6-K

 

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION 

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

of the Securities Exchange Act of 1934

For the month of May, 2012

Commission File Number: 033-97038

BROOKFIELD ASSET MANAGEMENT INC.

(Translation of registrant's name into English)

Brookfield Place

Suite 300

181 Bay Street, P.O. Box 762

Toronto, Ontario, Canada M5J 2T3

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 Form 20-F  o  Form 40-F  x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by

Regulation S-T Rule 101(b)(1): ____

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by

Regulation S-T Rule 101(b)(7): ____

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby

furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 Yes o  No  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82- ________

INCORPORATION BY REFERENCE

The Form 6-K of Brookfield Asset Management Inc. dated May 10, 2012 and the exhibit thereto are hereby incorporated by reference as exhibits to Brookfield Asset Management Inc.’s registration statement on Form F-9 (File No. 333-112049).

EXHIBIT LIST

Exhibit
99.1	BROOKFIELD ASSET MANAGEMENT REPORTS STRONG FUNDS FROM OPERATIONS OF $283 MILLION FOR FIRST QUARTER OF 2012
99.2	LETTER TO SHAREHOLDERS

 SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BROOKFIELD ASSET MANAGEMENT INC.
Date: May 10, 2012	By:	/s/ B. D. Lawson
		Name: B. D. Lawson Title: Managing Partner & CFO

 

EX-99.1

Exhibit 99.1

Brookfield Asset Management Inc.  

News Release

Investors, analysts and other interested parties can access Brookfield Asset Management’s 2012 First Quarter Results as well as the Shareholders’ Letter and Supplemental Information on Brookfield’s web site under the Investor Centre/Financial Reports section at www.brookfield.com.

The 2012 First Quarter Results conference call can be accessed via webcast on May 10, 2012 at 2:00 p.m. Eastern Time at www.brookfield.com or via teleconference at 1-800-319-4610 toll free in North America. For overseas calls please dial 1-604-638-5340, at approximately 1:50 p.m. Eastern Time. The teleconference taped rebroadcast can be accessed at 1-800-319-6413 or 1-604-638-9010 (Password 2811#).

BROOKFIELD ASSET MANAGEMENT REPORTS STRONG

FUNDS FROM OPERATIONS OF $283 MILLION FOR FIRST QUARTER OF 2012

TORONTO, May 10, 2012 – Brookfield Asset Management Inc. (TSX: BAM.A, NYSE: BAM, Euronext: BAMA) today announced its financial results for the quarter ended March 31, 2012. The financial results are based on International Financial Reporting Standards (“IFRS”) unless otherwise noted.

	Three months ended March 31
US millions (except per share amounts)	2012		2011
Total return1
– for Brookfield shareholders	$	711	$	427
Net income
– total	$	720	$	570
– for Brookfield shareholders		416		278
Funds from operations1
– total	$	622	$	516
– for Brookfield shareholders		283		231
Per Brookfield share
Total return1	$	1.13­­	$	0.69
Net income	$	0.60	$	0.41
Funds from operations1	$	0.40	$	0.33

1. Non-IFRS measure. See Basis of Presentation on page 3 for details.

“Investments we made over the past four years are now making a significant contribution to our results, and we are seeing strong performance from virtually all our major businesses,” commented Bruce Flatt, CEO of Brookfield. “Our global operations provide us a competitive advantage, and we are focused on expanding our operations through organic growth initiatives and acquisitions.”

1|  Brookfield Asset Management Inc. – 2012 Q1 Results

Highlights

We recorded strong financial and operating performance during the first quarter of 2012, and remain well positioned for future growth. The following list summarizes our more important achievements during the period:

· We generated strong financial results, including a Total Return for Brookfield shareholders of  $711 million, or $1.13 per share.

Total return is comprised of $283 million in funds from operations (“FFO”) and $457 million in valuation gains offset by $29 million of preferred share dividends. Improved performance and economic conditions in most of our operations contributed to this favorable result.

