Q3 2023 Brookfield Infrastructure Corp Earnings Call

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 Dar one one again as a reminder of today's program is being recorded and now I'd like to introduce your house with today's program, David Crane, Chief Financial Officer. Please go ahead Sir.

Thank you operator, and good morning, everyone welcome to Brookfield infrastructure partners third quarter 20 twenty-three earnings Conference call is introduced 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 valid.

Touch on our balance sheet strength and the success, we've had in our assets out 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. 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 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.

<unk> all 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.

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 segments are 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 base during the last 12 months.

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

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.

Each of our businesses have increased reflecting the positive impact inflation has on our results.

Specifically, our global toll roads 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 VIII are integrated route and logistics provider in Brazil, Brazil.

Brazil's 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 our ownership.

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

This was 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 increased utilization in higher contractive castles across the segments compared to last year as well as the initial contribution from the Heartland petrochemical complex.

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

All commercial arrangements underpinning approximately 70% of the capacity or in 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.

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

In the Asia Pacific region, we 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 that 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.

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 deck 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 into.

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

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 successors 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.

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 the favors well capitalised buyers with access to capital.

That concludes my remarks. This morning, I will now turn the call over to Sam.

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 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 a 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.

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

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

Transaction consideration.

We expect to generate a base case IRR above our targets drive 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 cash and less attractive markets.

We're also very excited about the opportunities across our data center platform, which has grown significantly following 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.

Of over 330 megawatts of capacity deployed in high demand areas across North America.

The combined platform lot the 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 blind.

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.

Our global footprint should allow us to arbitrage bearing economic circumstances recycle capital unfavorable term concern 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.

Brechtel 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.

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 its largest self funded from a combination of committed capex facilities and retain cash flows.

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

As a result, we have substantial built in growth that provides us the flexibility to paste or investment activity in the courts 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.

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

We see the merit and deploying cap to repurchase our equity.

During the quarter, we began repurchasing equity in about 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 and our new investments.

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 IRS 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.

<unk> 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.

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.

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 the law and their swollen red thrown from TB. Your question. Please.

Thank you very much and good morning.

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 keeping your investment environment, where the stress associated with higher interest rate.

<unk> hasn't been fully absorbed yet.

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 pace.

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 frankly with.

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.

Operator: Thank you for standing by and welcome to Brookfield Infrastructure Partners, third quarter two thousand twenty three results conference call and webcast. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the 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.

U S dollar businesses.

So that we don't have to deal with.

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.

David Krant: And now I'd like to introduce your host for today's program, David Krant, Chief Financial Officer. Please go ahead, sir. Thank you, operator and good morning, everyone. Welcome to Brookfield Infrastructure Partners, third quarter twenty twenty three 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 field program this year.

We've also.

Had 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.

Find some very interesting opportunities and those two markets, but I'd say, a as a general comment we do see.

Good opportunities pretty much everywhere.

As far as sectors.

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

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

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

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.

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.

Sectors <unk>.

Particularly the.

David Krant: 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. 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.

Telecom sector have tremendous capital project 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.

David Krant: Results benefit from our business's unique ability to capture current inflation levels, combined with the commissioning of nearly 1 billion of capital projects over the last 12 months. Looking ahead, we are well positioned for a strong end of the year, considering that our European Hyper-Scaled 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, are utilities businesses generated FFO of $229 million, an increase of 17% from the comparable period last year.

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

R.

Our letter.

We have been very successful in.

Precycling 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 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 to to take advantage of them, but.

David Krant: 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 HomeServe 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.

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.

Great. That's a great overview I'll keep my second one short since that one had a few inside it.

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

With respect to your pipeline of asset sales for 2024 with some of that pipeline have that that is horrible to the prospective buyers, which is presumably an advantage in this market.

Yes, Hi, Cheryl Lynn I would say.

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

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

Characteristics that we do look for at the moment and order.

David Krant: A bright spot within our transport segment is VLI, our integrated rail and logistics 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 5 and 9% respectively, as a result, even as increasingly six times during our ownership.

Selling businesses, because I think that is embedded value in those capital structures and.

And allows us to continue.

Continued to great create value in this market environment.

Thank you for the time.

Thank you one moment for our next question.

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

Good morning.

