OAK-PA

Business Context and Reporting Period

Company: Brookfield Oaktree Holdings, LLC (BOH)

Filing Type: Form 10-Q (Unaudited)

Reporting Period: Three months ended March 31, 2026

BOH is a Delaware limited liability company holding Credit, Real Estate, and Equity investments managed by Oaktree Capital Management, L.P. and Brookfield Asset Management Ltd. The Company's operations primarily consist of limited partner investments in Oaktree's flagship opportunistic funds, an equity method investment in Oaktree Capital I (approx. 74% economic interest), and an indirect ownership interest in Brookfield Real Estate Income Trust Inc. (Brookfield REIT). As of March 31, 2026, the Company had 118,832,320 Class A units and 41,558,979 Class B units outstanding.

Key Financial Metrics

Liquidity: On an unconsolidated basis, BOH held $1.9 million in cash and cash equivalents as of March 31, 2026. Consolidated funds held $305.8 million.

Material Changes vs. Prior Period

• Revenues: Total revenues decreased $31.8 million (22.1%) to $111.7 million. Interest and dividend income dropped $57.5 million (38.7%) primarily due to changes in income from investments in Oaktree Opportunities Fund XI (Opps XI). Conversely, investment income improved significantly, turning from a $4.9 million loss in Q1 2025 to a $20.8 million gain in Q1 2026, driven by the performance of Oaktree Capital I and Brookfield REIT.
• Expenses: Total expenses decreased $20.1 million (32.4%) to $41.8 million. Interest expense declined $14.6 million (42.8%) due to lower debt balances and interest rates at Opps XII. Consolidated fund expenses decreased $5.3 million (19.9%).
• Investment Performance: Net realized losses on consolidated funds' investments were $24.0 million in Q1 2026, compared to a $74.6 million gain in Q1 2025. However, net unrealized appreciation increased by $209.3 million year-over-year, resulting in an $81.5 million gain in Q1 2026 versus a $127.8 million loss in Q1 2025.
• Profitability: Net income attributable to Class A unitholders swung from a loss of $11.8 million in Q1 2025 to a profit of $32.4 million in Q1 2026, primarily reflecting unrealized investment gains.

Guidance, Outlook, and Risks

Outlook and Transactions:

• Brookfield Acquisition: On April 14, 2026, BOH entered into a Transaction Agreement whereby Brookfield Asset Management (BAM) and Brookfield will acquire all outstanding equity interests in the Oaktree business. The transaction is expected to close in the first half of 2026, subject to regulatory approvals. Consideration may include cash, BAM shares, Brookfield shares, and restricted stock units.
• Distribution of NTR: On April 20, 2026, BOH distributed 100% of its equity interests in OCG NTR Holdings LLC (NTR) to Brookfield Oaktree Holdings Canada Inc. (BOHCI) in a distribution in kind.
• Preferred Distributions: Distributions of $0.414063 per Series A unit and $0.409375 per Series B unit are scheduled for payment on June 15, 2026.

Risks and Contingencies:

• Market Risk: A 10% decline in market values of consolidated fund investments would decrease unrealized appreciation by approximately $537.1 million, with roughly $108.7 million impacting net income attributable to Class A unitholders.
• Interest Rate Risk: Consolidated funds hold $1.37 billion in variable-rate debt. A 100 basis point increase in interest rates would increase annualized interest expense by approximately $13.7 million.
• Capital Commitments: BOH has undrawn capital commitments of $112.5 million for Opps XI and $517.5 million for Opps XII as of March 31, 2026.
• Legal Proceedings: The Company is not currently subject to any pending actions expected to have a material impact on its financial statements.

Investor Verification Checklist

• Transaction Closing: Verify the status and closing date of the Brookfield acquisition of Oaktree announced in April 2026.
• Unrealized Gains: Assess the sustainability of the $81.5 million unrealized gain driving Q1 2026 profitability, noting the volatility of Level III asset valuations.
• Capital Calls: Monitor the timing and funding requirements for the remaining $630 million in undrawn capital commitments to Opps XI and Opps XII.
• Preferred Unit Servicing: Confirm that distributions to preferred unitholders remain fully serviced by cash flows from Oaktree Capital I and other corporate investments.
• Debt Maturities: Review the maturity schedule of the $1.37 billion in consolidated fund debt, noting that certain facilities are scheduled to mature within four months of the reporting date.