Q3 2023 Brookfield Infrastructure Partners L.P. Earnings Call

November 1, 2023

Operator: Thank you for standing by, and welcome to Brookfield Infrastructure Partners Q3 2023 results conference call and webcast. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. To remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, David Krant, Chief Financial Officer. Please go ahead, sir.

Thank you for standing by welcome to Brookfield infrastructure partners third quarter 2000, twenty-three results conference call and webcast. At this time all participants are in a listen only mode. After the speaker's presentation that will be a question and answer session to ask a question. During this session you'll need to press star one.

One on your telephone to remove yourself from the queue simply price Star one one again as a reminder of today's program is being recorded and now I'd like to introduce your host for today's program, David Great Chief Financial Officer. Please go ahead Sir.

David Krant: Thank you operator, and good morning, everyone. Welcome to Brookfield Infrastructure Partners Q3 2023 earnings conference call. As introduced, my name is David Krant, and I'm the Chief Financial Officer of Brookfield Infrastructure. I'm also joined today by our Chief Executive Officer, Sam Pollock. For the call this morning, I'll begin with a discussion of our strong financial and operating results. I will then touch on our balance sheet strength and the success we've had in our asset sale program this year. I'll then turn the call over to Sam, who will provide an update on our strategic initiatives and capital allocation. Following our commentary, we will be joined by Ben Vaughan, our Chief Operating Officer for question and answer period. At this time, I'd like to remind you that in our remarks today we may make forward-looking statements.

Thank you operator, and good morning, everyone welcomed.

What kind of Brookfield infrastructure partners third quarter 20, twenty-three earnings conference call.

Traduce My name is David Crap, and I'm, the Chief financial Officer of Brookfield infrastructure.

I'm also joined today by our Chief Executive Officer, Sam Pollock.

For the call. This morning, I'll begin with a discussion of our strong financial and operating results are going to touch on a balance sheet strength and the success. We've had in our asset sale program. This year.

Then turn the call over to Sam will provide an update on our strategic initiatives and capital allocation.

Following our commentary will be joined by bands on our Chief operating officer for question and answer period.

At this time I'd like to remind you that in our remarks today, we may make forward looking statements.

David Krant: These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I would encourage you to review our annual report on Form 20-F, which is available on our website. Beginning with our financial and operating results, we are pleased to report another quarter of excellent financial results due to good operating performance and the successful execution of our asset recycling strategy. Funds from operations or FFO for the quarter was $560 million, an increase of 7% compared to the same period in 2022. Results benefited from our business' unique ability to capture current inflation levels, combined with the commissioning of nearly $1 billion of capital projects over the last twelve months.

Statements are subject to known and unknown risks and future results may differ materially.

For further information on known risk factors I would encourage you to review our annual report on form 20th which is available on our web site.

Beginning with our financial and operating results. We are pleased to report another quarter of excellent financial results do too good operating performance and the successful execution of our asset recycling strategy.

Funds from operations are <unk> for the quarter was $560 million, an increase of 7% compared to the same period in 2022.

Resolve benefited from our business is unique ability to capture current inflation levels combined with the commissioning of nearly $1 billion of capital projects over the last 12 months.

David Krant: Looking ahead, we are well positioned for a strong end of the year, considering that our European hyperscale data center platform was the only new investment to contribute this quarter, with the remaining $1.6 billion of new investments having closed at quarter end or shortly thereafter. Taking a closer look at our results by segment. Our utilities businesses generated FFO of $229 million, an increase of 17% from the comparable period last year. Organic growth for the segment was over 10%, reflecting inflation indexation and the commissioning of approximately $500 million of capital into rate base during the last twelve months. Current quarter results benefited from the expansion of our residential decarbonization infrastructure platform in North America and Europe following the acquisition of HomeServe earlier this year.

Looking ahead, we are well positioned for a strong end of the year considering that our European Hyperscale data Center platform was the only new investments to contribute this quarter with the remaining one $6 billion of new investments haven't closed at quarter end or shortly thereafter.

Taking a closer look at our results by segment, our utilities businesses generated <unk> of $229 million, an increase of 17% from the comparable period last year.

Organic growth for the segment was over 10%, reflecting inflation indexation and the commissioning of approximately $500 million of capital integrate based during the last 12 months.

Current quarter results benefited from the expansion of our residential Decarbonize Asian infrastructure platform in North America and Europe. Following the acquisition of Homeserve earlier this year.

David Krant: This positive contribution was partially offset by the sale of our interest in our Australian regulated utility in August of this year. Moving to our Transport segment. FFO for the quarter was $205 million, with organic growth of 7% compared to the same period last year. Rates at each of our businesses have increased, reflecting the positive impact inflation has on our results. Specifically, our global toll road tariffs have increased 8% and our rail networks are passing through rate increases of approximately 7% relative to last year. Overall, volumes remain consistent across our portfolio, reinforcing the criticality of our assets despite softness in the broader global transportation network. A bright spot within our Transport segment is VLI, our integrated rail and logistics provider in Brazil.

This positive contribution was partially offset by the sale of our interest and our Australia unregulated utility and largest of this year.

Moving to our transport segment.

For the quarter was $205 million with organic growth of 7% compared to the same period last year.

Rates of each of our businesses have increased reflecting the positive impact inflation has on our results specifically.

Specifically, our global toll road tariffs have increased 8% and our rail networks are passing through rate increases of approximately 7% relative to last year.

Overall volumes remain consistent across our portfolio reinforcing the criticality of our assets despite softness in the broader global global Transportation network.

A bright spot within our transport segment is VLSI are integrated route and logistics provider in Brazil.

David Krant: Brazil's competitive advantages in the export of key agricultural commodities such as soy, corn, and sugar, combined with strong fertilizer imports, have supported growing rail volumes and tariffs. Over the past decade, we have been able to realize average annual volume and tariff increases of 5% and 9%, respectively. As a result, EBIT has increased nearly six times during our ownership. Our midstream segment FFO was $163 million, a decrease of 5% compared to the prior period. This was due to the partial sale of our interest in a US gas pipeline in June and the normalization of market sensitive revenues at our Canadian diversified midstream business. Results were supported by an increased utilization and higher contracted cash flows across the segment compared to last year, as well as the initial contribution from the Heartland Petrochemical Complex.

Those competitive advantages in the export of key agricultural commodity such as soy corn and sugar combined with strong fertilizer imports have supported growing rail volumes in Paris.

Over the past decade, we have been able to realize average annual volume and tariff increases are five and nine perspective percent respectively.

As a result, EBIT increased nearly six times during their ownership.

Our mission statement SFO was $163 million, a decrease of 5% compared to the prior period.

This is due to the partial sale of our interest in a U S gas pipeline in June and the normalization of market sensitive revenues at our Canadian diversified midstream business.

Results were supported by an increased utilization in higher contractive cash flows across the segments compared to last year as well as the initial contribution from the Heartland petrochemical complex.

David Krant: During the third quarter, Heartland ramped up production and sold over 200 million pounds of polypropylene. We're operating at target production levels, and we expect to continue at these levels into 2024. All commercial arrangements underpinning approximately 70% of the capacity are in service, and Q4 is expected to provide a full period contribution to results. Lastly, FFO from our data segment was $66 million, representing an increase of 10% from the same period last year. The increase is attributable to the acquisition of a European telecom tower operation in February 2023 and a European hyperscale data center platform this August. The prior period included contributions from a New Zealand integrated data distribution business that we sold in June of this year. At our data center businesses, we continue to experience strong industry tailwinds, driving elevated demand for capacity.

During the third quarter Hartland wrapped up production and sold over 200 million pounds of polypropylene, we're operating at target production levels and we expect to continue with levels into 2024.

All commercial arrangements underpinning approximately 70% of the capacity or in the service in the fourth quarter is expected to write a full period contribution to results.

Lastly, <unk> from our data segment with $66 million, representing an increase of 10% from the same period last year.

The increase is attributable to the acquisition of a European Telecom tower operation in February of 2023, and a European Hyperscale data Center platform you Miss August.

The prior period include contributions from a New Zealand integrated data distribution business that we sold in June of this year.

At our data center businesses, we continued to experience strong industry tailwinds driving elevated demand for capacity.

David Krant: In North America, our US retail colocation business had record capacity bookings during the past two quarters and recently initiated a densification program to create incremental capacity at existing sites. At our US hyperscale platform, we acquired a 200-acre site in Chicago that can accommodate 200MW of capacity. Chicago is a fast-growing tier one market for data centers with under 5% vacancy rates, and we have already received advanced indications of interest from major hyperscale customers. In the Asia Pacific region, we commercialized our inaugural data center development in Seoul, South Korea. We executed a 15-year contract with a global hyperscaler for 13MW of capacity that has built-in inflation escalation and a pass-through of electricity costs. Construction has commenced and is forecast to be completed by the end of 2025.

In North America R. U S retail co location business had record capacity bookings during the past two quarters and recently initiated identification program to create incremental capacity at existing sites.

And are you S. Hyperscale platform, we acquired a 200 acre site in Chicago that can accommodate 200 megawatts of capacity.

Chicago is a fast growing tier one market for data centers was under 5% vacancy rates and we have already received advanced indications of interest from major hyperscale customers.

In the Asia Pacific region, commercialize our nine year old data Center development in Seoul Korea.

South Korea, we we executed a 15 year contract with a global Hyperscaler for 13 megawatts of capacity to have built in inflation escalation and a pastor of electricity costs.

Construction has commenced and is forecast to be completed by the end of 2025.

David Krant: In India, Reliance Industries is joining our existing joint venture on an equal basis. The current development platform includes two land parcels in Chennai and Mumbai, with total capacity potential of up to 160MW. Transitioning from our resilient and growing financial results into remarks on our balance sheet and liquidity position, the fundamentals of our business remain strong as the benefit of inflation escalation and a disciplined financing approach have largely insulated us from rising rates. Furthermore, the debt capital markets have been extremely favorable for infrastructure assets, providing an overall net positive backdrop to business conditions. We have proven our ability to deliver on our strategy through market cycle, sourcing several value-based investments during this period of capital dislocation while completing our annual capital recycling objectives. In total, we have raised nearly $2 billion of proceeds this year from our program.

And India reliance industries are joining our existing joint venture on an equal basis. The current development platform includes two land parcels in Chennai in Mumbai with total capacity potential of up to 160 megawatts.

Transitioning from a resilient and growing financial results into remarks on our balance sheet and liquidity position. The fundamentals of our business remains strong as the benefit of inflation escalation in a disciplined financing approach have largely insulated us from rising rates.

Furthermore, the debt capital markets have been extremely favorable for infrastructure assets, providing an overall net positive backdrop to business conditions.

We have proven our ability to deliver on our re-stringing through market cycle sourcing several value based investments during this period of capital dislocation, while completing our annual capital recycling objectives in.

In total we have raised nearly $2 billion of proceeds of this year from our program.

David Krant: Achieving our capital recycling objectives has required additional focus as the current macro-market backdrop favors buyers. We continue to execute in this environment as we benefit from owning a high quality and diversified asset base across sectors and geographies that we leverage to monetize assets at the highest valuations. We also tailor the size and structure of our assets to attract the most suitable buyers. Our capital recycling success has resulted in a strong liquidity position. At the end of Q3, our corporate liquidity was approximately $2.1 billion, which reflects the funding of all announced transactions. This available liquidity, combined with our target $2 billion of asset sales in 2024, provides a solid foundation for us to capitalize on the current investment landscape that favors well-capitalized buyers with access to capital. That concludes my remarks for this morning.

Achieving our capital recycling objectives has required additional focus is the current Mac market backdrop favours buyers. We can continue we continued to execute in this environment as we benefit from owning a high quality and diversified asset base across sectors and geographies that we leveraged to monetize assets at the highest valuations we <unk>.

Also Taylor the size and structure of our assets to attract the most suitable buyers.

R capital recycling successes resulted in a strong liquidity position at the end of Q3 are corporate liquidity was approximately $2.1 billion, which reflects the funding of all announced transactions this'll.

Available liquidity combined with our target $2 billion of asset sales in 2024 provides a solid foundation for us to capitalize on the current investment landscape that favors well capitalised buyers with access to capital.

That concludes my remarks for this morning, I'll now turn the call over to Sam.

David Krant: I'll now turn the call over to Sam.