David Krant: Our mid-tune segment, FFO, 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 mid-stream business. Results were supported by an increased utilization and higher contracted castles across the segments 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.

If I could just.

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

Just.

Do you think about buybacks, especially this unit price.

As an investment in your own assets and the return.

Yes.

On buying back to Stockett.

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.

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% of the capacity are in service and the fourth quarter 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 of 2023 and a European hyperscale data center platform in this August.

Support the share price.

Hi, Robert.

So on the the first question on that.

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.

Yes, we do consider it is buying back.

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

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

David Krant: 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 business, we continued to experience strong industry tailwinds driving elevated demand for capacity. In North America, our U.S, 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 U.S, hyperscale platform, we acquired a 200 acre site in Chicago that can accommodate 200 megawatts of capacity.

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

The decision we way obviously.

What's attractive finding.

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.

Some respects you haven't a slightly lower return.

Threshold than you would for new investments.

But we do weigh those two things and obviously.

David Krant: 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, 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 passer of electricity costs. Construction is commenced and is forecast to be completed by the end of 2025. 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 160 megawatts.

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

Think.

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

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. Act. 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.

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 the assurance with the highest <unk>.

Dividend that they have today, plus that 5% to 9% growth.

And we have a long track record doing that and when we look at our business for the long term.

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 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.

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.

Alright.

Just for my second question just to.

Ask around.

B a U K.

I guess first with can you talk about.

Your take on the housing market there housing starts.

David Krant: 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 landscapes that favors well-capitalized buyers with access to capital.

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 groceries and valuation.

Even just a little bit of the evolution from where you started with his business.

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

Right.

Okay now thanks, Thanks Robert.

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 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 tried international.

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.

We bought.

But babcock and brown business back in 2009 and.

And then we've done a number of.

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

But they just.

The first part of your question on housing starts.

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

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

Really participate in the.

Housing.

Growth.

The increase in the stock of housing in the whole King.

Kingdom.

Well the business does it.

It basically works with developers too.

Install all the last mile connections and over time.

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 to 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 for and compass, which closed in August and October respectively.

Special about this business is the fact that.

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

Heating pumps as well and so.

So it's unique business today, the housing market has pulled back quite a bit I think it's.

Sam Pollock: Over night, we signed an agreement to acquire a portfolio of data centers out of bankruptcy from Sixterra. We believe we will generate strategic value by combining Sixterra with a bulk 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. Funding has been fully secured for the transaction, which is expected to close in the first quarter of 2024.

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.

One year, our connection's that'll be installed will in fact 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.

Sam Pollock: 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. Other regions seem to be somewhere in the middle.

The amount of housing death.

Deficit there exists in the market.

Pretty substantial typically there's about 200000.

Sam Pollock: 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 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.

Plus.

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.

Sam Pollock: I'd like to make a few comments in relation to our share price.

It it basically has a.

Sam Pollock: Despite achieving solid financial results throughout the year and delivering on our strategic initiatives, Brookfield Infrastructure's unit price is disappointingly 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. 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.

Perpetual asset base with inflation linked and highly diversified regulated cash flows.

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 <unk>.

Investors in the fund.

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

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

And we also have a <unk>.

Institutional investor Who's.

Been a long silence for the hold time for about 10 years, a big European institution, who owns 20% of the company.

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. Now, second, we have exceeded our new investments target for three consecutive years.

Sam Pollock: As a result, we have substantial built-in growth that provides us the flexibility to pace our investment activity in the courts 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. 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.

And.

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

And this is a company that.

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

We prepare valuations for them.

Each year, 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.

At 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.

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

Thank you one moment for our next question.

Sam Pollock: During the quarter, we began repurchasing equity in a cost 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-adjustive returns by deploying capital and new investment opportunities, of the United States.

And our next question.

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

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.

Bit a hole 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.

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 both value was approximately 70%.

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

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. We remain committed to providing unicorns with stable and growing distribution within the 5-9% 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 9 billion dollars of distributions paid to unicorn holders. Ultimately, we believe providing strong cash flow and income growth creates unicorn value which will be reflected in our unit price over time.

The businesses that we've already launched processes.

At the moment.

It's all booted 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 that that has not stopped and even though the last while.