FFO totalled $622 million on a consolidated basis, of which $283 million (or $0.40 per share) accrued to Brookfield shareholders. This represents a $52 million increase over the $231 million attributable to Brookfield shareholders in the 2011 quarter. Notable FFO growth occurred in our property operations, which benefitted from expansion initiatives and increased lease rates. Investment and other income also increased meaningfully due to improved capital markets conditions. Certain cyclical businesses that are tied to the U.S. homebuilding business remain below historical levels, but we expect them to outperform over the long term.

Consolidated net income was $720 million, of which $416 million (or $0.60 per share) accrued to Brookfield shareholders. This compares to $278 million (or $0.41 per share) in the 2011 quarter. The increase reflects the higher level of FFO as well as increases in valuation gains recorded in net income, offset in part by an increase in deferred income tax provisions. The largest portion of valuation gains occurred within our North American office and retail property portfolios.

· We continued to expand our asset management franchise with both listed and private entities.

We filed a registration statement for our proposed listed property business, that will rank as one of the largest and most diversified public property businesses, and are advancing capital campaigns for eight private funds with a goal of obtaining further third party commitments of approximately $5 billion. Our listed renewable energy unit ranks among the world’s largest public renewable power companies and our listed infrastructure business is well positioned as a global leader; with a number of growth opportunities for each business.

· We raised $6.2 billion of capital during the first four months of 2012 through asset sales, equity issuance, fund formation and debt financings.

Low interest rates, receptive credit markets and strong investor interest in our income-generating, high quality assets continued to support our capital raising and refinancing initiatives. These activities enhanced our liquidity, refinanced near-term maturities, lowered our cost of capital and extended terms, and funded new investment initiatives. Core liquidity was $4.2 billion at March 31, 2012.

· We completed and advanced a number of growth initiatives that increased the value and cash flows of our assets.

We leased 2.3 million square feet of commercial property at rents substantially higher than the expiring leases. Initial rents for new leases in our U.S. mall portfolio increased by 7.4% on a comparable basis and we continued to reposition the business by spinning out 30 malls into a new entity focused on these specific operations.

In our power business, we continue to expand our portfolio through acquisitions and developments, adding 332 megawatts, and continue to advance construction on four projects with a further

99 megawatts of installed capacity. Within our infrastructure operations, we have now completed

2|  Brookfield Asset Management Inc. – 2012 Q1 Results

approximately 60% of our $600 million Australian rail expansion, which is now contributing meaningfully to FFO.

In total, we completed $2.5 billion of acquisitions and capital expansions, deploying $1.9 billion of equity capital for our operating platforms and our clients.

Intrinsic Value of Common Equity

The intrinsic value of Brookfield’s common equity was $42.35per share at March 31, 2012. This includes net tangible asset value of $35.88per share and $6.47per share related to the company’s asset management franchise.

Dividend Declaration

The Board of Directors declared a quarterly dividend of US$0.14 per share (representing US$0.56 per share on an annualized basis), payable on August 31, 2012, to shareholders of record as at the close of business on August 1, 2012. The Board also declared all of the regular monthly and quarterly dividends on its preferred shares.

Information on Brookfield Asset Management’s declared share dividends can be found on the company’s web site under Investors/Stock and Dividend Information.

Basis of Presentation

This news release and accompanying financial statements make reference to total return, funds from operations, invested capital and intrinsic value.

Total return is defined as comprehensive income excluding deferred tax expenses and the impact of foreign currency fluctuations on the long-term capital invested in non U.S. operations, and including incremental valuation adjustments for assets not otherwise revalued under IFRS. Brookfield uses total return to assess the performance of the overall business as well as individual business units.

Funds from operations is defined as net income prior to fair value changes, depreciation and amortization, and deferred income taxes, and includes certain disposition gains that are not otherwise included in net income as determined under IFRS. Brookfield uses funds from operations to assess its operating results and the value of its business and believes that many of its shareholders and analysts also find this measure of value to them.