Sam Pollock: Thank you, David, and good morning, everyone. For my remarks today, I'm going to provide an update on our strategic initiatives and conclude with a brief discussion on the operating environment and our favorable outlook. The market environment we've been operating in has created a strong environment for capital deployment. We've surpassed our annual new investment objective for the third year in a row, closing the acquisitions of two marquee data center platforms, as well as the leading global logistics business, Triton International. The risk-adjusted returns we expect to generate in these investments are well in excess of our targets and are representative of the value entry points that can be achieved in this market. The take private of Triton closed on 28 September. We invested approximately $1.2 billion for a 28% interest that was funded primarily using new BIPC shares as transaction consideration.

Hey, Thank you David and good morning, everyone.

For my remarks today, I'm going to provide an update on our strategic initiatives and conclude with a brief discussion on the operating environment and are favorable outlook.

The market environment, we've been operating in has created a strong environment for a cap of deployment.

We have surpassed our annual new investment objective for the third year in a row.

Closing the acquisitions of two marquee data center platforms as.

As well as the leading global is logistics business trade and international.

The risk adjusted returns we expect to generate in these investments are well in excess of our targets and are represented up the value entry points that can be achieved in this market.

To take private of trading closed on September 28th we.

We invested approximately $1.2 billion for 28% interest that was funded primarily using new Pepsi shares.

As transaction consideration.

Sam Pollock: We expect to generate a base case IRR above our targets, derived largely from the in-place cash yield. The leading market position and highly cash generative nature of the business provides strong operational flexibility to invest in fleet replacements and growth during favorable markets or to harvest cash in less attractive markets. We're also very excited about the opportunities across our data center platform, which has grown significantly following the acquisitions of Data4 and Compass, which closed in August and October respectively. Overnight, we signed an agreement to acquire a portfolio of data centers out of bankruptcy from Cyxtera. We believe we will generate strategic value by combining Cyxtera with Evoque to create a leading retail colocation data center provider with over 330MW of capacity deployed in high demand areas across North America.

We expected generate a base case IRR above our targets derived largely from the in place cash yield.

The leading market position and highly cash generative nature of the business provides strong operational flexibility to invest in fleet replacements.

And growth during favorable market or to harvest cache and less attractive markets.

We're also very excited but the opportunities across our data center platform, which has grown significantly finally, the acquisitions of data for encompass which closed in August and October respectively.

Overnight, we signed an agreement to acquire portfolio of data centers out of bankruptcy from six Tara.

We believe we will generate strategic value by combining six Derek evoke two created leading retail co location data center provider with over 330 megawatts of capacity deployed in high demand areas across North America.

Sam Pollock: The combined platform will have the scale, assets, and capabilities required to provide critical infrastructure for its over 2,500 customers to support the exponential increase in demand from industry tailwinds, including artificial intelligence and cloud deployments. Funding has been fully secured for the transaction, which is expected to close in Q1 2024. Touching briefly on the current operating environment, it is clear that there are considerable impacts from geopolitical and macroeconomic factors. Also of note is that we are witnessing diverging economic conditions in several of our key markets. For instance, in Brazil, interest rates are expected to decline as inflationary pressures have waned. In the US, a relatively strong economic background will likely result in interest rates at current levels for a while longer. Other regions seem to be somewhere in the middle.

The combined platform lots of scale assets and capabilities required to provide critical infrastructure ports over 2500 customers to support the exponential increase in demand from industry, tailwinds, including artificial intelligence and cloud deployments.

Funding has been fully secured for the transaction, which is expected to close in the first quarter of 2024.

Attaching briefly on the current operating environment.

It is clear that there are considerable impacts from geopolitical and macroeconomic factors.

Also of note is that we are witnessing diverging economic conditions and several of our key markets.

For instance, in Brazil interest rates are expected to decline inflationary pressures of wind.

And the U S a relatively strong economic background.

Will likely result in interest rates at current levels for awhile longer.

Other regions seemed to be somewhere in the middle.

Sam Pollock: Our global footprint should allow us to arbitrage varying economic circumstances to recycle capital on favorable terms in certain markets while taking advantage of capital scarcity in others. This has always been our playbook, and we will continue to execute the same business strategy, which has been successful over many years. Now, I'd like to make a few comments in relation to our share price. Despite achieving solid financial results throughout the year and delivering on our strategic initiatives, Vertical Infrastructure's unit price has disappointingly underperformed recently. This is not unique to us, as utility infrastructure companies have generally traded off as investors focus on credit or other sector strategies. As we have noted in the past, the utility infrastructure sectors are highly resilient asset classes that generate growing and sustainable cash flows.

Our global footprint should allow us to arbitrage bearing economic circumstances recycle capital unfavorable term in certain markets, while taking advantage of capital scarcity and others.

This has always been our playbook and we will continue to execute the same business strategy, which has been successful over many years.

And I'd like to make a few comments in relation to our share price.

Despite achieving solid financial results throughout the year and delivering on our strategic initiatives Brooke.

Brittle infrastructures unit prices disappointingly underperform recently.

This is not unique to us as utility infrastructure companies have generally traded office investors focused on credit or other sectors strategies.

As we have noted in the past the utility infrastructure sectors are highly resilient asset classes that generate growing and sustainable cash flows.

Sam Pollock: Indicative of those attributes, we have grown FFO per unit and distributions per unit at compound annual rates of 11% and 8% respectively over the past decade. Now looking ahead, there are several elements to our current situation that are worth highlighting. First, our sizable organic growth consists largely of embedded inflationary escalators and secured capital expansion projects. This benefit compounds over long periods of time and provides us with a natural hedge to higher interest rates. Also, our capital backlog is largely self-funded from a combination of committed CapEx facilities and retained cash flows. Now, second, we have exceeded our new investments target for three consecutive years. As a result, we have substantial built-in growth that provides us the flexibility to pace our investment activity in accordance for capital recycling achievements.

Indicative those attribute.

We have grown FFL per unit and distributions per unit at compound annual rate of 11, and 8% respectively over the past decade.

Now looking ahead, there are several elements to our current situations.

Highlighting.

First are sizeable organic growth consists largely of embedded inflationary escalators and secured capital expansion projects.

This benefit compounds over long periods of time and provides us with a natural hedged a higher interest rates.

Also our capital backlog is largely self funded from a combination of committed capex facilities entertained cash flows.

Secondly, exceeded our new investments target for three consecutive years.

As a result, we have <unk>.

Substantial built in growth that provides us the flexibility to paste or investment activity in the courts for capital recycling achievements.

Sam Pollock: Third, we have locked in interest rates for over 90% of our debt, with an average maturity of approximately 7 years. This provides us with great visibility into our cash flow going forward. Fourth, in light of our strong conviction in the intrinsic value of our business and its growth trajectory, we see the merit in deploying capital to repurchase our equity. During the quarter, we began repurchasing equity and have bought close to 1 million units under our normal course issuer bid. Going forward, we will consider further buybacks in conjunction with our ability to earn strong risk-adjusted returns by deploying capital in new investment opportunities. In summary, we have demonstrated our ability to use our size, scale, and diversification to continue recycling capital at good valuations while earning higher returns on our new investments.

Third we have locked in interest rates for over 90% of our debt.

With an average maturity of approximately seven years.

This provides us with great visibility into our cash flow going forward.

Fourth in light of our strong conviction and the intrinsic value of our business and its growth trajectory with.

See the merit and deploying cap to repurchase our equity.

During the quarter, we began repurchasing equity and have bought close to 1 million units under our normal course issuer bid.

Going forward, we will consider further buybacks in conjunction with our ability to earn strong risk adjusted returns by deploying capital in new investment opportunities.

In summary, we have demonstrated our ability to use our size scale and diversification to continue recycling capital at good valuations, while earning higher returns on our new investments.

Sam Pollock: On recycling, over the last three years, we have generated approximately $4.5 billion of proceeds from 16 asset sales. Each was completed at a premium to the IFRS carrying value at the time of sale, and the combined gain over book value was approximately 70%. On deployment, our 2023 investments are expected to provide us with some of the best risk-adjusted returns we have seen in the last decade. Combining these acquisitions with our existing platform investments provide significant embedded growth in our business today. We remain committed to providing unitholders with a stable and growing distribution within the 5% to 9% range annually, while maintaining a payout ratio between 60% and 70% and a strong balance sheet. We have a track record of returning capital to investors with nearly $9 billion of distributions paid to unitholders.

On recycling over the last three years, we've generated approximately 4.5 billion proceeds from 16 asset sales.

Each was completed at a premium to the <unk> carrying value at the time of sale and the combined gain over book value is approximately 70%.

On deployment R. 2023 investments are expected to provide us with some of the best risk adjusted returns we have seen in the last decade.

Combining these acquisitions with our existing platform investments provide significant embedded growth in our business today.

We remain committed to providing unit horse stable and growing distribution within the 5% to 9% range annually, while maintaining a payout ratio between 60, and 70% and a strong balance sheet.

We have a track record of returning Kappa to investors with nearly $9 billion of distributions paid to unitholders.

Sam Pollock: Ultimately, we believe providing strong cash flow and income growth creates unitholder value, which will be reflected in our unit price over time. This concludes my remarks, and I'll now pass it back to the operator for questions.

Ultimately, we believe providing strong cash flow and income growth creates unitholder value, which will be reflected in our unit price over time.

This concludes my remarks, and I'll now pass it back to the operator for questions for questions.

Operator: Certainly. Once again, ladies and gentlemen, if you have a question at this time, please press star one one. One moment for our first question. Our first question comes from the line of Cherilyn Radbourne from TD Cowen. Your question please.

Certainly once again, ladies and gentlemen, if you have a question that this time. Please press star 111 moment for our first question.

Our first question comes from law and their swollen restaurants from TB outward your question. Please.

Cherilyn Radbourne: Thanks very much, and good morning. I was wondering if you could start by expanding on your comment in the letter on the investment landscape in terms of where you're seeing the most attractive opportunities by geography and by sector, and also how you think about pacing your investments in an environment where the stress associated with higher interest rates arguably hasn't been fully absorbed yet.

Thanks, very much and good morning.

I was wondering if you could start by expanding on your comments and the letter on the investment landscape.

Where you're skiing.

Give opportunities by geography and by sector and also how you think about keeping your investment.

Where the stress associated with higher interest rate.

Deeply hasn't been fully absorbed yet.

Sam Pollock: Hi, Cherilyn. Thank you for those questions. I think there's two of them in there. I think the first is just where we see value and just the tone of the market, and then the second one just on our own, you know, pacing of investments. On the first portion of your question, we do see attractive opportunities in most regions that we operate in. Frankly, you know, we've probably focused our attention in North America and Europe in the past year or two, and obviously, you know, given our base currency being US dollars, it's always favorable for us to invest in US dollar businesses, so that we don't have to deal with FX issues.

Hi, Cheryl and thank you for for those questions I think.

There's two of them in there I think the first such as where we see.

Value and just to tell him in the market and then the second just on our own pay.

Pacing of investments.

On the first.

Portion of your question.

We do see.

Attractive opportunities.

And most up in most regions that we operate in Franklin.

We've probably focused our attention in North America and Europe in the past.

Year, or two and and obviously given.

Our base currency being U S dollars, it's always favorable for us to invest in.

U S dollar businesses.

So that we don't have to deal with.

Sam Pollock: We tend to focus in this market when we see great opportunities. We are seeing interesting opportunities coming our way in Asia at the moment. We do have a new team and a focus in South Korea in particular. We've also, you know, have done generally very well in Australia, and because of the team we have down there, have hit above our weight, I guess, in terms of the amount of capital we've been able to deploy in that market. I think in the next little while, I'm optimistic that we will find some very interesting opportunities in those two markets. I'd say as a general comment, we do see good opportunities pretty much everywhere.

FX issues and so we tend to focus in this market when we see great opportunities, but we are seeing interesting opportunities.

Coming our way in Asia at the moment.

We do have.

A new team and a focus in South Korea in particular.

We've also.

Have had done generally very well in Australia, and because of the the team we have down there.

Hit above our weight I guess in terms of the amount of capital we've been able to deploy in that market.

So I think the next little while I'm optimistic that we will <unk>.

Find some very interesting opportunities in those two markets, but I'd say a as.

General comment we do see.

Good opportunities pretty much everywhere.