It has been relatively robust and we still see large transactions at back being done.

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.

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 1-1. One moment for our first question.

There is a lot more players.

And that segment.

I think.

Yeah.

Given the.

Uncertainty around growth highly contracted businesses tend to be.

Sam Pollock: Our first question comes in line. And there's Carolyn Radbrone from TV Howard. Your question, please. 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 in terms of where you're seeing the most attractive opportunities by geography and by sector and also how you think about piecing your investments in an environment where the stress associated with higher interest rates arguably hasn't been fully absorbed yet.

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.

But then you also have.

The dynamics that some regions are.

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

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

Sam Pollock: Hi, Carolyn. Thank you for those questions. I think there's two of them in there. I think the first is just where we see value in 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.

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 and enthusiasm that market is actually quite high compared to some markets where.

People are a little more.

<unk>.

So.

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

Bring assets a sale in regions where people are more.

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

Sam Pollock: 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. 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 done generally very well in Australia.

To buy.

Alright, well I appreciate that'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.

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 will further those efforts.

Okay, well, maybe I'll start and I'll turn it over to bend here to talk about the things that we've done.

Sam Pollock: 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. As far as sectors, as I've probably said on the previous call, and maybe a couple calls before that, you know, the best value tends to be in those businesses that need capital for growth.

And yes, I think it's fair comment that.

The first.

A 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 a leasing.

Leasing profile and leasing.

Success, maybe bandwidth touch on that but as far as this six Tara.

The real opportunity here is the ability to.

Not only five per value, but also executed multifaceted transaction, where.

Sam Pollock: A lot of companies are start 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. So I realize I've cover 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.

We can reunite some of the underlying land leases.

The.

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

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.

Sam Pollock: And 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 when we've seen good opportunities in the last couple years. You know, I think we're going to benefit from that for the foreseeable future, and 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.

Really reduce the overhead.

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

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

Mostly owned real estate and so it really is a very very different business than what the two were separately.

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.

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

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

[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 in a moment when some enterprise clients. There was a significant migration towards the clouds. So what we did is we work to improve.

Improve our data centers and position them, both to be attractive to hyperscalers as they need to move to the edge.

Sam Pollock: 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 debts that is portable to the prospective buyers, which is presumably an advantage in this market? Yeah, 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.

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.

Into retail Colo hyperscalers or looking for edge applications, and AI clients have tremendous demand and.

Sam Pollock: Because I think that is an embedded value in those capital structures and allows us to, you know, continue to create value in this market environment. Thank you for the time. Thank you one moment for our next question.

Sam mentioned in his opening comments as part of our under roof upgrades. We also identified in the 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.

The centers will reach full utilization and we're going to add capacity.

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

In the coming years to meet.

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

Sam Pollock: Good morning. If I can just touch on or ask you just around the capital allocation specifically how you are approaching by that. This, 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. And then more broadly, are there any other 10 options that you see is on the table to support the share price?

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

Thank you one moment for our next question.

And our next question.

<unk> comes from the lineup Robert Hope from Scotiabank. Your question. Please.

Hi, good morning.

You know just give them the market's focused on funding liquidity across a variety of sectors. 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 marketable security cells.

Hey, Robert David here.

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 prospects. And so we weigh that again, making investments in new assets and the type of returns we can get on that. So that is the decision we weigh.

I think first and foremost we feel very good about our current liquidity position as you'll see it's 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 plans 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 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: Obviously, what's attractive about buying your own assets is they're very much de-risk because you know what you're getting and you understand them well. And so 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 an initial hit. It's about are we investing our capital for good long-term value.

And going forward.

Thanks for that and then maybe just going back to the commentary on pacing like when we take a look at the environment, which could be full of opportunities.

How does that balance with a market where it could be.

More difficult to sell last how it or your unit price implies a higher cost of capital how do you balance the potential for significant accretive acquisitions versus.

Sam Pollock: 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 continuing to 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 Brooklyn Infrastructure is a long-term compounder of wealth and that people should buy because they want to know that putting aside where volatility might take place in the market because of what the capital markets do, we'll continue to deliver them with a high assurance that dividend that they have today plus that 5% to 9% growth.

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

A little bit.

A higher sorry, a higher cost of capital.

