a 45% interest in Brookfield Renewable Partners (BEP), or 47% including BWS. BEP owns hydroelectric, wind, utility-scale solar, and distributed energy and sustainable solutions assets, and its holdings include an interest in Westinghouse, the nuclear services business. Brookfield also buys some of BEP's North American hydro output at a fixed price and resells it. In the FY2025 report this segment was called "Renewable Power and Transition"; the 2026 reports call it "Energy".
- **Private Equity:** about 69% of Brookfield Business Corporation (BBUC): 27% directly and 42% through BWS. BBUC's businesses are in business services, infrastructure services and industrials, including an advanced energy storage (battery) operation. BBUC is the single listed corporation created in March 2026 by combining Brookfield Business Partners and Brookfield Business Holdings Corporation.
- **Real Estate:** 100% of Brookfield Property Group (BPG). It holds "super core" premier office and retail assets in gateway cities, "core plus" assets, "value add" assets being repositioned for sale, and a North American land-development and homebuilding platform.
- **Corporate Activities.** This segment holds corporate cash and financial assets, corporate borrowings and preferred equity.
Two features of the accounts matter for reading them. First, IFRS's control-based model means Brookfield consolidates many entities in which it holds only a minority economic interest. Consolidated revenue ($75.1 billion in 2025) and consolidated debt are therefore far larger than Brookfield's own economic exposure, and most consolidated net income belongs to non-controlling interests. Only about 6% of consolidated debt has recourse to the Corporation; the rest is non-recourse debt of the managed entities. Second, the company's own performance measures (DE, fee-related earnings, segment FFO and NOI) are non-IFRS. The company expects to switch its financial reporting to U.S. GAAP effective January 1, 2027, and to file its first U.S. GAAP annual report for fiscal 2027.
Scale and reach as at December 31, 2025: over $180 billion of invested capital, about $6.0 billion of annual free cash flow, more than 5,800 investment and asset-management professionals and employees (including Oaktree), about 250,000 operating employees, and operations in more than 50 countries.
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## Risk factors
*Source: FY2025 Form 40-F, accession 0001001085-26-000006, Exhibit 99.2, Part 6 "Business Environment and Risks" (it covers Brookfield, its consolidated subsidiaries, BWS and Oaktree).*
These are the risks that bear most directly on Brookfield's earnings and value, condensed from the annual report:
- **Fundraising and investment performance.** Asset-management earnings depend on continually raising, retaining and deploying third-party capital. Investors may cut allocations to alternatives, bring investing in-house, or demand lower fees. Poor fund performance would reduce fee revenue, carried interest and the value of Brookfield's own fund commitments. The contrarian approach of buying into dislocated markets carries its own valuation and integration risk.
- **Reputation and conflicts of interest.** As a manager with overlapping mandates and its own balance-sheet capital, Brookfield faces actual or perceived conflicts that draw heightened regulatory scrutiny, especially in the U.S. Misconduct at the firm or at portfolio companies could impair fundraising. In extreme cases fund investors can remove the general partner or accelerate a fund's liquidation.
- **Leverage, refinancing and liquidity.** The group relies heavily on asset-level debt. Cash flow may not cover debt service. Debt may not be refinanced at maturity or only on worse terms, and covenant breaches can trigger defaults. Much of the capital sits in illiquid physical assets and private holdings whose recorded fair values may not be realized on sale. Brookfield also makes temporary "warehouse" investments and backstop commitments for BAM funds, and may be unable to syndicate them.
- **Interest rates and inflation.** Higher rates reduce asset values and raise financing costs, and floating-rate and rate-reset debt and preferred shares are directly exposed. Tariffs and trade barriers make the path of inflation and rates more uncertain, and a re-acceleration of inflation could reverse recent rate cuts.
- **Foreign exchange.** A large share of capital is invested outside the U.S. At June 30, 2026, 56% of common equity was in U.S. dollars, with the rest mainly in sterling (14%), Canadian dollars (6%), euros (6%), Australian dollars (5%) and Brazilian reais (4%). The company limits its hedges of the Brazilian real, Colombian peso and other emerging-market currencies because hedging them is costly.