Invested capital represents the capital invested by the company in its operations on a segmented basis, net of the underlying liabilities and non-controlling interests. These balances are derived from the company’s IFRS balance sheets and are adjusted to exclude deferred income taxes and to include adjustments to present the fair value of assets and liabilities that are carried at historical book values or otherwise not reflected in the company’s IFRS balance sheets. Common equity on this basis is referred to as net tangible asset value.

Intrinsic value includes net tangible asset value, as represented by its invested capital, as well as the value attributed to the company’s asset management franchise. Asset management franchise value represents management’s estimate of the value attributable to the company’s asset management activities that is not otherwise included in net tangible asset value, based on current capital under management, associated fee arrangements, and potential growth.

Total return, funds from operations, invested capital and intrinsic value and their per share equivalents are non-IFRS measures which do not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. The company provides additional information on the determination of funds from operations, invested capital and intrinsic value and a reconciliation between funds from operations and net income attributable to Brookfield shareholders and invested capital and intrinsic value and common equity in the Supplemental Information available at www.brookfield.com.

3|  Brookfield Asset Management Inc. – 2012 Q1 Results

Additional Information

The Letter to Shareholders and the company’s Supplemental Information for the quarter ended

March 31, 2012 contain further information on the company’s strategy, operations and financial results. Shareholders are encouraged to read these documents, which are available on the company’s web site.

The attached statements are based primarily on information that has been extracted from our unaudited interim financial statements for the quarter ended March 31, 2012, which have been prepared using IFRS. The amounts have not been audited and are not subject to review by Brookfield’s external auditor.

* * * * *

Brookfield Asset Management Inc. is a global alternative asset manager with approximately

$150 billion in assets under management. We have over a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity. We have a range of public and private investment products and services, which leverage our expertise and experience and provide us with a competitive advantage in the markets where we operate. Brookfield is co-listed on the New York and Toronto Stock Exchanges under the symbol BAM and BAM.A, respectively, and on NYSE Euronext under the symbol BAMA. For more information, please visit our web site at www.brookfield.com.

Please note that Brookfield’s previous audited annual and unaudited quarterly reports have been filed on EDGAR and SEDAR and can also be found in the investor section of our web site at www.brookfield.com. Hard copies of the annual and quarterly reports can be obtained free of charge upon request.

For more information, please visit our web site at www.brookfield.com or contact:

Media:	Investors:
Andrew Willis SVP, Communications & Media Tel: (416) 369-8236   Fax: (416) 363-2856 Email: andrew.willis@brookfield.com	Katherine Vyse SVP, Investor Relations Tel: (416) 369-8246   Fax: (416) 363-2856 Email: katherine.vyse@brookfield.com

Note: This news release contains forward-looking information within the meaning of Canadian provincial securities laws and applicable regulations and “forward-looking statements” within the meaning of the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995. The words “continue,” “expect,” “believe,” “focus,” “goal,” “advance,” “grow,” and derivations thereof and other expressions, including conditional verbs such as “may” and will” are predictions of or indicate future events, trends or prospects or identify forward-looking statements. Forward-looking statements in this news release include statements with respect to the following: our focus on increasing cash flow through organic growth and opportunistic acquisitions; the growth of our operations as the economy recovers; the increase in the cash we generate and the value of our assets; capital campaigns for our private funds; our distribution policy and the payment of dividends; the potential launch of a flagship public entity for our property group; and other statements with respect to our beliefs, outlooks, plans, expectations and intentions. Although we believe that our 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 as such statements and information involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements 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 include the following: economic and financial conditions in the countries in which we do business; the behaviour of financial markets, including fluctuations in interest and exchange rates; availability of equity and debt financing; strategic actions including the ability to acquire or develop high quality assets; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; adverse hydrology conditions; regulatory and political factors within the countries in which we operate; availability of new tenants to fill property vacancies; acts of God, 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 form 40-F filed with the Securities and Exchange Commission as well as other documents filed by us with the securities regulators in Canada and the United States, including our most recent Management’s Discussion and Analysis of Financial Results under the heading “Business Environment and Risks.”

We caution that the foregoing factors that may affect future results are not exhaustive. When relying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, as a result of new information, future events or otherwise.