Sam Pollock: As far as sectors, as I probably said on the previous call and maybe the couple of calls before that, you know, the best value tends to be in those businesses that

As far as sectors.

As I, probably said on the previous call and maybe a couple of calls before that.

The the best value tends to be in those businesses that need capital for growth and a lot of companies are stark for for growth capital and <unk>.

Sam Pollock: Need capital for growth. A lot of companies are starved for growth capital, and sectors, you know, particularly the telecom sector, have tremendous capital projects in front of them, and so they need capital, and that's frankly where we can invest for value today. But we are seeing interesting opportunities across, you know, transportation and utilities as well. I realize I've covered up almost the whole universe of the infrastructure sector, but I do think there's value to be had pretty much across the board.

Sectors.

Particularly the.

[noise] telecom sector.

Have tremendous capital projects in front of them and so they need capital and that's frankly, where we can invest for value today.

But we are seeing interesting opportunities across transportation and utilities as well.

So I realized cover up almost a whole universe of of the infrastructure sector, but I do think there is.

Value to be had pretty much across the board.

Sam Pollock: As far as our own pacing, as we mentioned in our letter, you know, we have been very successful in recycling capital and using our liquidity to invest boldly where we've seen good opportunities in the last couple of years. You know, I think we're gonna benefit from that for the foreseeable future. As far as, you know, what we would do in the future, I think it will be similar. If we see some amazing opportunities, we will find the capital, you know, to take advantage of them. At the same time, we don't feel any pressure to invest and reduce our liquidity except in those circumstances where, you know, we see exceptional opportunities.

And as far as her own pacing as we mentioned in.

Our letter.

We have been very successful in.

Precisely capital and using our liquidity to invest boldly when we seen good opportunities in the last couple of years.

I think we're going to benefit from that for the foreseeable future.

And as far as.

What we would do in the future I think it will be similar if we see some amazing opportunities, we will find the capital to to take advantage of them.

But at the same time, we don't feel any pressure too.

To invest and reduce our liquidity.

Except in those circumstances, where we see exceptional opportunity. So I think you'll see as being patient, but also investing boldly if we see a great opportunity.

Sam Pollock: I think you'll see us being patient, but also investing boldly if we see a great opportunity.

Cherilyn Radbourne: Great. That's a great overview. I'll keep my second one short since that one had a few inside it. With respect to your pipeline of asset sales for 2024, would some of that pipeline have debt that is portable to the prospective buyers, which is presumably an advantage in this market?

Great. That's a great overview I'll keep my second one short since that one had a few inside it with respect to your pipeline of asset sales for 2024 would download that pipeline have that that is horrible to the prospective buyers, which is presumably an advantage in this.

Marquette.

Sam Pollock: Yeah. Hi, Cherilyn. I would say, the vast majority of the ones that we are selling have portable debt. And yes, that's, you know, that's one of the, you know, characteristics that we do look for at the moment in order, you know, to be selling businesses, because I think that is a embedded value in those capital structures and, you know, allows us to, you know, continue to create, you know, create value in this market environment.

Yeah, Hi, Sharon I would say.

The vast majority of the ones that we are selling have portable debt.

And yes that that that that's one of the.

Characteristics that we do look for at the moment in order to be selling businesses cause I think that is embedded value in those capital structures and.

And allows us to continue.

Continued to create create value in this market environment.

Cherilyn Radbourne: Thank you for the time.

Thank you for that time.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Robert Kwan from RBC.

Thank you one moment for our next question.

And our next question comes from the line of Robert Kwon from RBC.

Robert Kwan: Great. Good morning. If I can just touch on or ask you just around the capital allocation, specifically how you are approaching buybacks. Just, you know, do you think about buybacks, especially at this unit price, as being an investment in your own assets and the return you would get based on buying back the stock at these levels versus what you think intrinsic value is? More broadly, are there any other tangible options that you see is on the table to support the share price?

Good morning.

If I could just.

Catch on or ask you just around the cap allocation, specifically, how you are approaching buybacks.

Just.

Do you think about buybacks, especially this unit price.

As being an investment in your ground assets and the return.

Yes.

On buying back to stock it.

These levels versus what you think intrinsic value items and then more broadly are there any other tangible options that you see it on the table too.

Support the share price.

Sam Pollock: Hi, Robert. On the first question on the buyback, like I think you've done a better job of describing how we think about it than I probably could. Yes, you know, we do consider it as buying back, you know, businesses we know and understand well and have a good view on their future prospects. We weigh that against, you know, making investments in new assets and the type of returns we can get on that. That is the decision we weigh. Obviously, you know, what's attractive about buying your own assets is, you know, they're very much de-risked because you know what you're getting and you understand them well.

Hi, Robert.

So on the the first question on.

The buybacks like I think you've.

You have done a better job of describing how do we think about it then I probably could.

We do consider it is buying back bitch.

Businesses, we know and understand well and have a good view on.

Their future prospects in so we weigh that against making investments.

In new assets and the type of returns we can get on that so that is that is the.

The decision we way obviously.

What's attractive find your own assets is.

They're very much derisks, because you know, what you're getting and you'll understand them well and so you're.

Sam Pollock: You know, in some respects, you have a slightly lower return threshold than you would for new investments. But we do weigh those two things and obviously take a long-term perspective on it. We're not just looking for, you know, an initial hit. It's about, you know, are we investing our capital for good long-term value. That definitely is how we look at the buybacks. As far as things we can do in the short term, I think it's hard to do anything in particular other than, you know, continuing to, you know, describe the strength of the business and the prospects and the long-term value creation of the franchise set.

In some respects you haven't a slightly lower return.

Threshold than you would for new investments, but.

But we do weigh those two things and obviously.

Take a long term perspective on it we're not just looking for an initial hit it's about investing.

R capital for good long term value.

That definitely is.

How we look at the buybacks.

As far as.

Things, we can do in the <unk>.

Short term.

I think it's I think it's hard to do anything in particular other than.

Continuing to.

Describe the the strength of the business and the prospects in the long term.

Value creation of the franchise.

Sam Pollock: Like, I think, we've always tried to convey to our unitholders that Brookfield Infrastructure is a long-term compounder of wealth, and that, you know, people should buy it because they want to know that, you know, putting aside where volatility might take place in the market because of, you know, what the capital markets do, you know, we'll continue to deliver them with assurance, with high assurance that dividend that they have today, plus that 5% to 9% growth. We have a long track record doing that. When we look at our business for the long term, we feel as comfortable or more comfortable in our ability to do that. I think that's the story we just need to reinforce with the investors.

Think.

We've always tried to convey to our unitholders that.

Brooklyn infrastructure is a long term compound or of wealth.

That.

People should buy it because they want to.

No that.

Putting aside where volatility might take place in the market because of what.

The capital markets do will continue to deliver them.

With assurance with the highest <unk>.

Dividend that they have today, plus that 5% to 9% growth and then we have a long track record doing that and when we look at our business for the long term, we feel as comfortable or more comfortable in our ability to to that and I think that's the story, we just need to reinforce with investors.

Robert Kwan: Great. Thanks. Just for my second question, just to ask around, BUUK. I guess first, can you talk about your take on the housing market there, housing starts, and then just more broadly, you know, this is one of the assets that you've owned the longest, although it's not in a limited life fund. Can you talk about your long-term perspective on the business, how you think about, excuse me, the growth and valuation, and even just a little bit of the evolution from where you started with this business to where you are today and where you think that business is gonna go in the future?

Alright.

For my second question.

Ask around.

B U K.

Yes first with can you talk about your take on housing market there housing starts.

And then just more broadly.

This is one of the assets that you found belonged yes, although it's not in a limited lifespans, but.

But can you talk about your long term perspective on the business. How you think about excuse me the gross and valuation and even just a little bit of the evolution from where you started with this business.

Where you are today and where you think that businesses is can you go in the future.

Sam Pollock: Great. Okay. No, thanks, Robert. You know, for shareholders and analysts who have been with us for a long time, they know this is one of mine and our company's favorite businesses. We have owned it since we bought Babcock & Brown's business back in 2009. Then we've done a number of tuck-in acquisitions and organic growth projects to build the company up to where it is today. Maybe just dealing with the first part of your question on housing starts.

Right.

Okay now thanks, Thanks Robert.

Four.

For for shareholders and analysts who've been with us for a long time. They know this is one of mine in our company's favorite businesses we have.

Owned it since.

Operator: Thank you for standing by and welcome to Brookfield Infrastructure Partners' third quarter to 2023 results conference call and webcast. At this time, all participants are in listen only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 11 on your telephone. To remove yourself from the queue, simply press star 11 again. As a reminder, today's program is being recorded.

We bought.

But babcock and Brown business back in 2009, and and then we've done a number of Chuck.

Tuck in acquisitions and organic growth projects to build the company up to where it is today.

But they just dealing with the first part of your question on housing starts.

Sam Pollock: This is a business, for those of you who are less familiar with it, that, you know, really participates in the housing growth or the increase in the stock of housing in the whole United Kingdom. What the business does is, it basically works with developers to install all the last mile connections. Over time, you know, what's special about this business is the fact that, you know, when we first bought it, we used to install just gas connections. Today, we provide, you know, five different connections into the home, including water, electricity, fiber, and, you know, different heat pumps, as well. It's a unique business. Today, the housing market has pulled back, you know, quite a bit.

This is a business for those of you who are less familiar with it that.

Really participate in the.

David Krant: And now I'd like to introduce your hosted today's program, David Krant, Chief Financial Officer. Please go ahead, sir. Thank you, operator and good morning, everyone.

Housing.

Growth.

The increase in the stock of housing in the hole.

David Krant: Welcome to Brookfield Infrastructure Partners' third quarter, 2023, earnings conference call. As introduced, my name is David Krant and I'm the Chief Financial Officer of Brookfield Infrastructure. I'm also joined today by our Chief Executive Officer, Sam Pollock. For the call this morning, I'll begin with a discussion of our strong financial and operating results. I'll then touch on our balance sheet strength and the success we've had in our asset sale program this year.

Kingdom.

Well the business does it.

It basically works with developers too.

Install all the last mile connections and over time.

Special about this business is the fact that.

When we first bought a we used to install just gas connections today, we provide five different connections into the home, including water electricity fibre and different.

David Krant: I'll then turn the call over to Sam, who will provide an update on our strategic initiatives and capital allocation.

David Krant: Following our commentary, we will be joined by Ben Vaughn, our Chief Operating Officer, for question and answer period.

Heating pumps as well and so it's unique business today. The housing market has pulled back quite a bit I think it's.

David Krant: At this time, I'd like to remind you that in our remarks today, we may make forward-looking statements. These statements are subject to known and unknown risks and future results may differ materially. For further information on known risk factors, I would encourage you to review our annual report on Form 20X, which is available on our website.

Sam Pollock: I think it's somewhere in the range of 20% pullback from the prior year. I'd say housing is definitely weaker in the UK. What's great about this business is the fact that even though housing has pulled back pretty dramatically this one year, our connections that will be installed will in fact be higher than what they were last year. We'll have another record year of installations. We have a backlog of housing connections that represent about 7 to 8 years of our annual connections. We have a big backlog. You know, I think the only other thing I'd mention about the housing is even though it's been down this year, the amount of housing deficit that exists in the market is pretty substantial.

Somewhere in the range of 20% pullback from the prior year, So I'd say housing.

Is definitely weaker than the UK.

What's great about this business of the fact that even though.

Housing has pulled back pretty dramatically.

David Krant: Beginning with our financial and operating results, we are pleased to report another quarter of excellent financial results due to good operating performance and the successful execution of our asset recycling strategy. Funds from operations, or FFO, for the quarter, was $560 million, an increase of 7% compared to the same period in 2022. Results benefited from our businesses' unique ability to capture current inflation levels, combined with the commissioning of nearly 1 billion of capital projects over the last 12 months.

One year, our connection Salbi installed will in fact be.

Be higher than what they were last year will have another record year of installations.

And we have a backlog of housing connections that.

Represent about seven to eight years of our annual connection so we have a big big backlog.

And I think the only other thing I'd mentioned, but the housing is even though it's been down this year.

David Krant: Looking ahead, we are well positioned for a strong end of the year, considering that our European Hyperscale Data Center platform was the only new investment to contribute this quarter, with the remaining $1.6 billion of new investments having closed at quarter-end or shortly thereafter.

