Assets Under Management
Aircraft Warehouse Syndicate
The initial warehouse syndicate JET-i acquired a further 7 aircraft valued at US$299 million (A$341 million) over the twelve month period taking the total portfolio to 44. This portfolio was acquired by BBAir prior to its IPO.
During the year BBAM acquired 22 aircraft under a new US$1 billion (A$1.1 billion) warehouse facility, established in 2007. The value of total aircraft committed under the new facility to date is approximately $685 million.
BBAM acts as the servicer to the warehouse syndicate and earns origination, management and performance fees.
Other Rail Assets Under Management
As of 31 December 2007, Other Rail Assets under Management consisted of 6,662 railcars, with an AUM value of $519 million. The decline on the previous period was due to cars being transferred out to BBRNA.
Other Air Assets Under Management
As of 31 December 2007, Other Air Assets under Management consisted of 201 commercial jet aircraft valued in excess of $5.9 billion. BBAM provides a variety of on-going services for the portfolio including lease and sale remarketing, contracts administration, financial reporting and technical management services, and earns management, remarketing and performance fees.
Babcock & Brown Rail North America
BBRNA was established in 2006 for the purpose of aggregating a number of BBRM’s owned and managed railcar portfolios together with future railcar acquisitions with the intention of building a portfolio of sufficient size to allow BBRM to explore additional value enhancement alternatives.
At 31 December 2007 BBRNA’s portfolio consists of 13,935 general purpose freight railcars on operating leases to a variety of industrial shippers and railroads in North America. BBRM acts as both fleet and investment manager to BBRNA and receives a management fee for the services it provides which include lease remarketing, equipment management and maintenance, lessee invoicing and collections, bank reporting, financial statement preparation, and federal and state tax compliance.
Eurorail
Eurorail is a partnership between Babcock & Brown and Halifax Bank of Scotland (HBOS) providing operating leasing services in mainland Europe on regional passenger rolling stock and locomotives. Babcock & Brown provides a variety of origination and management services for Eurorail including building supervision, asset management and maintenance, lease administration and lease remarketing.
The partnership has recently been restructured to create a €390 million (A$653 million) long-term financing platform enabling the €330 million (A$553 million) acquisition of CBRail’s existing rolling stock assets and providing a €60 million (A$101 million) facility for future acquisitions.
As at 31 December 2007, the European rail leasing business held assets under management of $923 million and in addition held a number of order positions for locomotives.
PFI Assets Under Management
Babcock & Brown, an active participant in the UK Pubic Private Partnership sector (PPP’s) since 1997 and through one of its subsidiaries (BBIML) is the Investment Advisory, Manager and Operator of BBPP. Babcock & Brown currently has a number of PPP infrastructure deals at various stages of development. These projects
may be offered under the investment advisory agreement to BBPP in which Babcock & Brown holds an 8.33% interest.
Structured Finance CDO's
Babcock & Brown manages three CDOs.
Babcock & Brown also manages a closed end CDO Investment Fund which has approximately US$80.2 million (A$91.3 million) of risk capital subscribed by sophisticated investors. Babcock & Brown owns 9.9% of the fund.
Currently the CDO Investment Fund has investments in the three Babcock & Brown managed CDO’s and one third party managed CDO which was sponsored by Babcock & Brown. Importantly, unlike many funds, the CDO Investment Fund is currently un-leveraged and has surplus cash awaiting investment. Equally important, the Fund is not exposed to margin calls. Its currently un-drawn leverage facility is committed for the term of the Fund and has no provisions for market value based collateralisation. The Fund is closed end and is not subject to redemptions, and its returns are cash flow based rather than a function of market values.
European Property Mandates
During 2007 Babcock & Brown established a number of joint ventures when interests in several existing retail, residential and office portfolios in Germany and Switzerland were syndicated to third party investors. Babcock & Brown which retains an ongoing co-investment interest, has entered into agreements to manage the portfolios on behalf of the investors. The third party interest in these properties at 31 December 2007 was $2.0 billion.
US Property Manadates
During the year Babcock & Brown established significant residential and retail property management platforms in North America through the acquisition of BNP in March 2007 and GG&A in August 2007, respectively. Total third party assets under management at 31 December 2007 for these platforms was $1.3 billion.