4|  Brookfield Asset Management Inc. – 2012 Q1 Results

CONSOLIDATED BALANCE SHEETS

	(Unaudited) March 31		December 31
US$ millions	2012		2011
Assets
Cash and cash equivalents	$	2,299	$	2,027
Other financial assets		3,786		3,773
Accounts receivable and other		6,796		6,723
Inventory		6,478		6,060
Investments		10,156		9,401
Investment properties		29,293		28,366
Property, plant and equipment		24,566		22,832
Timber		3,162		3,155
Intangible assets		3,929		3,968
Goodwill		2,609		2,607
Deferred income tax asset		2,091		2,110
Total Assets	$	95,165	$	91,022
Liabilities and Equity
Accounts payable and other	$	9,742	$	9,266
Corporate borrowings		3,791		3,701
Non-recourse borrowings
Property-specific mortgages		29,027		28,415
Subsidiary borrowings		4,923		4,441
Deferred income tax liability		5,963		5,817
Capital securities		1,535		1,650
Interests of others in consolidated funds		382		333
Equity
Preferred equity		2,443		2,140
Non-controlling interests in net assets		20,009		18,516
Common equity		17,350		16,743
Total equity		39,802		37,399
Total Liabilities and Equity	$	95,165	$	91,022

5|  Brookfield Asset Management Inc. – 2012 Q1 Results

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)
Three months ended March 31 US$ millions (except per share amounts)	2012			2011
Total revenues	$	4,044		$	3,413
Asset management and other services		77			76
Revenues less direct operating costs
Property		471			344
Renewable power		248			190
Infrastructure		198			181
Private equity		114			103
Equity accounted income		390			211
Investment and other income		177			133
		1,675			1,238
Expenses
Interest		654			546
Operating costs		121			112
Current income taxes		27			33
Net income prior to other items		873			547
Other items
Fair value changes		306			248
Depreciation and amortization		(297	)		(221	)
Deferred income taxes		(162	)		(4	)
Net income	$	720		$	570
Net income attributable to:
Brookfield shareholders	$	416		$	278
Non-controlling interests		304			292
	$	720		$	570
Net income per share
Diluted	$	0.60		$	0.41
Basic	$	0.63		$	0.42

Note:

The foregoing table includes the results attributable to non-controlling interests whereas the corporation’s segmented operating results discussed elsewhere do not.

6|  Brookfield Asset Management Inc. – 2012 Q1 Results

RECONCILIATION OF NET INCOME TO TOTAL RETURN1

(Unaudited)
Three months ended March 31 US$ millions (except per share amounts)	2012			2011
Net income attributable to Brookfield shareholders (see page 6)2	$	416		$	278
Other comprehensive income2		409			319
Comprehensive income2		825			597
remove impact of:
Deferred income taxes2		124			(259	)
Foreign currency revaluations2		(249	)		(81	)
add impact of:
Fair value changes not included in IFRS		40			195
		740			452
less: preferred share dividends		(29	)		(25	)
Total return	$	711		$	427
– Per share	$	1.13		$	0.69

(Unaudited)
Three months ended March 31 US$ millions	2012			2011
Total return consists of
Funds from operations (see below)	$	283		$	231
Valuation gains		457			221
less: preferred share dividends		(29	)		(25	)
	$	711		$	427

Notes:

1. See Basis of Presentation on page 3.

2. Excludes amounts attributable to non-controlling interests.

3. Total return, valuation gains and funds from operations are non-IFRS measures.

RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS1

(Unaudited)
Three months ended March 31 US$ millions	2012			2011
Net income prior to other items (see page 6)	$	873		$	547
Adjust for: fair value changes within equity accounted income		(251	)		(34	)
Disposition gains recorded in equity under IFRS		—			3
		622			516
Non-controlling interest		(339	)		(285	)
Funds from operations2	$	283		$	231

Notes:

1. See Basis of Presentation on page 3.

2. Non-IFRS measure.

7|  Brookfield Asset Management Inc. – 2012 Q1 Results

EX-99.2

Exhibit 99.2

Brookfield Asset Management Inc.  