Wherever I got I guess, all I can say that we just closely monitor liquidity so.

We we know what we have to live.

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 well.

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.

Those larger ones will.

As we said will match up with.

Sam Pollock: And 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. And I think that's the story we just need to reinforce with the investors.

The cash that comes in from our asset sales.

Thank you.

Thank you one moment for our next question.

Robert Kwan: Great. I'm just for my second question just to ask around at BUUK. I guess first, can you talk about your take on the housing market there, housing starts, and then just more broadly, this is one of the assets that you've owned the longest, although it's not in the limited-life fund. But can you talk about your long-term perspective on the business, how you think about it? 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 grow in the future.

And our next question comes from the line of Robert <unk> from CIBC capital market. So your question. Please.

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 NCI be following quarter and I'm. Just wondering if there's something more substantial that you can do there over time and.

Search on the suburbs is preparing repurchases versus investments, but I'm wondering how you're looking at this cut.

Couple of location in terms of.

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

Sam Pollock: Okay, thanks Robert. 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 tuck and acquisitions and organic growth projects to build the company up towards today. But maybe just the only your first part of question on housing starts.

[noise] is focused on in general.

Hi, Robert.

So you.

You had a couple of different.

Elements of your question there I think.

Just to repeat from the.

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've done some cap recycling.

Sam Pollock: This is a business for those existing 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 and over time what's special about this business is the fact that when we first bought a used install just gas connections today we provide you know five different connections into the home including water electricity, fiber and you know different heating pumps as well.

We may do something larger.

Posed to.

Making investments in new transaction. So I think that's all we're telling people. It's it's part of our investment decision framework today, given where we're trading.

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 the corporate level for many years and.

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.

Sam Pollock: And so a unique business today the housing market has pulled back you know quite a bit. I think it's somewhere in the range of 20% pullback 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 connection cell being installed will in fact be higher than what they were last year.

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 rates. So.

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

I think that just leave it at that.

David asked why I think that covers it well.

Sam Pollock: We'll 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 you know I think the only other thing I've mentioned 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 you know typically there's about 200,000 plus 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.

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.

I understand your comments correctly this morning.

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

Mid market, rather than large scale and.

Given that you're looking at a pace or new investments for recycling can we expect more and then.

You're so in terms of tuck ins rather than large acquisitions in the current environment.

No.

No I wouldn't say that and.

Sam Pollock: 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 you know 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 you know the business and and our thoughts on it. You know we like this business because you know it basically is a perpetual asset base with inflation and highly diversified regulated cash flow, and it's been growing at about 20% per annum over the past 10 years.

I hope it and give people the wrong impression.

I think I'll.

All we want to just flag was.

What within the letter, namely that we've made lots of investments there's no.

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

We will be optimistic.

As are.

Quiddity increases with with capital recycling.

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

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.

Sam Pollock: So the growth in the businesses is tremendous. We do have many investors in the fund. Most of them are on the debt side. You know, we've issued about two billion dollars of investment grade debt into the U.S, 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.

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.

Okay. Thank you.

Thank you one moment for our next question.

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

Sam Pollock: And you know, they have seen the growth in the company as have we. And 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. And, you know, to give you a sense, you know, a big four accounting firm put a value on this business at over 3.1 billion pounds, which is almost four billion U.S, dollars. So a very sizable company, very successful. And one that I hope we keep for a long time.

Robert Kwan: That's great. Thank you.

Hey, good morning.

Good morning.

I just wanted to close the loop on this latest hysteria and best men can can you reconcile the total purchase price of 1.3 billion you highlighted in the.

Operator: One moment for our next question.

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

And and what what is your what is beeps.

Actual commitment to this 1.2 billion.

Yeah, sorry.

The the 1.3 includes all of the 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.

Devon 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. You know, 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 stabilize? And then maybe just in the general sense, where are you seeing the most interest from potential buyers?

Think of it as a true.

Recapitalization of that business.

Before we combine it with ours.

And.

The <unk>.

Funding is in place from that.

Groups of lenders to complete all the acquisitions.

Not requiring any capital from us and.

Closing is expected in the first quarter of.

Of 2024.

Okay. Thanks for that color.

Couple more questions quickly.

