Brookfield Asset Management Inc. believes the full impact of the U.K. leaving the European Union will be moderate, and that no other financial center on the continent will rival London.
CEO Bruce Flatt on a second-quarter earnings conference call said his company's investments in the U.K. are doing well. Brookfield has a number of office buildings under construction and the leasing business has been strong, he said.
The asset manager's electricity, gas and fiber optic connection business is robust, with sales volumes up 16% over 2016, shadowing strong housing sales in the U.K., Flatt said. Its east coast port continues to see solid volumes, and the industrial warehouse property business has held up well with growth driven by Internet deliveries. Valuations for industrial properties are at all-time highs, according to the CEO. Values for major, high-quality office properties in London have gone up 30% since the Brexit vote, he added.
"We have not seen many distress opportunities as a result of Brexit, and we do not know if we will," Flatt said. If business weakness appears in the U.K., Brookfield will take advantage of any opportunities to expand operations, the CEO said.
In a second-quarter letter to shareholders, Flatt said few cities in the world will be able to compete with London as a financial center owing to its hospitable global business market. New York is a national and global financial center, and Shanghai is the center of business in Asia, Flatt wrote, but London's allure is unique.
"Nothing comes close to London as a result of its rule of law, English language, taxation rules for global investors, and a welcoming environment for all," Flatt said.