Letter to Shareholders

Overview

We believe that the global recovery continues on track despite market volatility and media reports of continued financial uncertainty in Europe. Underlying fundamentals in our operations continue to improve as the world economy repairs itself, and governments and corporations deleverage. This process will undoubtedly take years to unfold but in the interim, borrowing rates for investors in real assets are exceptionally low, and thereby offer investors the opportunity for excellent returns.

As a result of these low interest rates, institutional clients continue to seek exposure to real assets. Our experience has shown that investors around the world are increasing

their allocations to alternative products; both as their funds under management grow, and their allocations to alternative strategies increase.

Operations

We generated $416 million of net income, $283 million of funds from operations and $711 million of total return for common shareholders during the quarter. Underlying cash flows and net asset values are increasing and we believe we are now one of the global alternative asset managers of choice for institutional clients.

The improving business climate is benefitting our operations. Our business partners, who include many of the largest international corporations, continue to make long-term commitments to our assets as they expand their businesses. For example, a global financial institution signed the largest single building lease in New York City since the economic downturn, taking 1.2 million square feet in an office tower we own in Lower Manhattan. In Australia, three resource companies, all new customers, began shipping commodities on our railway, pursuant to long-term contracts, for transport to Asia. Our strategy of owning and operating high quality assets allows us to build lasting client relations, which in turn help us to generate dependable cash flows.

Property

Global property markets continue to rebound with occupancies slowly recovering and rental rates starting to climb in most markets. Retail sales in the U.S. in our major shopping centres are above their respective peaks in 2007, after consistent sales growth since late 2009 when sales per square foot bottomed. Office rents have returned on average to 75% of peak rents; however, while the markets remain solid they are not yet robust.

During the quarter we closed a transaction to separate our secondary market malls from our iconic portfolio into a new company called Rouse Properties by underwriting a $200 million rights offering that made the transformation possible. Rouse Properties, subsequent to launch, made its first acquisition of a mall in Michigan for $66 million and we intend to utilize this company to grow in these secondary retail markets in the U.S.

1| Brookfield Asset Management Inc. – 2012 Q1 Letter to Shareholders

We purchased a loan backed by a 40% shareholding in an Australian commercial property company at a discount to face value and, following a default by the borrower, made a $400 million bid for all of the shares of the company. We hope to be successful with our offer for the company, which owns a $1 billion portfolio of real estate assets in major Australian cities.

We purchased 11 anchor stores encompassing 1.8 million square feet of space for $270 million. These will be incorporated into new anchor and in-line stores in our shopping malls. The most important store in this portfolio was the space acquired in our Ala Moana mall in Hawaii, which qualifies as one of the highest sales per square foot properties in the United States. As a result, the space was more valuable to us than anyone else and this is a situation where one plus one truly equals three.

We created a $400 million joint venture to acquire industrial properties in the U.S. and closed on one acquisition to date. We also took full control of a development site in Calgary for approximately $90 million where we intend to launch an office development, while at the same time recycling capital by selling a non-core office property in Calgary for $180 million, over double our original purchase price. We acquired our partner’s 49% interest in two malls in the U.S. for equity of approximately $100 million, and subsequent to quarter end completed the foreclosure process and now own the 3,500 room Atlantis Resort in the Bahamas.

Renewable Power

Power prices across North America remain under pressure due to under-utilization of industrial capacity and the current over-supply of natural gas from drilling shale gas deposits. While few  predicted a $2 price for natural gas, the technological breakthroughs that have made this possible are very meaningful for the long-term health of the United States as more energy is produced from natural gas and less foreign oil will have to be imported.

Longer term, we believe that natural gas will revert to higher pricing as rising consumption matches supply and exporting becomes a reality. This will come about from market dynamics as global natural gas prices are now five times greater than U.S. domestic prices, and the oil to natural gas conversion factor is currently at historic highs.

In the interim, we intend to continue to acquire renewable power assets at attractive returns, which should create even more value for us if we are right on our pricing predictions. We are also looking for other ways to benefit from the natural gas recovery in our power operations, through our infrastructure group and through further private equity investments.

