Business Context and Reporting Period
Company: Brookfield Oaktree Holdings, LLC (BOH)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: BOH holds Credit, Real Estate, and Equity investments managed by Oaktree Capital Management, L.P. and Brookfield Asset Management Ltd. Following a restructuring completed on July 1, 2024, the Company no longer consolidates Oaktree Capital I, L.P. ("Oaktree Capital I") but accounts for its approximately 74% economic interest under the equity method. Revenue is now primarily derived from investment income on limited partner investments in flagship funds, the equity method investment in Oaktree Capital I, and an indirect ownership in Brookfield Real Estate Income Trust Inc. ("Brookfield REIT").
Key Financial Metrics
| Metric (in thousands) | 2025 | 2024 |
|---|---|---|
| Total Revenues | $679,546 | $777,950 |
| Interest and Dividend Income | $483,025 | $490,389 |
| Incentive Income | $0 | $117,529 |
| Investment Income | $196,521 | $170,032 |
| Total Expenses | $(177,151) | $(207,198) |
| Net Income (Consolidated) | $523,215 | $787,062 |
| Net Income Attributable to Class A Unitholders | $221,922 | $280,208 |
| Net Income Per Class A Unit | $1.88 | $2.45 |
| Distributions Declared Per Class A Unit | $2.10 | $2.84 |
| Assets Under Management (Oaktree) | $222.8 billion | $201.8 billion |
| Cash and Cash Equivalents (Unconsolidated) | $6,766 | $22,303 |
Material Changes vs. Prior Period
- Deconsolidation Impact: The most significant change was the deconsolidation of Oaktree Capital I effective July 1, 2024. Consequently, BOH recorded $0 in incentive income for 2025 (down from $117.5 million in 2024) and eliminated associated incentive compensation expenses. These economics are now reflected within investment income via the equity method.
- Revenue Decline: Total revenues decreased 12.6% to $679.5 million, driven by the loss of consolidated incentive income, partially offset by a 15.6% increase in investment income ($196.5 million) due to the performance of Oaktree Capital I and Brookfield REIT.
- Net Income Decline: Net income attributable to Class A unitholders decreased 20.8% to $221.9 million, primarily reflecting lower other income related to consolidated funds.
- Unrealized Losses: Net change in unrealized appreciation on consolidated funds' investments swung from a gain of $150.7 million in 2024 to a depreciation of $31.5 million in 2025.
- AUM Growth: Oaktree's Assets Under Management increased 10.4% to $222.8 billion, driven by $14.3 billion in capital commitments to closed-end funds and $14.1 billion in market value appreciation.
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. The transaction is expected to close in the first half of 2026, subject to regulatory approvals. Upon completion, Brookfield will own 100% of Oaktree and BOH.
- Distribution Policy: Distributions on Series A and Series B preferred units are discretionary and non-cumulative. The Company plans to distribute amounts received from Oaktree Operating Group entities, less tax obligations, to Class A unitholders.
- Key Risks:
- Market Conditions: Global economic uncertainty, inflation, and geopolitical conflicts (Russia-Ukraine, Middle East) may adversely affect fund performance and capital raising.
- Regulatory Changes: Evolving regulations regarding AI, cybersecurity, and "pay-to-play" rules could increase compliance costs or restrict fundraising.
- Valuation Subjectivity: A significant portion of assets ($4.4 billion in Level III investments) relies on unobservable inputs, creating estimation uncertainty.
- Liquidity: The Company has undrawn capital commitments of approximately $689.8 million to Oaktree funds, which are generally due on demand.
Investor Verification Checklist
- Verify the 2024 Restructuring Impact: Confirm understanding that incentive income is no longer a line item and is now embedded in investment income via the equity method.
- Monitor the Brookfield Acquisition: Track the progress of the "Remaining Interest Acquisition" expected to close in H1 2026 and its potential impact on governance and future distributions.
- Review Capital Commitments: Assess the $689.8 million in undrawn commitments to Opps XI and Opps XII and the Company's ability to fund these calls if required.
- Assess Distribution Coverage: Compare the $2.10 distribution per Class A unit against the $1.88 net income per unit to evaluate the sustainability of payouts relative to earnings.
- Examine Level III Valuations: Review Note 6 regarding the $4.4 billion in Level III investments and the sensitivity of valuations to unobservable inputs like discount rates and multiples.