- **Geopolitics, trade and foreign-investment regimes.** The company cites political instability, tariffs and protectionism, armed conflict in Eastern Europe and the Middle East, and expropriation. Foreign-investment screening such as CFIUS in the U.S. and EU regimes can block deals, deter co-investors or narrow the pool of buyers for exits.
- **Regulation, sanctions and anti-corruption.** The asset manager and broker-dealer face growing oversight in the U.S. (Advisers Act, FINRA), the EU, the U.K., Canada, Brazil, Colombia, Australia, India and South Korea. Brookfield must avoid being deemed an investment company under the U.S. Investment Company Act of 1940, which could force it to restrict operations or sell assets. It operates under the FCPA, OFAC sanctions and similar regimes, including in emerging markets where due diligence is harder.
- **Tax.** Changes in tax law, including the OECD "two-pillar" global minimum tax, as well as reassessments and lower-taxed state-owned competitors could raise effective tax rates or weaken competitiveness.
- **Wealth Solutions-specific risk.** BWS's results depend on pricing, reserving and actuarial assumptions about benefits, claims and investment returns. Errors in underwriting, claims handling or systems could damage the business. Growth through new policies, pension risk transfer and acquisitions faces intense competition. Brookfield's support agreement commits it to help BWS pay distributions on, and redeem, its exchangeable shares. Future share issuance by BN or BWS could dilute holders.
- **Segment-specific risks.**
- *Energy:* generation depends on hydrology, wind and solar resource, and on wholesale power prices and re-contracting.
- *Nuclear technology services:* exposed to accident and regulatory-change risk.
- *Infrastructure:* regulators can reset allowed tolls and returns, and large capital expenditure is needed.
- *Private equity:* portfolio companies are cyclical, illiquid and sometimes distressed, and consumer-facing ones carry added liability risk.
- *Real estate:* exposed to leasing markets, tenant defaults, retail spending and the homebuilding cycle.
- **Information barriers, people and technology.** Some asset-management businesses, Oaktree among them, operate behind information barriers, which creates unmanaged conflicts and the risk of trading on material non-public information. Other risks are losing key professionals (including "key person" fund provisions, with no key-person insurance), cyberattacks and third-party or cloud outages, and both competitive and misuse risk from artificial intelligence.
- **Share-price volatility, litigation, insurance gaps and financial-reporting control failures** are also identified. The company notes that its non-IFRS metrics have no standardized meaning.
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## Management's discussion: fiscal 2025
*Source: FY2025 Form 40-F, accession 0001001085-26-000006, Exhibit 99.2 MD&A Parts 1–3. The same annual report was also furnished on 6-K (accession 0001001085-26-000008) and re-furnished on 6-K/A (accession 0001001085-26-000011) to correct clerical errors. Those errors were stray cells in certain tables, such as the eight-quarter summary; the narrative text is unchanged.*
**Consolidated results.** 2025 revenue was $75.1 billion, down 13% from $86.0 billion. Growth from infrastructure acquisitions and inflation indexation, and from renewable acquisitions and newly commissioned projects, was more than offset by private-equity dispositions completed in the third quarter of 2024, chiefly the road fuels operation. Net income rose $1.4 billion to $3.2 billion. Of this, $1.3 billion ($0.49 per share) was attributable to shareholders, up from $641 million ($0.20), and $1.9 billion went to non-controlling interests. The year-on-year increase came from:
- same-store growth;
- $1.1 billion more other income and gains, mainly infrastructure disposition gains, including the Australian container terminals, U.K. port, Mexican gas transmission and North American gas operations;
- a $998 million improvement in fair value changes, helped by the absence of the prior year's private-equity goodwill impairment.
These were partly offset by $485 million higher interest expense, $172 million lower equity-accounted income (mark-to-market on BWS insurance reserves) and $153 million higher income tax.