During the quarter, water levels were strong and therefore overall cash flows generated were higher than last year despite lower pricing on our uncontracted capacity.

We acquired a 150 megawatt wind project in California and also acquired our partner’s interest in another wind facility, bringing our capacity in the Los Angeles area to 274 megawatts, all contracted on a long-term basis.

Brookfield Renewable Energy Partners increased its shareholder distributions by 2%, and is on target to meet all of its objectives in 2012. We sold $350 million of Brookfield Renewable Energy Partners’ units to increase the public float of this entity and to redeploy capital.

Infrastructure

2| Brookfield Asset Management Inc. – 2012 Q1 Letter to Shareholders

Global infrastructure continues to evolve, with the asset class quickly becoming a readily accepted category in institutional investor allocations. As more governments and corporations look to fund their activities with private parties owning infrastructure, we believe investment opportunities will increase. As a result, this business will continue to expand over the next 10 years and we are pleased that we are positioned to be in the forefront of this movement.

Our operations performed well with results significantly ahead of last year despite slower timber sales, as a result of a decrease in Chinese timber demand during the quarter.

We continue to integrate the acquisition of our Santiago toll road into our operations and we are progressing on time and on budget with the expansion of our rail lines in Western Australia, now 60% complete. We continue to advance discussions on numerous acquisitions, as well as the expansion of our metallurgical coal shipping facility in Northeast Australia.

We acquired a natural gas storage facility in Alberta for $82 million, which should benefit as natural gas prices recover, and closed our $450 million acquisition of an electricity distribution network in the province of Boyaća, which is north of Bogota, Colombia. We hope to use this platform in Colombia to grow our electricity distribution, transmission and generation operations.

Private Equity

Our private equity investments generated results on plan with no exceptional events occurring during the quarter.

In general our investing themes for the past few years have revolved around distressed situations, including those caused by the U.S. housing collapse and the decline in natural gas prices, which are currently at decade lows. As a result, the positive change in either or both of these sectors will have a meaningful impact on a number of businesses in our private equity portfolio.

In the U.S., our housing operations are stable with some markets starting to recover. Relative to the last five years this is very positive; but the U.S. business will not show its earnings potential until we begin the slow march back to construction of 1.25 million homes in the U.S. annually. And while we see signs of this starting today, one should not expect any exceptional changes in the short term.

We also continue to integrate the acquisition of Prudential’s global relocation and franchise brokerage business into our residential property services business. This merger has gone smoothly, as we are retaining most of the clients that came to us in the acquisition and adding customers more quickly than expected.

Brookfield Property Partners

We recently announced plans to distribute, by way of a special dividend, an interest in our commercial and income producing property operations, which will be called Brookfield Property Partners, with the stock symbol BPY. We have filed a registration statement with U.S. regulators, and subject to approval, we intend to list on the New York and Toronto stock exchanges in the second half of the year.

We are pleased with the positive initial response to BPY, which will rank among the largest listed commercial property companies. More importantly, it will own one of the premier portfolios of office, retail, multifamily, and industrial assets in the world, and will further our investing activities on a global basis. BPY will comprise substantially all of our current and future commercial property operations, including, among other things, our significant influence stakes

3| Brookfield Asset Management Inc. – 2012 Q1 Letter to Shareholders

in Brookfield Office Properties, General Growth Properties and Canary Wharf Group and our directly held commercial properties in the U.S., Europe, Australia and Brazil.

In total, BPY will be launched with interests in over 250 million square feet of commercial space. With assets under management of ±$70 billion, a proportionately consolidated balance sheet of ±$50 billion, permanent shareholder capital of ±$25 billion, and common equity under IFRS of ±$10 billion, BPY is positioned to attract a global following of investors seeking diversified exposure to commercial real estate and other income producing property assets.

For investors, BPY should deliver both growth and income, as it will have access to a wide range of capital, and the ability to complete significant mergers and acquisitions. At the same time, BPY will pay an initial annual dividend of 4% of the entity’s IFRS value, a dividend that is expected to grow by 3% to 5% annually. We will own around 90% of BPY after the distribution, and you will directly own around 10%. To ensure a proper market trading float, we intend to reduce our interest in BPY over time.

