PVF.UN Partners Value Investments LP

Partners Value Investments L.P. (the “Partnership” TSX: PVF.UN TSX:PVF.PR.U) announced today its financial results for the three months ended September 30, 2020. All amounts are stated in US dollars.

The Partnership recorded an increase in net book value during the period of $0.45 to $43.05 per unit ($3.8 billion). The increase is primarily due to an increase in the quoted market price of Brookfield Asset Management common shares and investment valuation gains, partially offset by foreign currency losses. The Partnership generated a net income of $2 million for the quarter ended September 30, 2020 compared to $14 million in the prior year period.

The market price of a Brookfield share was $33.06 per share on September 30, 2020 compared to $32.90 per share on June 30, 2020.

Consolidated Statements of Operations

(unaudited)For the period ended September 30(Thousands, US dollars)	Three Months Ended						Nine Months Ended
		2020			2019			2020			2019
Investment income
Dividends	$	17,906		$	16,252		$	56,140		$	52,919
Other investment income		1,061			1,634			2,184			7,417
		18,967			17,886			58,324			60,336
Expenses
Operating expenses		(142)			(190)			(984)			(2,314)
Financing costs		(571)			(29)			(722)			(200)
Retractable preferred share dividends		(6,774)			(5,498)			(18,691)			(18,628)
		11,480			12,169			37,927			39,194
Other items
Investment valuation gains (losses)		3,746			(12,137)			(10,298)			(1,266)
Amortization of deferred financing costs		(625)			(498)			(1,748)			(2,224)
Current taxes expense		(1,820)			4,005			(1,946)			(6,083)
Deferred taxes (expense) recovery		(459)			776			(2,662)			5,936
Foreign currency (losses) gains		(10,605)			9,949			43,109			(27,238)
Net income	$	1,717		$	14,264		$	64,382		$	8,319

Change in Net Book Value

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

For the period ended September 30(Thousands, except per unit amounts)	Three Months Ended						Nine Months Ended
		Total			Per Unit			Total			Per Unit
Net book value, beginning of period1	$	3,756,487		$	42.60		$	4,365,103		$	49.50
Net (loss) income2		(1,119)			(0.01)			55,876			0.63
Other comprehensive income (loss)2		48,998			0.56			(628,642)			(7.12)
Adjustment for impact of warrant3		(5,343)			(0.06)			6,778			0.08
Equity LP repurchase		(3,306)			(0.04)			(3,398)			(0.04)
Net book value, end of period1,4,5	$	3,795,717		$	43.05		$	3,795,717		$	43.05

1. Calculated on a fully diluted basis, net book value is a non-IFRS measure.
2. Attributable to Equity Limited Partners.
3. The basic weighted average number of Equity Limited Partnership (“Equity LP”) units outstanding during the period ended September 30, 2020 was 73,373,531. The diluted weighted average number of Equity Limited Partnership (“Equity LP”) units available and outstanding for the three and nine months ended September 30, 2020 was 88,111,953 and 88,126,845, respectively; this includes the 14,708,666 Equity LP units issuable on the exercise of all outstanding warrants.
4. At the end of the period, the diluted Equity LP units outstanding were 88,082,197 (December 31, 2019 – 88,181,996).
5. Net book value is a non-IFRS measure and is equal to total equity less General Partner equity and Preferred Limited Partners’ equity, plus the value of consideration to be received on exercising of warrants, which as at September 30, 2020 was $358 million (December 31, 2019 – $367 million).

Financial Profile

The Partnership’s principal investment is its interest in approximately 129 million Class A Limited Voting Shares (“Brookfield shares”) of Brookfield, on a post-split basis. This represents approximately a 9% interest as at September 30, 2020. In addition, the Company owns a diversified investment portfolio of marketable securities.

The information in the following table has been extracted from the Partnership’s Statement of Financial Position:

As at(Thousands, US dollars, except per share amounts)		September 30, 2020			December 31, 2019
Assets
Cash and cash equivalents	$	177,211		$	99,497
Investment in Brookfield Asset Management Inc. 1		4,256,757			4,961,496
Other investments carried at fair value		423,725			266,572
Accounts receivable and other assets		31,160			19,445
	$	4,888,853		$	5,347,010
Liabilities and Equity
Accounts payable and other liabilities	$	15,620		$	21,195
Corporate borrowings		112,620			—
Preferred shares2		553,251			454,076
Deferred taxes3		520,604			608,876
		1,202,095			1,084,147
Equity
Common equity		3,686,758			4,262,863
	$	4,888,853		$	5,347,010

1. The investment in Brookfield Asset Management Inc. consists of approximately 129 million Brookfield shares on a post-split basis with a quoted market value of $33.06 per share as at September 30, 2020 (December 31, 2019 – $38.53).
2. Represents $563 million of retractable preferred shares less $10 million of unamortized issue costs as at September 30, 2020 (December 31, 2019 – $462 million less $8 million).
3. The deferred tax liability represents the potential future income tax liability of the Partnership recorded for accounting purposes based on the difference between the carrying values of the Partnership’s assets and liabilities and their respective tax values, as well as giving effect to estimated capital and non-capital losses.

For further information, contact Investor Relations at ir@pvii.ca or 416-956-5142.

Note: This news release contains “forward-looking information” within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of applicable Canadian securities regulations. The words “potential” and “estimated” and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to historical matters, identify forward-looking information. Forward-looking information in this news release includes statements with regard to the Company’s potential future income taxes.

Although the Company believes that its anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond its control, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements and information include, but are not limited to: the financial performance of Brookfield Asset Management Inc., the impact or unanticipated impact of general economic, political and market factors; the behavior of financial markets, including fluctuations in interest and foreign exchanges rates; global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; strategic actions including dispositions; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; changes in government regulation and legislation; changes in tax laws, catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts and other developments including terrorist acts; and other risks and factors detailed from time to time in the Company’s documents filed with the securities regulators in Canada.

The Company cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on the Company’s forward-looking statements and information, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements and information, whether written or oral, that may be as a result of new information, future events or otherwise.