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

Sam Pollock: Hi there. So, you know, obviously, it's hard to predict exactly what the market will look like. What I would say though is that, you know, we are bringing, you know, we will, you know, bring to market those businesses that, you know, we think will be highly sought after. You know, what I can't say is that, you know, on the businesses that we've already launched processes at the moment. And it's all be early days.

We can't really comment too much on specifics.

But we do periodically make invest.

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

And say.

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

Sam Pollock: The number of interested parties looking at it is substantial. 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 fact being 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.

Yeah, I'd, rather not comment more than that.

Okay fair enough.

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

So I say again the question was where do we see the <unk>.

Opportunities for growth in midstream, whether it's organic or inorganic.

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

Sam Pollock: There's a lot more players in that. Management. You know, I think, you know, 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 with growth wedges. So again, that's something to keep in mind. But then you also have the dynamics that, you know, some regions are in a different spot than others. You know, I mentioned South American Brazil, 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 meaningful to you over the next couple of months.

In the mid stream sector is on the organic side maybe been.

<unk> upon a little bit of what we're doing.

And Ah IPL in it.

North River in relation to.

Some of the.

Customer related.

Mostly what we're focusing on.

Those businesses are what I would consider.

Fairly.

Smaller scale, but.

Important projects for our clients to just help them with additional capacity needs. If we're seeing utilization rates.

Increase enriched 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>.

Sam Pollock: And I'd say the market has improved significantly and the enthusiasm that market is actually quite high compared to some markets where, you know, people are a little more skittish. So, you know, I think one of the big benefits, and this is what we highlight in our letter and we 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. And then in those regions where things are less constructive, you know, we tend to be looking for opportunities there to buy. Okay. No, I appreciate that. That's good color. Okay.

Smaller scale and <unk>.

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

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.

$400 million of capital with relatively.

Low.

But as a capex ratios, so they're very accretive.

They represent.

<unk> number of of clients.

And we'll be doing this both ICL lifestyle is norther.

That's great. Thanks, so much.

Thank you one moment for our next question.

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 at evoke over the last couple of years and how the addition of the six their assets will further those efforts.

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

Take them altogether.

To come back to the balance sheets.

Mm you reference.

<unk> turned over the next 12 months.

Maybe.

Green.

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

Bruce.

All over.

Notwithstanding.

<unk> <unk>.

Just wanted to confirm whether or not they're going to be any businesses.

Oh.

Might be.

Liquidity support over the next 12.

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 his upcoming refinancing that we referenced in our materials and any need for liquidity or support from the business or from Brookfield infrastructure and.

Sam Pollock: But as far as the six era, you know, the real opportunity here is, you know, the ability to, you know, 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 six era assets, combine some of those as well as the data centers in six era. 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.

And I think we highlight of 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 we as.

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.

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

I would say from a maturity came home at about 5% in the next 12 months.

Sam Pollock: We can really reduce the overhead as a percentage of revenue quite dramatically because of the combination of the two businesses. And then especially finance 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. 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.

When we think through the cost of that financing.

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 more expensive on base rates spreads for the sector remained relatively constructive because of over the market has 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 or.

[noise] coming for refinancing.

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: I don't know if you want to add a little bit more what we've done with a boat. Yeah, maybe as we've talked about on a few calls in the past, what we've been up to at a boat is when we bought the business it was in a moment when some enterprise clients there was a significant migration towards the cloud. 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.

On the back of the 660 transaction here that you continue to expect.

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

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

Perfect I'll leave it there thanks guys.

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

Sam Pollock: And also today we're 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, 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.

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 and results early new year.

All the best Thank you.

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

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Sam Pollock: So going forward with 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. Okay, good to hear. I really did call. I appreciate that.

Operator: I'll turn it over. Thank you one moment for our next question.

Robert Hope: And our next question comes from the line of Robert Hope from Scotia Bank. 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 personal formulas we feel very good about our current liquidity position is 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.

Robert Hope: 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. But when you perform with that with four billion of total liquidity, we think that's a significant amount to be operating at this environment, and I'm going forward.

Sam Pollock: 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 assets or your unit price implies a higher cost of capital. How do you balance the potential for significant accretive acquisitions versus what we'll call your higher cost of capital as well as a little bit, you know, a higher cost of capital.