We are confident that BPY will find a strong following with investors, as the structure is similar to two successful income-oriented entities we previously introduced: namely, Brookfield Infrastructure Partners (“BIP”), launched in 2008, which has delivered an annual compound return of 18% since inception, and Brookfield Renewable Energy Partners (“BREP”), which since its predecessor’s formation in 1999 has earned shareholders an annual compound return of 15%.

BPY will target significant investments on a “value” basis similar to the manner in which we acquired major assets in the past.  Examples of this approach include the acquisition of the Olympia & York portfolio in New York in the mid 1990’s, our investment in Canary Wharf office complex in London in 2002, and the recapitalization of the General Growth retail portfolio in the U.S. in 2009.

The returns of BPY should come from a combination of stable long-term cash flows from our premier portfolios of office, retail, multifamily and industrial properties, and more “opportunistic” returns from our opportunistic fund investing, along with our development and redevelopment initiatives. These activities will be a continuation of the strategies we have used in the past, which since 1989, on $17 billion of investments in core and opportunistic strategies, have generated a compound annual return of over 15%.

With our operational and asset management expertise, and our value approach to investing, we believe that BPY should generate strong performance over the long term.

Agricultural and Timber Land Operations

We operate one of the largest and most valuable assemblies of agricultural and timber lands in the world. This encompasses approximately three million acres of land in North and South America, generating cash flow on an annual and sustainable basis. In addition, in a world where there is concern over the value of currencies, these land holdings are an appreciating real asset which should continue to act as a hedge against currency debasement.

Our North American operations encompass lands which generate stable base cash flows, but which should also increase substantially with the onset of a full housing recovery. We currently own 2.4 million acres of very high value timberlands in North America, focused on the northwest coast of the U.S. and Canada. These extremely high quality timberlands are

4| Brookfield Asset Management Inc. – 2012 Q1 Letter to Shareholders

harvested on a sustainable 40 to 80 year basis, and due to the maturity of these operations, they generate attractive margins and strong cash flows. Over the past five years, our timberlands have performed very well despite the headwinds of the U.S. housing market, which has traditionally consumed a large portion of the lumber produced. More importantly, our timber operations have the flexibility to reduce harvest levels in response to lower prices, which we have done to preserve value. So as the U.S. housing market inevitably recovers, the cash flows from these operations have the potential to grow substantially as we benefit from both higher prices and increased harvest levels.

Our South American timber operations are smaller but growing at a rapid pace, and with among the best growing conditions in the world, should generate steadily increasing cash flows over time. We currently operate approximately 240,000 acres of Brazilian timberlands which are planted with Eucalyptus and Pine, and we are expanding the business both internally and with acquisitions. A large part of this growth is due to the growing conditions in Brazil, which allow us to plant and harvest within six to eight years. Our annual cash flows currently are low in these operations because we have a number of plantations in the early stages of growth, but in the next five years our cash flows are expected to increase substantially.

Our Brazilian agriculture operations are participating in an incredible renaissance caused by one of the greatest technological advancements in agriculture, with scientists finding ways to improve soil quality and grow crops that thrive in tropical climates. These farms will assist in feeding the ever increasing population. We currently operate close to 500,000 acres of some of the most productive agricultural lands in the world, planted with grain crops such as soya and corn, sugarcane and rubber trees, as well as those used for cattle. One of the largest operations in Brazil, we are expanding these farms rapidly and have acquired close to 100,000 acres of land in Brazil since the beginning of 2011. Our agricultural businesses are located in more established areas such as São Paulo, Minas Gerais, Mato Grosso, and Mato Grosso do Sul, and more recently we have been expanding our investments in Goiás and the new frontier Cerrado or savannah regions in the States of Tocantins and Maranhão.

