Business Context and Reporting Period
Company: Brookfield Oaktree Holdings, LLC (BOH)
Filing Type: Form 10-Q (Unaudited)
Period Ended: September 30, 2025 (Q3 2025)
Business Overview: BOH holds Credit, Real Estate, and Equity investments managed by Oaktree Capital Management and Brookfield Asset Management. The company's structure was significantly altered by a "2024 Restructuring" completed on July 1, 2024, which resulted in the deconsolidation of Oaktree Capital I, L.P. (Oaktree Capital I). Post-restructuring, BOH accounts for its approximately 74% economic interest in Oaktree Capital I using the equity method rather than consolidation. The company continues to consolidate vehicles holding interests in Oaktree Opportunities Fund XI and XII.
Key Financial Metrics
| Metric | Q3 2025 (3 Months) | Q3 2024 (3 Months) | YTD 2025 (9 Months) | YTD 2024 (9 Months) |
|---|---|---|---|---|
| Total Revenues | $160.4 million | $140.3 million | $424.8 million | $550.4 million |
| Net Income (Consolidated) | $181.2 million | $183.4 million | $276.1 million | $570.9 million |
| Net Income Attributable to Class A Unitholders | $59.7 million | $36.8 million | $62.6 million | $151.5 million |
| Net Income Per Class A Unit (Basic/Diluted) | $0.50 | $0.33 | $0.53 | $1.38 |
| Distributions Declared Per Class A Unit | $0.28 | $0.65 | $1.86 | $2.05 |
| Cash and Cash Equivalents (Total) | $290.4 million | $529.3 million | $290.4 million | $529.3 million |
| Debt Obligations (Consolidated Funds) | $1.17 billion | $1.47 billion | $1.17 billion | $1.47 billion |
Note: All figures in millions unless otherwise noted. YTD figures represent the nine months ended September 30.
Material Changes vs. Prior Period
- Revenue Composition: Incentive income, which was $117.5 million for the nine months ended September 30, 2024, is now $0 for the current period due to the deconsolidation of Oaktree Capital I. This revenue stream is now reflected within "Investment Income" via the equity method.
- Investment Income: For Q3 2025, investment income increased 55.3% to $39.3 million compared to $25.3 million in Q3 2024, driven by value increases in publicly traded equity investments and global opportunities funds. However, on a YTD basis, investment income decreased 28.2% to $43.1 million from $60.0 million in 2024.
- Unrealized Gains/Losses: Net change in unrealized appreciation on consolidated funds' investments swung from a gain of $147.6 million (YTD 2024) to a loss of $117.0 million (YTD 2025). This $264.6 million decrease was primarily driven by performance in Oaktree Opportunities Fund XI (Opps XI).
- Realized Gains: Net realized gains on consolidated funds' investments increased significantly on a YTD basis to $106.4 million in 2025 from $35.6 million in 2024, attributed to sales in Opps XI and Opps XII.
- Interest Expense: YTD interest expense decreased 4.9% to $69.2 million, primarily due to the deconsolidation of Oaktree Capital I and its funds, partially offset by higher debt balances in Opps XI and XII earlier in the year.
Guidance, Outlook, and Risks
- Transaction Outlook: On October 13, 2025, Brookfield and Oaktree announced a proposed transaction for Brookfield to acquire the remaining ~26% interest in Oaktree it does not own. Upon completion (expected Q1 2026), Brookfield will own 100% of Oaktree and BOH.
- Liquidity: BOH maintains $8.6 million in unconsolidated cash. Liquidity is supported by distributions from equity method investments (including Oaktree Capital I) and capital contributions from the sole Class A unitholder to fund capital commitments.
- Capital Commitments:
- Opps XI: $750.0 million total commitment; $637.5 million funded as of Sept 30, 2025.
- Opps XII: $796.2 million total commitment; $218.9 million funded as of Sept 30, 2025.
- Risks:
- Market Risk: A 10% decline in market values of consolidated fund investments would result in a $484.7 million decrease in unrealized appreciation, impacting Class A unitholders by approximately $99.3 million.
- Interest Rate Risk: Consolidated funds hold $1.2 billion in variable-rate debt. A 100 basis point increase in rates would increase annualized interest expense by $11.7 million.
- Concentration: As of Sept 30, 2025, Azorra Aviation Holdings LLC represented a significant portion of consolidated net assets ($266.7 million fair value).
Investor Verification Checklist
- Deconsolidation Impact: Verify the specific impact of the July 2024 restructuring on the comparability of Q3 2025 results versus Q3 2024, particularly regarding the shift from incentive income to investment income.
- Unrealized Losses: Investigate the drivers behind the $117.0 million YTD unrealized depreciation, specifically the performance of Opps XI.
- Capital Calls: Monitor the timing and funding of the remaining undrawn capital commitments ($112.5 million for Opps XI and $577.3 million for Opps XII).
- Brookfield Acquisition: Track the regulatory approval status and closing timeline of the proposed 100% acquisition by Brookfield.
- Preferred Unit Distributions: Confirm the sustainability of quarterly distributions on Series A and Series B preferred units given the shift in revenue recognition and the reliance on distributions from Oaktree Capital I.