Bruce Flatt: “We are at or past bottom in asset prices” $$
- Posted by ToddSullivan
- on December 15th, 2009
Hard to argue with a guy like Flatt given his track record
From the Australian:
BROOKFIELD Asset Management (BAM), the group that rescued Babcock & Brown Infrastructure (BBI), plans to expand the capacity of the Dalrymple Bay Coal Terminal to capture the benefits of the next commodity boom.
Brookfield’s Toronto-based chief executive, Bruce Flatt, will tour the coal loading facility near Mackay in north Queensland this week, after the company paid $295 million for a 49.5 per cent stake in the asset last month.
The purchase was part of the overall deal in which Brookfield became the cornerstone investor with 40 per cent of Prime Infrastructure, the former BBI business, as part of the $1.8 billion recapitalisation lifeline.
“We are a long-term investor in both our real estate and our infrastructure businesses in Australia; we plan on being here for a long period of time,” Mr Flatt said.
“When you buy into an investment, you get the asset, but you always get the management, the organisation, the people that can build it up for the future.
“We would say that in 25 years from now we would have expanded and grown many of the assets in the portfolio.”
Under the deal, Brookfield also took on half of Dalrymple Bay’s $1.7bn worth of debt in the transaction.
Mr Flatt said the asset was primed for expansion to capture the benefits of the next commodity supercycle.
There has been criticism during the peak of the previous economic boom that Dalrymple Bay was in need of development to speed up the coal loading process and cut demurrage costs.
“Dalrymple Bay is one of the great assets in the world,” Mr Flatt said. “There will be a lot of expansion and capacity growth.”
Mr Flatt rejected suggestions that Dalrymple Bay, in its current state, may miss out on the next resources boom.
“The commodity boom is something that is going to happen for the next 25 years, not just the next two years,” he said. “Our view is that if you’re a foreign investor and looking at Australia, it’s an attractive place given the size, the amount of resources, the fiscal situation and the rule of law.”
Brookfield escalated its Australian investments in 2007 when it paid $4.2bn for Multiplex, the commercial property and development group.
Brookfield also took ownership of PD Ports, the British port operator, as part of the BBI transaction. Its stake in the new Prime Infrastructure has struggled, with the stock falling from the $5.08 paid by Brookfield to $3.91.
Mr Flatt said asset valuations had started to improve in the past six months. “We are at the bottom or past the bottom on asset prices.”
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