We believe that these agricultural lands offer extremely compelling investment characteristics. First, they are among the most productive in the world, due to a favourable climate with a mix of abundant sunshine and precipitation that extend the growing season to almost 365 days a year. Second, these lands can grow soya in vast quantities, used as a protein in most parts of the world; as well as sugarcane, a crop that can only be grown in scale in very select regions in the world. Third, relative to the prices paid for less productive agricultural land in North America, Europe or Australia, Brazilian land can be purchased at substantial discounts, in particular as we move into new regions of the country where infrastructure is less robust.

Summary

We remain committed to our objective of investing capital for you and our investment partners in high-quality, simple-to-understand assets which earn a solid cash return on equity, while emphasizing downside protection of the capital employed. With interest rates still low, our chosen areas of real assets continue to offer attractive options for alternative investment portfolios.

The primary objective of the company, as always, is to generate increased cash flows on a per share basis, and as a result, higher intrinsic value over the longer term.

5| Brookfield Asset Management Inc. – 2012 Q1 Letter to Shareholders

And, while I personally sign this letter, I respectfully do so on behalf of all of the members of the Brookfield team, who collectively generate the results for you. Please do not hesitate to contact any of us, should you have suggestions, questions, comments, or ideas you wish

to discuss or share with us.

J. Bruce Flatt

Chief Executive Officer

May 10, 2012

Note: This letter to shareholders contains forward-looking information within the meaning of Canadian provincial securities laws and applicable regulations and “forward-looking statements” within the meaning of the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995.  The words, “future,” “intend,” “grow,” “believe,” “position,” “objective,” “continue,” “enable,” “generate,” “expand,” “focus,” “commit,”  “potential,” “see,” “plan,” “seek,” “expect,” “target,” and derivations thereof and other expressions, including conditional verbs such as “will,” “can,” “may,” “could,” “would,” and “should” are predictions of or indicate future events, trends or prospects or identify forward-looking statements.  Forward-looking statements in this letter include statements with respect to the following: our belief that 2012 will be a good year to invest capital and our focus on deploying the capital we manage and raising additional capital; the growth of our results as the global economy recovers; the growth rates in the developed world and their effect on our strategy; the potential for capital appreciation of real assets; the future recognition in our share price of currently unrecognized value; our ability to continue to compound our long-term returns at attractive levels; the ability of our development assets to generate cash in the future; the completion and acquisition of renewable energy projects in North America and Brazil; the future growth of Brookfield Renewable Energy Partners; the expansion of our rail lines in Western Australia; the expansion of our Australian coal terminal and our UK port operations; the construction of our electricity transmission project in Texas; the performance of our flagship private infrastructure fund; our belief that our business strategies should enable our shares to compound at a rate of between 12% and 15%; our distribution policy; our belief that reinvestment back into our four major businesses is more accretive to long-term returns than payment of substantially higher dividends; the continuation of the low level of interest rates; our belief that real assets will protect against long-term interest rate increases; the potential launch of a flagship public entity for our property group; our objective of generating increased cash flows on a per share basis and a higher intrinsic value of the company over the longer term; and other statements with respect to our beliefs, outlooks, plans, expectations, and intentions. Although we believe that our 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 which may cause our actual results, performance or achievements 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 include the following: economic and financial conditions in the countries in which we do business; the behaviour of financial markets, including fluctuations in interest and exchange rates; availability of equity and debt financing and refinancing; strategic actions including our ability to acquire and develop high quality assets; the ability to complete and effectively integrate acquisitions into existing operations and the ability to attain expected benefits; our ability to attract and retain suitable management; adverse hydrology conditions; regulatory and political factors within the countries in which we operate; tenant renewal rates; availability of new tenants to fill property vacancies; default or bankruptcy of counterparties to our contracts and leases; acts of God, 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 our form 40-F filed with the Securities and Exchange Commission as well as other documents filed by us with the securities regulators in Canada and the United States including Management’s Discussion and Analysis of Financial Results under the heading “Business Environment and Risks.”

We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to us, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information, whether written or oral, that may be as a result of new information, future events or otherwise.

6| Brookfield Asset Management Inc. – 2012 Q1 Letter to Shareholders