**Distributable earnings.** DE was $6.0 billion, against $6.3 billion in 2024; the 2024 figure included a $1.0 billion gain on selling part of the BAM stake to fund the AEL acquisition. DE before realizations rose 11% to $5.4 billion:
- Asset Management DE was $3.3 billion, up 9%. BAM raised a record $112 billion, including $24 billion from retail and wealth clients. Fee-bearing capital grew $64 billion (12%) to $603 billion, and fee-related earnings rose 22%.
- Wealth Solutions DE rose $321 million to $1.7 billion. Annuity sales were $20 billion, insurance assets reached $143 billion, P&C underwriting profitability rose 73%, and $13 billion was deployed into Brookfield-managed strategies at an average 8.5% yield.
- Infrastructure FFO rose $190 million to $757 million on inflation indexation, volume growth and the gain on the Australian container terminals.
- Renewable Power and Transition FFO rose $114 million to $584 million on newly commissioned assets, strong Canadian and Colombian hydrology and higher contributions from nuclear services.
- Private Equity FFO fell to $455 million from $951 million, reflecting net dispositions, a smaller direct stake in BBU, and higher borrowing costs after a special distribution from the advanced energy storage operation.
- Real estate NOI was $3.1 billion against $3.4 billion, as same-store super-core growth was more than offset by asset sales and fewer North American residential lot sales. Super-core occupancy was 96% and core-plus 95%.
**Capital and liquidity at December 31, 2025.** Common equity was $43.8 billion. Corporate debt-to-capitalization was 21%, against 50% on a consolidated basis. Core liquidity was $5.9 billion and group deployable capital a record $188 billion.
**Strategic steps in 2025 and early 2026** (Annual Information Form):
- **Asset-management restructuring (February 2025):** Brookfield exchanged its 73% interest in the asset-management operating company for BAM shares.
- **BAM stake to BWS (June 2025):** Brookfield contributed about $3.3 billion of BAM shares to BWS.
- **Just Group (July 31, 2025):** BWS agreed to acquire Just Group plc, a U.K. pension risk transfer insurer, at 220 pence per share, about $3.17 billion converted from the £2.4 billion stated. BWS completed the acquisition after March 31, 2026 (Q1 2026 interim report, 6-K 0001001085-26-000015). Per the Q2 2026 results release (6-K 0001171843-26-005474), the closing added $45 billion of insurance assets, and the second quarter of 2026 was Just Group's first full-quarter contribution.
- **Stock split (October 9, 2025):** three-for-two.
- **Oaktree (October 13, 2025):** Brookfield and BAM agreed to buy the roughly 26% of Oaktree they did not already own for about $3 billion. Under the announced terms, $1.4 billion was BN's share and $1.6 billion BAM's.
- **Brookfield Business (March 2026):** Brookfield Business Partners was combined into a single corporation (BBUC).
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## Current quarter: Q2 2026 (three and six months ended June 30, 2026)
*Sources: Q2 2026 interim report, Form 6-K accession 0001001085-26-000021 (Letter to Shareholders, MD&A and condensed consolidated financial statements); Q2 2026 results press release, Form 6-K accession 0001171843-26-005474 (used for the per-segment DE-before-realizations split, fundraising detail and monetization detail, which only it states).*
**Headline.** Brookfield's own cash earnings grew strongly while consolidated IFRS net income fell. DE before realizations was $1.43 billion ($0.61 per share), up from $1.25 billion ($0.53), a 15% per-share increase. Total DE, including $121 million of realized carried interest, was $1.55 billion ($0.66 per share), up 12% from $1.39 billion ($0.59). Over the last twelve months, DE was $6.2 billion ($2.61 per share). Management attributed the quarter to record fundraising, fee growth at BAM, organic growth plus the first full-quarter contribution from Just Group at Wealth Solutions, and stable operating-business cash flows. In the shareholder letter the CEO said the first half should make 2026 "one of our best years ever". Year to date the company raised $98 billion, deployed $100 billion and sold $40 billion of assets.