The amount of housing death.

Deficit there exists in the market is pretty substantial typically there's about 200000.

Sam Pollock: You know, typically there's about 200,000+ new homes built, you know, in the UK every year, and the government has had a long-term ambition to see that grow to over 300,000. There's always lots of programs to encourage it. Like most countries, including Canada, the need for housing is pretty dramatic. You know, we expect while there's a pullback this year in housing starts, that will rebound pretty quickly. Just maybe a couple of final comments on you asked about, you know, the business and our thoughts on it. You know, we like this business because, you know, it basically is a perpetual asset base with inflation-linked and highly diversified regulated cash flows.

Plus.

David Krant: Taking a closer look at a result by segment, our utilities' businesses generated FFO of $229 million, an increase of 17% from the comparable period last year. Organic growth for the segment was over 10% reflecting inflation indexation and the commissioning of approximately $500 million of capital into rate base during the last 12 months. Current quarter results benefited from the expansion of our residential decarbonization infrastructure platform in North America and Europe following the acquisition of home-serve earlier this year. This positive contribution was partially offset by the sale of our interest in our Australian regulated utility in August of this year.

New homes built.

In the UK every year and the government has had a longterm ambition to see that grow to over 300000, and so there's always lots of programs to encourage it and like most countries, including Canada.

Need for housing is pretty dramatic so we expect while there's a pullback this year housing starts that that will rebound.

Pretty quickly.

Just maybe just a couple of final comments on.

You asked about the business and and our thoughts on it.

We liked this business because.

David Krant: Moving to our transport segment, FFO for the quarter was $205 million, with organic growth of 7% compared to the same period last year. Rates at each of our businesses have increased, reflecting the positive impact inflation has on our results. Specifically, our global toll road tariffs have increased 8% and our rail networks are passing through rate increases of approximately 7% relative to last. Overall, volumes remain consistent across our portfolio, reinforcing the criticality of our assets, despite softness in the broader global transportation network.

It it basically has a.

<unk> asset base with inflation linked and highly diversified regulated cash flows.

Sam Pollock: It's been growing FFO at about 20% per annum over the past 10 years. The growth in the business is tremendous. We do have many investors in the fund. Most of them are on the debt side. You know, we've issued about $2 billion of investment-grade debt into the US markets. It's a regular issuer into the debt markets and has a very strong following. We also have an institutional investor who's been alongside us for the whole time, for about 10 years, a big European institution who owns 20% of the company. You know, they've seen, you know, the growth in the company, as have we.

And it's been growing FFL at about 20% per annum over the past 10 years, so the growth and the businesses is tremendous we do have many.

Investors in the fund.

Most of them are on the desk side, we've issued about $2 billion of investment grade that into the U S markets and.

David Krant: A bright spot within our transport segment is VLI, our integrated rail and logistic provider in Brazil. Brazil's competitive advantages in the export of key agricultural commodities, such as soy, corn, and sugar, combined with strong fertilizer imports, have supported growing rail volumes and tariffs. Over the past decade, we have been able to realize average annual volume and tariff increases of five and nine percent respectively, as a result, even as increasingly six times during our ownership.

A regular issue into the debt markets and has a very strong following.

And we also have a.

Institutional investor Who's.

Been alongside us for the whole time for about 10 years, a big European institution, who owns a 20% of the company.

And.

They have they seen the growth and the company as have we.

Sam Pollock: You know, this is a company that, you know, today we don't typically talk about value, but it is a very meaningful value to us. We prepare valuations for them each year as we do for many of our other institutional investors. You know, to give you a sense, you know, a Big Four accounting firm put a value on this business at over GBP 3.1 billion, which is almost $4 billion. So a very sizable company, very successful, and one that I hope we keep for a long, long time.

And this is a company that.

Today, we don't typically talk about value, but is it very meaningful value to us.

David Krant: Our midstream segment, FFO, was $163 million, a decrease of five percent compared to the prior period. This was due to the partial sale of our interest in a US gas pipeline in June, and the normalization of market-sensitive revenues at our Canadian-diversified midstream business. Results were supported by an increased utilization and higher contracted castles across the segment compared to last year, as well as the initial contribution from the Heartland Petrochemical Complex. During the third quarter, Heartland ramped up production and sold over 200 million pounds of polypropylene.

We prepare valuations for them.

Each year as we do for many of our other institutional investors.

To give you a sense.

A big for accounting firm.

Put a value on this business.

That over 3.1 billion pounds.

Which is almost $4 billion, so very sizable company very successful.

And one that I hope, we keep for a long time.

David Krant: We were operating at target production levels and we expected to continue at these levels into 2024. All commercial arrangements underpinning approximately 70 percent of the capacity are in service, and the fourth quarter is expected to provide a full period contribution to results.

Robert Kwan: That's great. Thanks for the color.

Oh, that's great. Thanks for your health.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Devin Dodge from BMO Capital Markets. Your question, please.

Thank you one moment for our next question.

And our next question.

Comes from the line of <unk> from BMO capital markets. Your question. Please.

David Krant: Lastly, FFO from our data segment was $66 million, representing an increase of 10 percent from the same period last year. The increase is attributable to the acquisition of a European telecom tower operation in February of 2023 and a European hyperscale data center platform in this August. The prior period include contributions from a New Zealand integrated data distribution business that we sold in June of this year. At our data center businesses, we continue to experience strong industry tailwinds driving elevated demand for capacity.

Devin Dodge: Thanks, good morning. So we've been getting questions from investors on your ability to recycle capital in this type of market. You know, I know you talked about it at the Investor Day as well as in the prepared remarks earlier. Should we expect a bit of a low on monetizations until long-term interest rates stabilize? Maybe just in a general sense, where are you seeing the most interest from potential buyers?

Good morning, So we've been getting questions from investors on your ability to recycled capital in this type of market. You know I know you talked about or the Investor day as.

As well as in the prepared remarks earlier, but so we expect.

Not a whole low on monetizations until longterm interest rate stabilized and then maybe just in a general sense, where are you seeing the most interest from potential buyers.

David Krant: In North America, our US retail co-location business had record capacity bookings during the past two quarters and recently initiated a densification program to create incremental capacity at existing sites. At our US hyperscale platform, we acquired a 200 acre site in Chicago that can accommodate 200 megawatts of capacity. Chicago is a fast growing Tier 1 market for data centers with under 5 percent vacancy rates and we have already received advanced indications of interest from major hyperscale customers.

Sam Pollock: Hi there. You know, obviously, it's hard to predict exactly, you know, what the market will look like. What I would say though is that, you know, we will bring to market those businesses that, you know, we think will be highly sought after. You know, what I can say is that, you know, on the businesses that we've already launched processes, at the moment, and it's obviously early days, the number of interested parties looking at it is substantial. There is lots of investors out there looking for high-quality businesses. That's not stopped, and even over the last while, has been relatively robust, and we still see large transactions, in fact, being done.

Hi, there.

So.

Obviously.

It's hard to predict exactly what the market will look like what I would say, though is that.

We are bringing we will bring to market those <unk>.

Businesses that we think will be highly sought after what I can say is that.

David Krant: In the Asia Pacific region, we commercialized our inaugural data center development in Seoul, Korea, South Korea. We executed a 15 year contract with a global hyperscale for 13 megawatts of capacity that has built an inflation escalation and a pass through a electricity cost. Construction is condensed and is forecast to be completed by the end of 2025.

The businesses that we've already launched processes.

At the moment.

And it's obvious early days the number of interested parties looking at it is substantial so there is lots of investors out there looking for high quality businesses.

Stopped and even though the last while has been relatively robust we still see large transactions at back being done.

David Krant: In India, reliance industries are joining our existing joint venture on an equal basis. The current development platform includes two land parcels in Chennai and Mumbai with total capacity potential of up to 160 megawatts.

Sam Pollock: I think in this market environment, if I had to say where, you know, the sweet spot is, the sweet spot is probably more mid-market transactions than large-scale transactions. There's a lot more players in that segment. I think, given the uncertainty around growth, highly contracted businesses tend to be, you know, have less divergence in views as far as valuations than, say, businesses with growth wedges. Again, that's something to keep in mind. You also have the dynamics that, you know, some regions are in a different spot than others. You know, I mentioned South America and Brazil.

I think.

In this market environment, if I had to say where.

The sweet spot is the sweet spot is probably more mid market transactions, then large scale transactions.

David Krant: Transitioning from our resilient and growing financial results into remarks on our balance sheet and liquidity position, the fundamentals of our business remain strong as the benefit of inflation escalation and a disciplined financing approach have largely insulated us from rising rates. Furthermore, the debt capital markets have been extremely favorable for infrastructure assets providing an overall net positive backdrop to business conditions. We have proven our ability to deliver on our strategy through market cycle, sourcing several value-based investments during this period of capital dislocation while completing our annual capital recycling objectives.

There's a lot more players.

And that segment.

I think.

Yeah.

Given the.

Uncertainty around growth highly contracted businesses tend to be.

Have less divergence in views as far as valuations than say businesses with with growth wedges.

So again, that's something to keep in mind.

David Krant: In total, we have raised nearly $2 billion of proceeds this year from our program. Achieving our capital recycling objectives has required additional focus as the current market backdrop favors buyers. We can continue to execute in this environment as we benefit from owning a high quality and diversified asset base across sectors and geographies that we leverage to monetize assets at the highest valuations. We also tailor the size and structure of our assets to attract the most suitable buyers. Our capital recycling success has resulted in a strong liquidity position. At the end of Q3, our corporate liquidity was approximately $2.1 billion, which reflects the funding of all announced transactions.

But then you also have.

The dynamics that some regions are.

In a different spot and others I mentioned South America in Brazil.

Sam Pollock: You know, they got ahead of the curve as far as tackling inflation and increasing interest rates, and rates there now are expected to drop pretty meaningfully over the next couple of months. I'd say the market has improved significantly, and the enthusiasm in that market is actually quite high, compared to some markets where, you know, people are a little more skittish. You know, I think one of the big benefits, and this is what we highlight in our letter and we've said in the past, is having a business that's very diversified across many regions. We can, you know, bring assets to sale in regions where people are more constructive, and there's lots of access to capital.

They got ahead of the curve as far as tackling inflation and increasing interest rates and.

Rates there now are expected to drop pretty meaningfully over the next couple of months and I would say the the market has improved significantly in the enthusiasm that market is actually quite high.

Compared to some markets where.

People are a little more.

Skittish.

So.

I think one of the big benefits and this is will be highlighted in our letter and we said in the past is having a business that is very diversified cross many regions we can.

David Krant: This available liquidity combined with our target, $2 billion of asset sales in 2024, provides a solid foundation for us to capitalize on the current investment landscape that favors well capitalized buyers with access to capital.

Bring asset to sell in regions, where people are more.

Constructive and there's lots of access to capital and then in those regions, where things are less constructive we tend to be looking for opportunities there.

Sam Pollock: In those regions where things are less constructive, you know, we tend to be looking for opportunities there to buy.

David Krant: That concludes my remarks for this morning.

Sam Pollock: I'll now turn the call over to Sam. Thank you, David, and good morning, everyone. From my remarks today, I'm going to provide an update on our strategic initiatives and conclude with a brief discussion on the operating environment and our favorite broad look. The market environment we've been operating in has created a strong environment for capital deployment. We've surpassed our annual new investment objective for the third year in a row, closing the acquisitions of two marquee data center platforms, as well as the leading global logistics business tried international.

To buy.

Devin Dodge: Okay. No, I appreciate that. It's a good color. Okay. I'm gonna switch over to, maybe the deal announced this morning, at least in a general sense. I think it's fair to say that your initial investment in a retail colocation data center business has been, you know, at least a bit of a challenge. You know, can you talk about the improvements that have been made at Evoque over the last couple of years, and how the addition of the Cyxtera assets will further those efforts?

Alright, well I appreciate that it's a good color okay, yeah switch over to maybe the deal announced this morning listen to general sense, but.

It's fair to say that your initial investment in a retail co location data Center business then.

Just a bit of a challenge can you talk about the improvements that have been made it evoke over the last couple of years and how the addition of the six their assets.

Well for those efforts.