Sam Pollock: Robert, I guess all I can say is that we just closely monitor liquidity. So we 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 aggressiveness and pursuing big opportunities. In the meantime, you know, we'll continue to, you know, look at the tucking acquisitions or the businesses, the opportunities like the 6th era opportunity, which didn't really require any capital.

Sam Pollock: 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. And those larger ones, you know, will, as we said, you know, will match up with the cash that comes in from our assets.

Operator: Thank you. One moment for our next question.

Robert: And our next question comes from the line of Robert, from CIBC Capital Markets. Your question, please. Good morning. Thank you for your comments so far. I do want to 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. And 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 the leveraging, just given that seems to be what the market is focused on in general.

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

Sam Pollock: 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. So from that perspective, we are always delivering just because the businesses are growing. So I think that just leaves us at that, unless Dave didn't ask why. I think that covers it well.

Sam Pollock: Okay, thanks for that. And 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. 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 current environment?

Sam Pollock: No, I wouldn't say that. And I hope I didn't give people the wrong impression. I think all we want 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. 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.

Sam Pollock: 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, you know, aligned to 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.

Robert: Yeah, okay, thank you.

Operator: They do one moment for our next question.

Frederick Bastion: And our next question comes from the line of Frederick Bastion from Raymond James. Your question, Thank you. Hey, good morning.

Sam Pollock: Morning, President. I just wanted to close the loop on this latest sister investment. Can you reconcile the total purchase price of 1.3 billion, he highlighted in the in your federal remarks and the $775 million has been quoted in press. And what is your, what is BIP's actual commitment to this 1.2 billion? Yeah, sorry. The 1.3 includes all the purchases of the land leases in addition to the $7.50 going to success there.

Sam Pollock: So, as I mentioned earlier, it's really a multi-facet transaction with many, many different parties. 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 acquisition. It's not requiring any capital from us.

Frederick Bastion: And closing is expected in the first quarter of 2024. Okay, thanks for that, Congressman. A couple more questions quickly. In prior periods of market volatility, we seen you make total hold investments in the press public stock. Obviously, you have been buying your own stock. But have you made such investment recently in other companies? We can't really comment too much on specifics. But, you know, 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, yeah, I'd rather not comment more than that.

Sam Pollock: Okay, Fair enough. Lastly, where do you see the best opportunities for organic and inorganic growth in the midstream segment right now? So, I say 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 touch upon a little bit of what we're doing in IPL and at North River in relation to some of the customer related products.

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 increase and reach pretty high levels across our midstream fleet. And so, most of what we're engaged in is, I'd call them quite side, capital projects to allow our customers to bring either more barrels or gas through our facilities.

Sam Pollock: And they're very smaller scale and relatively lower risk capital projects that are highly accrued of course. So, that's our main area of focus. I would say on a total dollar basis though, and 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.

Frederick Bastion: That's great. Thanks so much.

Operator: Thank you one moment for our next question. And our next question comes from the line up Patrick Kenny from NBF, your question please. Thank you for coming back to the balance sheet zero. Your reference, I'm going to be course dead, over the next 12 months, getting to be green, just been created persons all over and notwithstanding your conservative comments from the market system. I just wanted to confirm whether or not there are any BIA businesses, or might be in public liquidity support for the next 12 months.

Operator: I didn't catch much of that admittedly, Pat, and David here. I think what I did capture and feel free to jump in, what I think you're asking about is upcoming refinancing that we referenced in our materials, and any need for liquidity or support from the business or from fulfilling frustration. And I think we highlighted the well-lattered maturity profile in our materials. We have no concerns around the leverage in any of our businesses that we have, or the need for financial support for them.

Operator: 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. So, 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.

Operator: Spreads for the sector have remained relatively constructive, because of 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 of upcoming refinancing. Okay, no, that's great, David. Thanks. 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. Yep, nothing has changed in the environment from last month when we provided that, that.

Patrick Kenny: 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. Paulis for the remarks. Okay, thank you, operator. And thank you, everyone, for joining the providing you our fourth quarter and year in results. I really knew you're all the best. Thank you. Thank you, ladies and gentlemen, for your participation at today's conference.

Operator: This does conclude the program. You may now disconnect.

Operator: Good day.