**IFRS results.** Revenue rose 7% to $19.41 billion from $18.08 billion, driven by infrastructure inflation indexation and rate-base growth, newly commissioned energy projects and net acquisitions. Consolidated net income fell $352 million to $703 million. The main cause was an $824 million swing in fair value changes, from a $797 million gain to a $27 million loss. The year-earlier quarter had included gains from derecognizing deferred tax liabilities on the Australian senior living portfolio and from revaluing the Brazilian electricity transmission operation. Interest expense was also $224 million higher. Partial offsets were $345 million more other income and gains, from selling stabilized assets of the U.S. fiber network, and $256 million more equity-accounted income, mainly from a U.S. semiconductor manufacturing facility partnership. Non-controlling interests took a much smaller share ($339 million against $783 million), so net income attributable to shareholders rose to $364 million from $272 million, and diluted EPS to $0.14 from $0.10. For the six months, revenue was $37.99 billion (up from $36.03 billion), net income $1.75 billion (up from $1.27 billion), and net income attributable to shareholders $466 million ($0.16 diluted per share), up from $345 million. The six-month effective tax rate was 30%.
**Segment results for the quarter** (DE for Asset Management and Wealth Solutions; FFO or NOI for the operating businesses):
- **Asset Management.** DE was $861 million, up 10%; excluding realized carried interest it was $740 million. Fundraising was a record $77 billion, including $5 billion from retail and wealth clients:
- The seventh private-equity flagship raised $7 billion and the sixth infrastructure flagship $9 billion; both are on track to be the largest in their series.
- Fee-bearing capital rose $58.4 billion in the quarter, and 19% year on year, to $672 billion. Credit added $44.3 billion, driven by inflows from Wealth Solutions (organic growth and the Just Group acquisition) and partner-manager fundraising.
- Base management fees rose 17% and fee-related earnings 20% to $808 million, at a 57% margin.
- Accumulated unrealized carried interest reached $12.5 billion gross ($9.6 billion at Brookfield's share).
- About $68 billion of uncalled commitments are not yet earning fees; once deployed they are expected to add about $680 million of annual fees.
- **Wealth Solutions.** DE was $480 million, up 23%. Insurance assets reached $191 billion, including $5 billion of annuity sales in the quarter and $45 billion added by Just Group. The net investment income yield averaged 5.7%. The North American business earned a 2.2% gross spread, and the P&C business ran a 99% combined ratio.
- **Infrastructure.** FFO was $161 million against $188 million. Excluding the prior year's $42 million gain on the sale of a U.S. gas pipeline, it rose $15 million on inflation indexation, capital projects commissioned in utilities and data, volume growth and net acquisitions.
- **Energy.** FFO was $177 million, up $22 million, helped by new capacity, capital-recycling gains, nuclear services and energy-contract pricing. Generation was 9,378 GWh, 2% lower year on year and 8% below the long-term average.
- **Private Equity.** FFO was $83 million against $99 million. Excluding the effect of the smaller direct stake in BBUC, it rose $23 million, led by higher-margin battery demand at the advanced energy storage operation.
- **Real Estate.** BPG NOI was $723 million, up $7 million. Occupancy stayed above 95% in the super-core and core-plus portfolios, 6 million square feet of office and retail leases were signed, and office net rents were 19% above expiring levels.
**Monetizations.** Year to date, Brookfield executed $40 billion of asset sales:
- $10 billion each in infrastructure and real estate, including One Churchill Place at Canary Wharf, London, for about $1.01 billion (converted from £750 million);
- $7 billion of energy assets;
- $9 billion of credit investments;
- $4 billion of private-equity businesses, including the construction business Multiplex for $650 million.
**Strategic developments.**
- **Simplification.** On July 16, 2026, shareholders approved combining Brookfield Corporation and Brookfield Wealth Solutions under a new parent, Brookfield Corporation Ltd., which will trade as "BN" on the NYSE and TSX. BN Class A shares and BWS Class A exchangeable shares are to be exchanged one-for-one (6-K accession 0001104659-26-066346), and the deal is expected to close by year-end subject to regulatory approvals (6-K accession 0001104659-26-084374). Management says the combined structure strengthens its eligibility for major U.S. and global equity indices.