Sam Pollock: Okay. Maybe I'll start, and I'll turn over to Ben here to talk about the things that we've done. Yes, I think it's a fair comment that the first couple years have been challenging as we, you know, work through our tenant base there. It has been a business that over the last I'd say year and a bit, we've seen a real turnaround in its leasing profile and leasing success. Maybe Ben will touch on that.

Okay, well, maybe I'll start an alternative to ban here.

Sam Pollock: The risk adjusted returns we expect to generate in these investments are well in excess of our targets and are represented of the value entry points that could be achieved in this market. To take private of tried and closed on September 28, we invested approximately $1.2 billion for a 28% interest that was funded primarily using new BIPC shares as transaction consideration. We expected generated base case IRR above our targets drive largely from the in place cash yield.

But the things that we've done and and yes, I think it's fair comment that.

The first.

Couple of years have been challenging as we.

Work through our tenant base there.

But but it has been a business that over the last.

I'd say year and a bit we've seen a real turnaround and it's.

Leasing profile and leasing.

Sam Pollock: The leading market position and highly cash generative nature of the business provides strong operational flexibility to invest in fleet replacements and growth during favorable markets or the harvest cash in less attractive markets. We're also very excited, but the opportunities across our data center platform, which has grown significantly following the acquisitions of data foreign compass, which closed in August and October respectively.

Success and may be bandwidth touch on that but as far as this six Tara.

Sam Pollock: As far as Cyxtera, you know, the real opportunity here is, you know, the ability to, you know, not only buy for value, but also execute a multifaceted transaction where we can, you know, reunite some of the underlying land leases that are associated with the Cyxtera assets, combine some of those, as well as the data centers in Cyxtera. Take that set of assets, combine it with our business, which is largely data centers with real estate that's owned. Take advantage of significant synergies from a sales and cost perspective, where we can really reduce the overhead as a percentage of revenue quite dramatically because of the combination of the two businesses.

The real opportunity here is the ability to.

Not only five per value but.

But also executed multifaceted transaction, where.

We can reunite some of the underlying land leases that are.

Are associated with the six terror assets combined some of those as well as the data centers and six Tara.

Sam Pollock: Over night, we signed an agreement to acquire a portfolio of data centers out of bankruptcy from 6th era. We believe we will generate strategic value by combining 6th era with evoke to create a leading retail co-location data center provider with over 330 megawatts of capacity deployed in high demand areas across North America. The combined platform will have the scale, assets and capabilities required to provide critical infrastructure ports over 2,500 customers to support the exponential increase in demand from industry tailwinds, including artificial intelligence and cloud deployments.

And then take that setup assets combine it with our business, which is largely.

Data centers with real estate that's owned.

Take advantage.

Of.

Significant synergies from a sales and cost perspective, where we can.

Really reduce the overhead.

As a percentage of revenue quite dramatically because of the combination of the two businesses and then.

Sam Pollock: Effectively finance the businesses, because now you have much more scale as well as, mostly owned real estate. It really is a very, very different business than what the two were separately. We're very excited by that. Obviously, I think the real win is gonna be the fact that we're buying at a time when the tailwinds are really just starting for the edge-type centers that we have. I don't know, Ben, if you want to add a little bit more what we've done with Evoque.

Efficiently finance the businesses because now you have much more scale as well as.

Sam Pollock: Funding has been fully secure for the transaction, which is expected to close in the first quarter of 2024. Attaching briefly on the current operating environment, it is clear that there are considerable impacts from geopolitical and macroeconomic factors. Also, note is that we are witnessing diveraging economic conditions in several of our key markets. For instance, in Brazil, interest rates are expected to decline as inflationary pressures have waned. In the US, a relatively strong economic background will likely result in interest rates at current levels for a while longer.

Mostly owned real estate and so it really is a very very different business than what the two were separately and so we're very excited by that and and obviously I think the real when it's going to be the fact that we're buying at a time when the Tailwinds are really just starting for for the.

The edge type centers that we have.

If you want to add a little bit more what we've done with the book.

Ben Vaughan: Yeah. Maybe as we've talked about on a few calls in the past, what we've been up to at Evoque is, you know, when we bought the business, it was in a moment when some enterprise clients, there was a significant migration towards the cloud. What we did is we worked to improve our data centers and position them both to be attractive to hyperscalers as they need to move to the edge.

[noise], yes.

Maybe as as we've talked about on a few calls in the past we've been up to evoke is when we bought the business. It was at a moment when some enterprise clients. There was a significant migration towards the clouds. So what we did is we work to improve.

Sam Pollock: Other regions seem to be somewhere in the middle. Our global footprint should allow us to arbitrage varying economic circumstances to write recycled capital on favorable terms in certain markets, while taking advantage of capital scarcity and others. This has always been our playbook, and we will continue to execute the same business strategy, which has been successful over many years.

Improve our data centers and positioned them both to be.

Attractive to hyperscalers as they need to move to the edge.

Ben Vaughan: Continue to be attractive to enterprise clients. You know, today we're seeing, you know, large demand from smaller companies engaged in AI businesses. With the under-roof upgrades that we undertook over the last many years, the business today has a tremendous call on its capacity. Utilization is going up tremendously. We've had record sales quarters. Like I said, enterprise is coming back into retail colo. Hyperscalers are looking for edge applications, and AI clients have tremendous demand. I think as Sam mentioned in his opening comments, as part of our under-roof upgrades, we also identified an ability to bring on a fairly significant amount of additional capacity at a very low cost per megawatt.

Continue to be attractive to enterprise clients and also today, we are seeing.

Large demand from smaller companies engaged in AI businesses, and so with the under roof upgrades that we undertook over the last many years. The business today has a tremendous call on its capacity utilization is going up tremendously we've had record sales quarters and like I said enterprises coming back.

Sam Pollock: I'd like to make a few comments in relation to our share price. Despite achieving solid financial results throughout the year and delivering on our strategic initiatives, Brookfield Infrastructure's unit price has disappointedly underporn recently. This is not unique to us, as utility infrastructure companies have generally traded off its investors focused on credit or other sector strategies.

Into retail Colo.

Hyperscalers or looking for edge applications, and AI clients have tremendous demand and.

Sam Pollock: As we have noted in the past, the utility infrastructure sectors are highly resilient asset classes that generate growing and sustainable cash flows. Indicator of those attributes, we have grown FFO per unit and distributions per unit at compound annual rates of 11 and 8% respectively over the past decade.

Sam mentioned in his opening comments as part of our under roof upgrades, we also identified and ability to bring on.

A fairly significant amount of additional capacity at a very low cost per megawatt so going forward executing that now that the.

Sam Pollock: You know, going forward, we're executing that now that the centers will reach full utilization, and we're gonna add capacity in the coming years to meet you know, the demand that we see in the market. It's been a real turnaround in the business.

Ben Vaughan: You know, going forward, we're executing that now that the centers will reach full utilization, and we're gonna add capacity in the coming years to meet you know, the demand that we see in the market. It's been a real turnaround in the business.

The centers will reach full utilization and we're going to add capacity in the coming years to meet.

Sam Pollock: Looking ahead, there are several elements to our current situation that are worth highlighting. First, our sizable organic growth consists largely of embedded inflationary escalators and secured capital expansion projects. This benefit compounds over long periods of time and provides us with a natural hedge to higher interest rates. Also, our capital backlog is largely self-funded from a combination of committed capex facilities and retained cash flows.

Demand that we see in the market. So it's been a real turnaround in the business.

Devin Dodge: Okay, good to hear. Really good call. Appreciate that. I'll turn it over.

Okay. Good to hear I really can call appreciate that I'll turn it over.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Robert Hope from Scotiabank. Your question, please.

Thank you one moment for our next question.

And <unk>.

Next question comes from the line Robert Hope from Scotiabank. Your question. Please.

Robert Hope: Hi. Good morning. You know, just given the market's focus on funding liquidity across a variety of sectors, you know, how do you think about your existing liquidity position? Could you accelerate asset sales to further bolster the balance sheet or look for other levers like, you know, marketable securities sales?

Hi, good morning.

You know just give them the market's focus on funding liquidity across a variety of sectors. You know how do you think about your existing liquidity position and could you accelerate asset sales to further bolster the balance sheet or look for other reverse like multiple security sales.

Sam Pollock: Now, second, we have exceeded our new investments target for three consecutive years. As a result, we have this substantial built-in growth that provides us the flexibility to pace our investment activity in accordance for capital recycling achievements. Third, we have locked in interest rates for over 90% of our debt with an average maturity of approximately seven years. This provides us with great visibility into our cash flow going forward.

David Krant: Hey, Robert, it's David here. Look, I think first and foremost, we feel very good about our current liquidity position. As you'll see, it's over $2 billion at the corporate level and a lot of existing liquidity in each of our businesses so that they can fund a lot of the organic growth that we talk about, as you've seen throughout our materials. I think from a liquidity perspective, I think the $2 billion of asset sales that we have earmarked for next year is a very actionable plan, as you heard from Sam. We also have many pockets in the business where we think we can find additional liquidity if we need to accelerate our new investment opportunity.

Hey, Robert David here.

Look I think first and foremost we feel very good about our current liquidity position as you'll see it it's over $2 billion at the corporate level.

And a lot of existing liquidity in each of our businesses. So that they can fund.

A lot of the organic growth that we talked about as you've seen throughout.

Sam Pollock: Fourth, in light of our strong conviction in the intrinsic value of our business and its growth trajectory, we see the merit in deploying capital to repurchase our equity. During the quarter, we began repurchasing equity and have bought close to 1 million units under our normal course issue or bid. Going forward, we will consider further buybacks in conjunction with our ability to earn strong risk adjusted returns by deploying capital and new investment opportunities.

Our materials I think from a liquidity perspective, I think the $2 billion of asset sales that we have earmarked for next year.

Is a very actionable plan as you heard from Sam We also have any pockets in the business, where we think we can find additional liquidity, if we need to accelerate our new investment opportunities, but when you're pro forma that with 4 billion. A total liquidity. We think that's a significant amount to be operating it in this environment.

Sam Pollock: when you pro forma that with $4 billion of total liquidity, we think that's a significant amount to be operating at in this environment, and going forward.

And going forward.

Sam Pollock: In summary, we have demonstrated our ability to use our size, scale, and diversification to continue recycling capital at good valuations while earning higher returns in our new investments. On recycling, over the last three years, we have generated approximately 4.5 billion dollars of proceeds from 16 assets sales. Each was completed at a premium to the IFRS carrying value at the time of sale, and the combined gain over book value was approximately 70%.

Robert Hope: Thanks for that. Maybe just going back to the commentary on pacing. Like, when we take a look at the environment, you know, which could be full of opportunities, you know, how is that balanced, you know, with a market where it could be, you know, more difficult to sell assets or your unit price implies a higher cost of capital? You know, how do you balance the potential for significant accretive acquisitions versus, you know, what we'll call your higher cost of capital as well as, you know, a higher cost of capital?

Thanks for that and then maybe just going back to the commentary on pacing.

When we take a look at the environment, which could be full of opportunities how is that balance with a market where it could be.

More difficult to sell last time or your unit price implies a higher cost of capital Yeah, How do you balance the potential for significant accretive acquisitions versus what.

Well, we'll call your higher cost of capital as well as.

Sam Pollock: On deployment, our 2020 reinvestments are expected to provide us with some of the best risk-adjusted returns we have seen in the last decade. Combining these acquisitions with our existing platform investments provides significant embedded growth in our business today.

A little bit.

A higher sorry, a higher cost of capital.

Sam Pollock: Robert, I guess all I can say is, you know, we just closely monitor our liquidity. We know, you know, what we have to live with as far as our capacity. Once we have visibility on our capital recycling program, that will, you know, gauge our aggressiveness in pursuing big opportunities. In the meantime, you know, we'll continue to, you know, look at the tuck-in acquisitions or the businesses, the opportunities like the Cyxtera opportunity, which didn't really require any capital, and we'll take advantage of those. There's lots of things we can do to create value in our businesses that doesn't require a lot of capital.

Wherever I go I guess I can say that we just closely monitor liquidity so.

We we know what we have to live.

Sam Pollock: We remain committed to providing unicorns with stable and growing distribution within the five to nine percent range annually, while maintaining a payout ratio between 16-70% and a strong balance sheet. We have a track record of returning capital to investors with nearly nine billion dollars of distributions paid to unicorns.

With as far as are <unk>.

Capacity and.