- **BBUC interest moved to BWS.** In the second quarter, Brookfield transferred an economic interest in BBUC of about $1 billion to BWS in exchange for newly issued BWS Class C shares. This lowered Private Equity segment equity to $1.0 billion from $1.9 billion.
- **Energy and power partnerships.** The Bloom Energy partnership expanded fivefold, to up to $25 billion, for behind-the-meter fuel cells at data centers. Building on the 2025 Westinghouse partnership with the U.S. government, the U.S. Department of Energy committed $17.5 billion to finance long-lead equipment for ten more large-scale Westinghouse reactors. The letter also cites a $100 billion announcement to build an AI factory in Kentucky in partnership with the U.S. government.
- **Private credit.** The letter acknowledges concerns about direct lending to sponsor-backed and software borrowers. Management says Brookfield has limited exposure to those areas, and that redemption requests at the Oaktree Strategic Credit Fund fell below 5% in the quarter.
**Balance sheet, liquidity and capital return (June 30, 2026).**
- **Balance sheet:** total assets were $525.5 billion and common equity $42.5 billion. Common equity fell from $43.8 billion as net income was more than offset by $659 million of other comprehensive loss (mainly rate-driven marks on the wealth portfolio), $406 million of dividends and $556 million of net buybacks.
- **Corporate debt:** $14.7 billion, comprising $14.4 billion of fixed-rate term debt with a 15-year average term at 4.8%, plus $459 million of commercial paper. Corporate debt-to-capitalization was 21%.
- **Liquidity:** there are no corporate debt maturities until March 2027, when a Canadian-dollar note of about $351.99 million (converted from C$500 million) is due. In April the Corporation issued 10- and 30-year notes totalling about $549.77 million, converted from C$750 million (6-K accession 0001171843-26-002519). Core liquidity was $5.6 billion and group deployable capital a record $210 billion, of which $114 billion was uncalled third-party fund commitments.
- **Buybacks:** Brookfield bought $111 million of Class A shares in the quarter and about $580 million year to date at an average of $42. Shares outstanding were 2,233.0 million.
- **Dividend:** the quarterly dividend is $0.07 per share, against $0.06 a year earlier, payable September 29, 2026.
- **Cash flow:** six-month operating cash flow was $2.1 billion, down from $3.7 billion, mainly because mortgage receivables grew at the Australian asset manager and lender and the prior year had included sales of master-planned communities.
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## Subsequent events
*Source: Q2 2026 interim report, Form 6-K accession 0001001085-26-000021, Note 15 "Subsequent Events" to the condensed consolidated financial statements (statements authorized for issue August 12, 2026). Oaktree closing confirmation: Form 6-K accession 0001171843-26-005138.*
- **Oaktree acquisition completed (July 31, 2026).** Brookfield acquired the remaining 26% interest in Oaktree Capital Management, L.P. and its affiliates for total consideration of about $3 billion in cash and non-cash consideration. Its economic interest rose to 100% and it now controls and consolidates Oaktree. Oaktree was previously equity-accounted. The deal will be accounted for as a business combination achieved in stages, so the previously held interest is remeasured to fair value at the acquisition date. The purchase-price allocation was not complete when the statements were issued. Brookfield announced completion on August 3, 2026. With Oaktree, the U.S. becomes BAM's largest market, home to over 60% of its employees and the source of nearly half its revenue. Howard Marks and Bruce Karsh become co-chairs of Oaktree.
- **Boralex acquisition (August 14, 2026).** Through its Energy segment and alongside institutional partners, Brookfield acquired 100% of Boralex Inc., a developer and operator of renewable power assets in Canada, the United States, the United Kingdom and France, for total cash consideration of $2.7 billion. Initial accounting was not yet complete.
The note discloses no other post-period events. Two items announced before quarter-end remain pending: the Brookfield Corporation Ltd. simplification, expected to close by year-end, and the move to U.S. GAAP reporting from January 1, 2027.