Once we have visibility on.

A capital recycling program that will.

Gauge our aggressiveness in pursuing big opportunities in the meantime, we'll continue to look at the tuck in acquisitions or the businesses the opportunities like the sixth era opportunity, which didn't really require any capital and.

Sam Pollock: Ultimately, we believe providing strong cash flow and income growth creates unitholder value, which will be reflected in our unit price over time.

Operator: This concludes my remarks, and I'll now pass it back to the operator for questions and for questions. Certainly, once again, ladies and gentlemen, if you have a question at this time, please press star 11. One moment for our first question.

I will take advantage of those there's lots of things we can do to create value in our businesses that doesn't require a lot of capital.

Sam Pollock: Those larger ones, you know, as we said, you know, will match up with the cash that comes in from our asset sales.

Those larger ones will.

As we said will match up with.

Carolyn Radburn: Our first question comes in a lot, and there's Carolyn Radburn from TV Howard. Your question, please. Thanks very much and good morning.

The cash that comes in from our asset sales.

Robert Hope: Thank you.

Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Robert Catellier from CIBC Capital Markets. Your question, please.

Thank you one moment for our next question.

Sam Pollock: I was wondering if you could start by expanding on your comments and the letter on the investment landscape, in terms of where you're seeing the most attractive opportunities by geography and by sector, and also how you think about pacing your investments in an environment where the stress associated with higher interest rates arguably hasn't been fully absorbed yet. Hi, Carolyn. Thank you for those questions. I think there's two of them in there.

And our next question comes from the line of Robert <unk> from CIBC capital markets. Your question. Please.

Robert Catellier: Hey, good morning. Thank you for your comments so far. I do wanna get back to the capital allocation subject. It looks like you've become considerably more active under the NCIB following quarter end. I'm just wondering if there's something more substantial that you can do there over time. You've touched on this versus comparing repurchases versus investments, but I'm wondering how you're looking at this capital allocation in terms of some of your other options, like perhaps deleveraging, just given that seems to be what the market is focused on in general.

Good morning, and thank you for your comments, so far I I do want to get back to the capital allocation subject.

It looks like you've become considerably more active under the and see I'd be following quarter and I'm. Just wondering if there's something more substantial that you can do there over time and.

Sam Pollock: I think the first is just where we see value and just the tone of the market, and then the second one just on our own pacing of investments. On the first portion of your question, we do see attractive opportunities in most regions that we operate in. Frankly, we've probably focused our attention in North America and Europe in the past year or two, and obviously given our base currency being US dollars, it's always favorable for us to invest in US dollar businesses so that we don't have to deal with affects issues, and so we tend to focus in this market when we see great opportunities.

You've touched on the suburbs is preparing repurchases versus investments, but I'm wondering how you're looking at this <unk>.

Couple of location in terms of.

Some of your other options like perhaps to deleveraging just given that seems to be with.

[noise] is focused on in general.

Sam Pollock: Hi. Hi, Robert. You had a couple of different elements to your question there. I think, you know, just to repeat from the buyback of shares, you know, we will do that, you know, on a periodic basis, you know, with the existing programs that we have in place. To the extent that, you know, once we've done some capital recycling, we may do something larger, as opposed to, you know, making investments in new transactions. I think that's all we're telling people is it's part of our investment decision framework today, given where we're trading.

Hi, Robert.

So you.

You had a couple of different elm.

Elements of your question there I think.

Just to repeat from the.

Buyback of shares.

We will do that on a periodic basis with the.

Existing programs that we have in place and to the extent that once we.

Sam Pollock: But we are seeing interesting opportunities coming our way in Asia at the moment. We do have a new team and a focus in South Korea in particular. We've also, you know, have done generally very well in Australia, and because the team we have down there have hit above our weight, I guess, in terms of the amount of capital we've been able to deploy in that market. So I think the next little while I'm optimistic that we will find some very interesting opportunities in those two markets, but as a general comment, we do see good opportunities pretty much everywhere.

Done some cap recycling we.

We may do something larger as opposed to.

Making investments in new transaction. So I think that's all we're telling people is it's part of our investment.

Decision framework today, giving them wherever trading.

Sam Pollock: You know, in relation to delevering, you know, we feel very comfortable with our balance sheet today, which is as strong as it has been, and our maturities are as well-laddered as they probably have ever been. We really don't have any maturities at the corporate level for many years. At the asset level, you know, it's not only extremely manageable, but very comfortable with what we have. There's nothing that we're looking to delever in any particular case. I think the other thing which, you know, we did flag in our letter is, you know, even as interest rates go up, the inflation compounding within our business exceeds the amount of any increase in interest rates.

Yeah.

In relation to Delevering.

We feel very comfortable with.

Our balance sheet today, which has been strong and.

And our Maturity's R as well ladder as they probably have ever been we really don't have any maturities at.

At the corporate level for many years and.

Sam Pollock: As far as sectors, as I've probably said on the previous call and maybe a couple of calls before that, the best value tends to be in those businesses that need capital for growth. A lot of companies are start for growth capital and sectors, particularly the telecom sector, have tremendous capital projects. In front of them, and so they need capital, and that's frankly where we can invest for value today. But we are seeing interesting opportunities across transportation and utilities as well.

And at the asset level.

It's not only extremely manageable, but but very comfortable what we have so.

There's nothing that we're looking to delever in any particular case I think.

And our business the I think the other thing, which we did flagging are.

R letter is even as interest rates go up the inflation compounding within our business.

Exceeds the amount of any increase in interest rate so.

Sam Pollock: From that perspective, we are always delevering, just because the businesses are growing. I think that just leaves it at that. Unless Dave, you had anything else you wanna add?

From that perspective, we are always delevering, just because of the businesses are growing.

So.

I think that just leave it at that.

David Krant: No, I think that covers it well.

David had asthma.

Robert Catellier: Okay, thanks for that. I just wanted to clarify something. You, in recent years, have been talking about the value of your platform investments. If I understand your comments correctly this morning, you said that in terms of monetizing assets, the sweet spot is more middle market, mid-market rather than large scale. You know, given that you're looking to pace your new investments for the recycling, can we expect more in the next year or so in terms of tuck-ins rather than large acquisitions in the current environment?

Cover the Rocky.

Sam Pollock: So I realize I've covered up almost the whole universe of the infrastructure sector, but I do think there's a value to be had pretty much across the board. As far as our own pacing, as we mentioned in our letter, we have been very successful in recycling capital and using our liquidity to invest boldly when we've seen good opportunities in the last couple of years. I think we're going to benefit from that for the foreseeable future.

Okay, Thanks for that and I just want.

To clarify something.

In recent years I've been talking about the the value of your platform investments.

I understand your comments correctly this morning.

So the terms of monetizing such a sweet spot more middle market.

Mid market, rather than a large scale and.

Given that you're looking to pay for new investments for recycling can we expect more than.

In the next your so in terms of tuck ins rather than large acquisitions in the current environment.

Sam Pollock: And as far as what we would do in the future, I think it will be similar. If we see some amazing opportunities, we will find the capital to take advantage of them. But at the same time, we don't feel any pressure to invest and reduce our liquidity except in those circumstances where we see exceptional opportunities. So I think you'll see us being patient, but also investing boldly if we see a great opportunity. Great. That's a great overview. I'll keep my second one short since that one had a few inside it.

Sam Pollock: No, I wouldn't say that. I hope I didn't give people the wrong impression. I think all we wanted to just flag was, you know, what was in the letter, namely that we've made lots of investments. There's no pressure that we feel to deploy capital. You know, we will be opportunistic. You know, our liquidity increases with capital recycling, you know, we'll be on the lookout for great opportunities, whether it's buying our shares or making a big investment. We'll continue to do that. The tuck-ins are things that I would say that is a constant thing we're always doing. Those generally don't require any capital.

No.

No I wouldn't say that and.

I hope it and give people the wrong impression.

I think I'll.

All we wanted to just flag was.

What within the letter, namely that we've.

We've made lots of investments there's no.

There's no pressure that we feel to deploy capital.

We will be optimistic.

And as our.

Liquidity.

Increases with with capital recycling.

Sam Pollock: With respect to your pipeline of asset sales for 2024, would some of that pipeline have debts that is portable to the prospective buyers, which is presumably an advantage in this market? Hi, Sharon. I would say the vast majority of the ones that we are selling have portable debt. And yes, that's one of the characteristics that we do look for at the moment in order to be selling businesses. I think that is an embedded value in those capital structures and allows us to continue to create value in this market environment. Thank you for the time.

Will be on the lookout for great opportunities, whether it's buying shares or making a big.

Investment.

We will continue to do that the tuck ins are things that I would say that is a constant thing. We're always doing those don't generally don't require any capital we can usually do them on her.

Operator: Thank you one moment for our next question.

Sam Pollock: We can usually do them on our, you know, lines of credit in each of the businesses. Those are just part of the regular business plans of creating value. We'll continue to do those, particularly in this market where we see good opportunities.

Lines of credit each of the businesses those are.

Just part of the regular business plans of creating value and.

And we will continue to those.

Particularly in this market, where we see good opportunities.

Robert Catellier: Yeah, okay. Thank you.

Okay. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Frederic Bastien from Raymond James. Your question, please.

Thank you one moment for our next question.

And our next question comes from the lineup Frederick Bastian from Raymond James Your question. Please.

Robert Kwan: And our next question comes from the line of Robert Kwan from RBC. Great.

Frédéric Bastien: Hey, good morning.

Frederic Bastien: Hey, good morning.

Hey, good morning.

Sam Pollock: Morning.

David Krant: Morning, Fred.

Good morning.

Frédéric Bastien: Just wanted to close the loop on this latest Cyxtera investment. Can you reconcile the total purchase price of $1.3 billion you highlighted in your prepared remarks and the $775 million that's been quoted in the press? What is BIP's actual commitment to this $1.2 billion?

Frederic Bastien: Just wanted to close the loop on this latest Cyxtera investment. Can you reconcile the total purchase price of $1.3 billion you highlighted in your prepared remarks and the $775 million that's been quoted in the press? What is BIP's actual commitment to this $1.2 billion?

I just wanted to close the loop on this latest stare investment can can you reconcile the total purchase price of 1.3 billion you highlighted in the.

Sam Pollock: Good morning. If I can just catch on or ask you just around the cat's allocation specifically how you are approaching by that. Do you think about by that, especially if this unit price? As being an investment in your own assets and the return you would get based on buying back the stock at these levels versus what you think intrinsic value is. And then more broadly, are there any other 10 options that you see is on the table to support the share price.

In your remarks N B, a 775 million Bucks that's been corwin impressive.

And what what is your what is beeps.

Actual commitment to this 1.2 billion.

Sam Pollock: Yeah, sorry. The $1.3 billion includes all the purchases of the land leases, in addition to the $750 million going to Cyxtera. It's as I mentioned earlier, it's really a multifaceted transaction with many, many different parties. Think of it as a true, you know, recapitalization of that business, before we combine it with ours. The funding is in place from a group of lenders to complete all the acquisitions. It's not requiring any capital from us and, you know, closing is expected in Q1 2024.

Yeah, sorry.

The the 1.3 includes all the hurt.

Purchases of the land leases.

In addition to the 750 going to six there so as I mentioned earlier, it's really a multifaceted transactions many many different parties.

Sam Pollock: Hi, Robert. So on the first question on the buyback, like I think you've done a better job of describing how we think about it than I probably could. Yes, we do consider it as buying back businesses we know and understand well and have a good view on their future process. And so we weigh that again, you know, making investments in new assets and the type of returns we can get on that.

If it is a true.

Recapitalization of that business.

Before we combine it with ours.

And.

The the funding is in place from.

A group of lenders to complete all the acquisitions.

Not requiring any capital from us and.

Closing is expected in the first quarter of.

Sam Pollock: So that is the decision we weigh. Obviously, you know, what's attractive about buying your own assets is, you know, they're very much de-risk because you know what you're getting and you understand them well. And so you're, you know, in some respects, you have a slightly lower return threshold than you would for new investments. But we do weigh those two things and obviously take a long-term perspective on it. We're not just looking for, you know, an initial hit.

Frédéric Bastien: Okay, thanks for that color, Sam. Just a couple more questions quickly. In prior periods of market volatility, we've seen you make toehold investments in depressed public stocks. Obviously, you have been buying your own stock. Have you made such investment recently in other companies?

Frederic Bastien: Okay, thanks for that color, Sam. Just a couple more questions quickly. In prior periods of market volatility, we've seen you make toehold investments in depressed public stocks. Obviously, you have been buying your own stock. Have you made such investment recently in other companies?

Of 2024.

Okay, Thanks for that call or something.

Couple more questions quickly.

In prior periods of market volatility, we've seen you make a toehold investments and depressed public stocks. Obviously, you have been buying your own stock, but Ah have you made such investment recently in other companies.

Sam Pollock: We can't really comment too much on specifics, but you know, we do periodically, you know, make investments in companies that trade down and to monitor them. It's safe to say that at any given point in time, we probably have, you know, one or two that we've done that with. You know, I'd rather not comment more than that.

We can't really comment too much on specifics.

But we do periodically make invest.

Sam Pollock: It's about, you know, are we investing our capital for good long-term value. So that definitely is how we look at duck buybacks. As far as things we can do in the short-term, I think it's hard to do anything in particular other than, you know, continuing to, you know, describe the strength of the business and the prospects and the long-term value creation of the franchise assets. I think we've always tried to convey to our unit holders that brick infrastructure is a long-term compounder of wealth and that, you know, people should buy because they want to know that, you know, putting aside where volatility might take place in the market because of, you know, what the capital markets do, you know, we'll continue to deliver them.

Investments in companies that that trade down and to monitor them.

And is it safe to say that at any given point in time, we probably have one or two that we've done that with but.

I'd, rather not comment more than that.

Frédéric Bastien: Okay, fair enough. Lastly, where do you see the best opportunities for organic and inorganic growth in the midstream segment right now?

Frederic Bastien: Okay, fair enough. Lastly, where do you see the best opportunities for organic and inorganic growth in the midstream segment right now?

Okay fair enough.

Lastly, where do you see the best opportunities for organic and inorganic growth in the mid stream segment right now.

Sam Pollock: Sorry, say again, Fred. The question was, where do we see,

So I say again the question was where do we see the best opportunities for growth in midstream, whether it's organic or inorganic.

Frédéric Bastien: The best opportunities for growth, in midstream, whether it's organic or inorganic.

Frederic Bastien: The best opportunities for growth, in midstream, whether it's organic or inorganic.

Sam Pollock: Okay. Yeah. I'd say most of what we're focused on in the midstream sector is on the organic side. Maybe Ben, do you wanna touch upon a little bit of what we're doing in IPL and at NorthRiver in relation to some of the, you know, customer-related projects.

Okay, Yeah, I would say most of them are are focused on.

In the mid stream sector is on the organic side, maybe been touched upon a little bit of what we're doing.

And.

Oh and it.

North River in relation to.

Some of the.

Ben Vaughan: Mostly what we're focusing on in those businesses are what I would consider, you know, fairly smaller scale, but, you know, important projects for our clients to just help them with additional capacity needs. We're seeing utilization rates increase and reach pretty high levels across our midstream fleet. They're very smaller scale and relatively lower risk CapEx projects that are highly accretive for us. That's our main area of focus in that space.

Customer related.

Mostly what we're focusing on in those businesses are what I would consider.

Sam Pollock: With assurance, with the high assurance that give it in that they have today plus that five to nine percent growth and we have a long track record doing that and when we look at our business for the long-term, we feel as comfortable or more comfortable in our ability to do that. And I think that's the story we just need to reinforce with the investors.

Fairly.

Smaller scale, but.

Important projects for our clients to just help them with additional capacity needs were seeing utilization rates.

Increase in reached pretty high levels across our midstream fleet and so most of what we're engaged in is I'd call them quite size capital projects to allow our customers to cream either more barrels of gas through our facilities and they're very <unk>.

Robert Kwan: Great. Thanks.

Robert Kwan: I'm just for my second question just to ask around at BUUK.

Smaller scale and <unk>.

Relatively lower risk capex projects that are highly accretive course, so that's our main area of focus.

Sam Pollock: Yeah. I would say on a total dollar basis, though, Ben, it's probably in the next couple of years, we'd be investing $400 million of capital with relatively low EBITDA to CapEx ratios.

I would say on a on a total of one dollar basis, though been it's probably in the next couple of years, we've been investing.

Sam Pollock: I guess first, can you talk about your take on the housing market there, housing starts, and then just more broadly, you know, this is one of the assets that you've owned the longest, although it's not in the limited life fund. So, but can you talk about your long-term perspective on the business, how you think about, excuse me, the growth and valuation, and even just a little bit of the evolution from where you started with this business to where you are today and where you think that business is going to go in the future.

$400 million of capital with relatively.

Low.

EBIT capex ratios, so they're very accretive.

Ben Vaughan: Yep.

Ben Vaughan: They're very accretive. They represent a, you know, diversified number of clients. We'll be doing this both at IPL as well as at NorthRiver.

Sam Pollock: They're very accretive. They represent a, you know, diversified number of clients. We'll be doing this both at IPL as well as at NorthRiver.

They represent.

<unk> number of of clients.

Sam Pollock: Okay, no thanks, Robert. You know, for shareholders and analysts who have been with us for a long time. They know this is one of mine and our company's favorite businesses. We have owned it since we bought Babcock and Brown's business back in 2009. And then we've done a number of token acquisitions and organic growth projects to build the company up towards today. But maybe just the only first part of question on housing starts.

And we've been doing this call, but I feel as well as north or.

David Krant: That's great. Thanks so much.

Frederic Bastien: That's great. Thanks so much.

That's great. Thanks, so much.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Patrick Kenny from NBF. Your question please.

Thank you one moment for our next question.

And our next question comes from the line of Patrick any from N. B at your question. Please.

Patrick Kenny: Thank you. Good morning. To come back to the balance sheet here, you referenced your non-recourse debt maturing over the next 12 months. Notwithstanding your constructive comments on the market demand for, just wanted to confirm whether or not there may be any businesses or investors might be in need of liquidity support over the next 12 months?

[noise]. Thank you come over here.

To come back to the balance sheets.

You reference.

Your home decor stepped over.

Over the next 12 months.

Maybe.

Green.

<unk>.

Sam Pollock: This is a business for those of you who are less familiar with it, that really participate in the housing growth or the increase in the stock market. The stock of housing in the whole United Kingdom, what the business does, it basically works with developers to install all the last mile connections. And over time, what's special about this business is the fact that when we first bought it, we used to install just gas connections.

All over.

Notwithstanding.

<unk> <unk> <unk>.

Just wanted to confirm whether or not there wouldn't be any businesses.

Oh.

Might be some.

Liquidity support over the next 12.

David Krant: I didn't catch much of that, admittedly, Pat. It's David here. I think what I did capture, and feel free to jump in. What I think you're asking about was upcoming refinancings that we referenced in our materials and any need for liquidity or support from the business or from Brookfield Infrastructure. I think, you know, we highlighted the well-laddered maturity profile in our materials. We have no concerns around the leverage in each of our businesses that we have or the need for financial support for them. As we've alluded to in the past, these are structured, you know, predominantly to investment grade levels, very sustainable amounts of leverage at the underlying businesses.

I I didn't catch much of that admittedly it's.

It's David here I think what I gave capture him feel free to jump in what I. What I think you were asking about upcoming refinancing that we referenced in our materials and any need for liquidity or support from the business or from Brookville infrastructure and.

Sam Pollock: Today, we provide five different connections into the home, including water, electricity, fiber, and different heating pumps as well. And so, it's unique business. Today, the housing market has pulled back quite a bit. I think it's somewhere in the range of 20% pull back from the prior year. So, it's a housing is definitely weaker in the UK. What's great about this business is the fact that even though housing has pulled back pretty dramatic this one year, our connections that will be installed will in fact be higher than what they were last year.

And I think we highlighted the latter maturity profile on our materials, we have no concerns around the the leverage in each any of our businesses that we have or the need for financial support for them.

As we've alluded to in the past these are structured predominantly to investment grade levels.

Very sustainable amounts of leverage at the at the underlying businesses and the reason we do that is for.

David Krant: The reason we do that is for, you know, the ability to operate through cycles. We've seen that come to fruition this year. You know, I'd say from a maturity standpoint, we have about 5% in the next 12 months. You know, when we think through the cost of that financing, you know, depending on when that debt was raised, you know, if it was in the last five years, it was probably, you know, somewhere in the 150 to 200 basis points more expensive on base rates. You know, spreads for the sector have remained relatively constructive because of, you know, the market's been very open for high-quality infrastructure businesses like ours. You know, we're not feeling any concerns at the portfolio company or of upcoming refinancing.

The ability to operate through cycles, and we've seen that come to fruition. This year. So I.

I'd say from a maturity favorite we have about 5% in the next 12 months.

When we think through the cost about financing.

Sam Pollock: We'll have another record here of installations. And we have a backlog of housing connections that represent about 70 years of our annual connections. So, we have a big, big backlog. And I think the only other thing I'd mention about the housing is even though it's been down this year, the amount of housing deficit that exists in the market, it's pretty substantial. Typically, there's about 200,000 plus new homes built in the UK every year.

Depending on when the Dot Dot was raised you know if it was in the last five years it was probably.

Somewhere in the 150 to 200 basis points are more expensive on base rates spreads for the sector remained relatively constructive.

Because of you know over the market's been very open for for high quality infrastructure businesses like ours. So we're not we're not feeling any concerns at the portfolio company.

[noise] coming for net refinancings.

Patrick Kenny: Okay. No, that's great, David. Thanks. Then you guys provided a quick recap of your Investor Day highlights, and I apologize if I missed it, but just wanted to confirm on the back of the Cyxtera transaction here that you continue to expect that 12%+ FFO per unit growth over the next 1 to 3 years.

Okay, No that's great David Thanks.

And then you just provided a quick recap of your Investor day highlights and I apologize if I missed it but just wanted to confirm.

Sam Pollock: And the government has had a long-term ambition to see that grow to over 300,000. And so, there's always lots of programs to encourage it. And like most countries including Canada, the need for housing is pretty dramatic. So, we expect while there's a pull back this year, housing starts that will rebound pretty quickly.

On the back of the <unk> transaction here that you continue to expect that.

At 12% plus a full per unit growth over the next one to three years.

David Krant: Yep. Nothing has changed in the environment from last month when we provided that.

Yep nothing has changed in the environment from from last month, when we when we provide it back.

David Krant: Perfect. I'll leave it there. Thanks, guys.

Perfect I'll leave it there thanks guys.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Sam Pollock for any further remarks.

Thank you. This does conclude the question and answer session of today's program I'd like the hand, the program back to Sam Pollick for any further remarks.

Sam Pollock: Just maybe just a couple of final comments on, you asked about the business and our thoughts on it. We like this business because it basically is a perpetual asset base with inflation, the length, and highly diversified regulated cash flow. And it's been growing at about 20% per annum over the past 10 years. So the growth in the business is tremendous. We do have many investors in the fund. Most of them are on the debt side.

Sam Pollock: Okay. Thank you, operator. Thank you to everyone for joining the call this morning. We'd like to wish everyone a very happy upcoming holiday season. We look forward to providing you our Q4 and year-end results, early in the new year. All the best. Thank you.

Okay. Thank you operator, and thank you to everyone for joined the call. This morning.

We'd like to wish everyone, a very happy upcoming holiday season.

And we look forward to provide you our fourth quarter and year end results early new year.

All the best Thank you.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Sam Pollock: We've issued about $2 billion of investment grade debt into the US markets. And it's a regular issue into the debt markets and has a very strong following. And we also have an institutional investor who's been alongside us for the whole time for about 10 years, a big European institution who owns 20% of the company. And they have seen the growth in the company as have we. And this is a company that today we don't typically talk about value, but it is a very meaningful value to us.

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Sam Pollock: We prepare valuations for them each year as we do for many of our other institutional investors. And to give you a sense, a big four accounting firm put a value on this business at over 3.1 billion pounds, which is almost $4 billion US dollars. So very sizable company, very successful. And one that I hope we keep for a long time.

Operator: That's great. Thanks. Thank you.

Devin Dodge: One moment for our next question.

Devin Dodge: And our next question comes from the line of Devon Dodge from BMO Capital Markets. Your question, please. Thanks. Good morning. So we've been getting questions from investors on your ability to recycle capital in this type of market.

Sam Pollock: I know you talked about it the investor day, as well as in the prepared remarks earlier, but should we expect a bit of a low on monetization until long term interest rates stabilized. And then maybe just in the general sense, where are you seeing the most interest from potential buyers?

Sam Pollock: Hi there. So, obviously, it's hard to predict exactly what the market will look like. But what I would say though is that, you know, we are bringing, you know, we will, you know, bring to market those businesses that we think will be highly sought after. You know, what I can say is that, you know, on the businesses that we've already launched processes at the moment, and it's all be early days. The number of interested parties looking at it is substantial.

Sam Pollock: So there is lots of investors out there looking for high quality businesses. That's not stopped, and even though the last while has been relative to robust, and we still see large transactions that have been done. I think in this market environment, if I had to say where, you know, the sweet spot is, the sweet spot is probably more mid market transactions than large scale transactions. There's a lot more players in that sense. I think given the uncertainty around growth, highly contracted businesses tend to have less divergence in views as far as valuations than say businesses with growth wedges, so again that's something to keep in mind.

Sam Pollock: But then you also have the dynamics that some regions are in a different spot than others. I mentioned South American Brazil. They got ahead of the curve as far as tackling inflation and increasing interest rates and rates there now are expected to drop pretty meaningful to you over the next couple of months. And I'd say the market has improved significantly. And the enthusiasm that market is actually quite high compared to some markets where people are a little more skittish.

Sam Pollock: So I think one of the big benefits, and this is what we highlight in our letter and we've said in the past, is having a business that's very diversified across many regions. We can bring access to sale in regions where people are more constructive and there's lots of access to capital. And then in those regions where things are less constructive, we tend to be looking for opportunities there to buy. Okay, no, I appreciate that. That's a good color. Okay.

Sam Pollock: I guess we'll switch over to maybe the deal announced this morning. Listen to general sense, but I think it's fair to say that your initial investment in a retail collocation data center business has been, you know, at least a bit of a challenge. Can you talk about the improvements that have been made out of oak over the last couple of years and how the addition of the six their assets will further those efforts.

Sam Pollock: Okay. Well, maybe I'll start an alternative to ban here to talk about the things that we've done. And yes, I think it's fair to comment that the first couple years have been challenging as we work through our tenant base there. But it has been a business that, although last, I'd say, year and a bit, we've seen a real turnaround in its leasing profile and leasing success. So maybe ban will touch on that.

Sam Pollock: But as far as the six era, you know, the real opportunity here is, you know, the ability to, you know, not only buy per value, but also execute a multifaceted transaction where we can, you know, reunite some of the underlying land leases that are associated with the six their assets, combine some of those as well as the data centers in six their and then take that set of assets, combine it with our business, which is largely data centers with real estate that's owned, take advantage of significant synergies from a sales and cost perspective. We can really reduce the overhead as a percentage of revenue quite dramatically because of the combination of the two businesses. And then it especially finesse the businesses because now you have much more scale as well as mostly own real estate. And so it really is a very very different business than what the two were separately.

Benjamin Vaughan: And so we're very excited by that. And obviously I think the real wins can be the fact that we're buying at a time when the tailwinds are really just starting for the edge type centers that we have. I don't think we want to add a little bit more what we've done with the boat. Yeah, maybe as we've talked about on a few calls in the past, what we've been up to would evoke is when we bought the business, it was in a moment when some enterprise clients there was a significant migration towards the cloud.

Benjamin Vaughan: So what we did is we worked to improve our data centers and position them both to be attractive to hyperscalers as they need to move to the edge, continue to be attractive to enterprise clients. And also today we're seeing a large demand from smaller companies engaged in AI businesses. And so with the under roof upgrades that we undertook over the last many years, the business today has a tremendous call on its capacity utilization is going up tremendously.

Benjamin Vaughan: We've had record sales quarters. And like I said, enterprise is coming back into retail co-lo hyperscalers are looking for edge applications and AI clients have tremendous demand. And I think as Sam mentioned in his opening comments, as part of our under roof upgrades, we also identified an ability to bring on a fairly significant amount of additional capacity at a very low cost per megawatt. So going forward, we're executing that now that the centers will reach full utilization and we're going to add capacity in the coming years to meet the demand that we see in the market. So it's been a real turn around in the business.

Devin Dodge: Okay, good to hear. I really did call. I appreciate that. I'll turn it over.

Operator: Thank you one moment for our next question.

Robert Hope: And our next question comes from the line of Robert Hope from Scotiabank. Your question, please. Good morning. Just given the market's focus on funding liquidity across variety sectors, how do you think about your existing liquidity position? And could you accelerate asset sales to further pull through the balance sheet or look for other levers like, you know, marketable securities sales? Hey, Robert, it's David here. Look, I think first and foremost, we feel very good about our current liquidity position.

Robert Hope: As you'll see, it's over $2 billion at the corporate level and a lot of existing liquidity in each of our businesses so that they can fund a lot of the organic growth that we talked about as you've seen throughout our materials. I think from a liquidity perspective, I think the $2 billion of asset sales that we have earmarked for next year is a very actionable plan as you heard from Sam. We also have many pockets in the business where we think we can find additional liquidity if we need to accelerate our new investment opportunity.

Robert Hope: But when you probe form of that with four billion of total liquidity, we think that's a significant amount to be operating at this environment. Thanks for that. And then maybe just going back to the commentary on pacing. Like when we take a look at the environment, you know, which could be full of opportunities, you know, how is that balanced, you know, with a market where it could be, you know, more difficult to sell out to or your unit price implies a higher cost of capital, you know, how do you balance the potential for significant creative acquisitions versus, you know, what we'll call the higher cost of capital, as well as, you know, a little bit, you know, a higher, a higher cost of capital.

Robert Hope: Robert, I guess all I can say is, you know, we just closely monitor liquidity. So, we know, you know, what we have to live with as far as our capacity. And once we have visibility on our capital recycling program, that will, you know, gauge our aggression. [inaudible] In relation to delivering, we feel very comfortable with our balance sheet today, which has been strong, and our maturities are well-lattered as they probably have ever been.

Robert Hope: We really don't have any maturities at the corporate level for many years, and at the asset level, it's not only extremely manageable, but very comfortable. What we have, so there's nothing that we're looking to deliver in any particular case. I think our business, I think the other thing, which we did flag in our letter, is even as interest rates go up, the inflation compounding within our business exceeds the amount of any increase in interest rates.

Robert Hope: So, from that perspective, we are always delivering, just because the businesses are growing. So, I think that just leaves us that, unless Dave didn't ask why. I think that covers it well. Okay, thanks for that. I just wanted to clarify something. In recent years, I've been talking about the value of your platform investments, and if I understand your comments correctly this morning, it said that in terms of monetizing assets, the sweet spot is more middle-market, mid-market rather than large-scale.

Robert Hope: And given that you're looking to pace your new investments for the recycling, can we expect more in the next year or so in terms of tokens rather than large acquisitions in the current environment? No, I wouldn't say that, and I hope I didn't give people the wrong impression. I think all we wanted to just flag was what was in the letter, namely that we've made lots of investments. There's no pressure that we feel to deploy capital.

Robert Hope: We will be optimistic, and as our liquidity increases with capital recycling, we'll be on the lookout for great opportunities, whether it's buying our shares or making a big investment. We'll continue to do that. The tokens are things that I would say that is a constant thing we're always doing. Those don't generally don't require any capital. We can usually do them on our lines of credit in each of the businesses. Those are just part of the regular business plans of creating value, and we'll continue to do that, particularly in this market where we see good opportunities. Thank you.

Operator: Thank you one moment for our next question.

Frederic Bastien: And our next question comes from a line of Frederick Bastion from Raymond James.

Frederic Bastien: Your question, please. Hey, good morning. I just wanted to close the loop on this latest sister investment. Can you reconcile the total purchase price of 1.3 billion? You highlighted in your program arts and the $7075 million has been quoted in press. And what is BIPP's actual commitment to this 1.3 billion? Yeah, sorry. The 1.3 includes all the purchases of the land leases in addition to the $750 going to 6,000. So as I mentioned earlier, it's really a multifaceted transaction with many, many different parties.

Frederic Bastien: Think of it as a true recapitalization of that business before we combine it with ours. And the funding is in place from a group of lenders to complete all the acquisitions. It's not requiring any capital from us.

Frederic Bastien: And closing is expected in the first quarter of 2024. Okay, thanks for that, Congressman. A couple more questions quickly. In part periods of market volatility, we've seen you make total hold investments in the press. Public stocks, obviously, you have been buying your own stock. But have you made such investment recently in other companies? We can't read comments too much on specifics, but we do periodically make investments in companies that trade down and to monitor them. And it's safe to say that at any given point in time, we probably have 1 or 2 that we've done that with. But I'd rather not comment more than that.

Frederic Bastien: Okay, Fair enough.

Sam Pollock: Lastly, where do you see the best opportunities for organic and inorganic growth in the midstream segment? I know. Sorry, again, Fred. The question was where do we see the best opportunities for growth in midstream, whether it's organic or inorganic? Okay. Yeah, I say most of what we're focused on in the midstream sector is on the organic side. Maybe Ben, you want to test upon a little bit of what we're doing in IPL and at North River in relation to some of the customer related projects.

Sam Pollock: Yeah, mostly what we're focusing on in those businesses are what I would consider, you know, fairly smaller scale, but you know, important projects for our clients to just help them with additional capacity needs. We're seeing utilization rates, you know, increase and reach pretty high levels across our midstream fleet. And so most of what we're engaged in is I'd call them height side capital projects to allow our customers to bring either more barrels or gas through our facilities and their very smaller scale and relatively lower risk capital projects for their highly accrued accourse.

Sam Pollock: So that's our main area focus. Yeah, I would say on a total dollar basis though. Ben, it's probably the next couple of years we've been investing $400 million of capital with relatively low EBITDA to the cat-bets ratios. So they're very creative. They represent a diversified number of clients. And we're doing this both at ICL as well as Northrop.

Frederic Bastien: That's great. Thanks so much.

Robert Hope: Thank you one moment for our next question. And our next question comes from the line Patrick Kenney from NBF. Your question, please. Thanks for coming back to the balance sheet zero. Your reference, I think you're going to be course debt over the next 12 months. Could maybe create a person pull over and notwithstanding your conservative comments from the market demand for that just wanted to confirm whether or not there may be any businesses or investments might be in public liquidity support over the next 12 months.

Robert Hope: I didn't catch much of that admittedly, Pat. It's David here. I think what I did catch from feel free to jump in. What I think you're asking was upcoming refinancing that we referenced in our materials and any need for liquidity or support from the business or from Brookfield Infrastructure. And I think we highlighted the well-lattered maturity profile in our materials. We have no concerns around the leverage in each any of our businesses that we have or the need for financial support for them.

Robert Hope: As we've alluded to in the past, these are structured predominantly to investment grade levels, very sustainable amounts of leverage at the underlying businesses. And the reason we do that is for the ability to operate through cycles. And we've seen that come to fruition this year. From a maturity standpoint, we have about 5% in the next 12 months. When we think through the cost of that financing, depending on when that debt was raised, if it was in the last five years, it was probably somewhere in the 150 to 200 basis points more expensive on base rates.

Robert Hope: It's spread for the sector of remained relatively constructive because of over the markets have been very open for high quality infrastructure businesses like ours. So we're not feeling any concerns at the portfolio company or upcoming refinancing. Okay. No, that's great, David. Thanks.

Robert Hope: And then you guys provided a quick recap of your investor day highlights, and I apologize if I missed it, but just wanted to confirm on the back of the six era transaction here that you continue to expect that 12% plus FFO per unit growth over the next one to three years. Yeah, nothing has changed in the environment from last month when we provided that. Perfect. I'll leave it there. Thanks, guys. Thank you.

Sam Pollock: This does conclude the question-and-answer session of today's program. I'd like to hand the program back to St. Pollock for the remarks. Okay. Thank you, operator. And thank you, everyone, for joining the call this morning. We'd like to wish everyone a very happy upcoming holiday season. And we look forward to providing you our fourth quarter and year-and-results, our early new year. All the best. Thank you.

Operator: Thank you, ladies and gentlemen, for your participation at today's conference. This does conclude the program. You may now disconnect. Good day.

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