Q4 2024 Brookfield Infrastructure Corp Earnings Call
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Before we go into our form of Q&A.
We thought we call an audible and have someone from our team addressed the news that came out this week regarding deep seek.
And so in that regard I'd like to.
Welcome.
Roberto <unk>, who is the head of our.
Speaker Change: Telecom business here in North America, and I thought I'd just pose a question to them, that's probably on a lot of People's minds, and Rob I guess.
Simple question is yes.
No.
Speaker Change: What happened this week what is the.
Speaker Change: The news regarding deep seeking what what they did and how does that impact our business going forward.
Speaker Change: Great. Thank you Shannon and good morning, everyone.
Speaker Change: So as Sam said earlier this week deep seek which is a Chinese based artificial intelligence company.
Speaker Change: How is the training of our new large language model.
Speaker Change: Effectively is capable of achieving the same performance of some of the current industry leading models.
Speaker Change: If we kind of take a step back.
Speaker Change: That announcement in of itself is not.
Speaker Change: I think the focus is people always thought there was going to be increased competition, but what was interesting about the announcement.
Speaker Change: Is that deep sea was able to drive significant optimization.
Speaker Change: And train its model for only $6 million in less than two months, we will using approximately 2000.
Speaker Change: Older generation Nvidia chips.
Speaker Change: And so relative to the approach that's been used historically.
Speaker Change: This was quite novel and this.
Speaker Change: Ultimately has raised a number of questions around whether less hardware less servers less power less data centers would be required to kind of propel AI forward in <unk>.
Speaker Change: Artificial general intelligence and ultimately beyond.
Speaker Change: Faced with that uncertainty obviously, the stock market reacted quite quickly.
Speaker Change: And effectively erased hundreds of billions of dollars of market cap value from companies. There are a number of different sectors that benefited from enthused.
Speaker Change: <unk> isn't related to AI.
Speaker Change: And so from our perspective, while this may be true in the short term.
Speaker Change: We never really expected that demand for compute with scale on a on a straight line basis, our expectation and as we've seen a number of other technologies is that we would always see a level of continuous improvement whether it's at the server hardware level.
Speaker Change: Our software and then those improvements would ultimately be offset by new use cases and in most cases more complex use cases, whether it's things like robotics, which will ultimately more compute.
Speaker Change: Do you actually have those.
Speaker Change: Robots running so the deep seek announcements from our perspective is really just a piece of that improvement puzzle and we expect more advancements to come as we are still very early.
Speaker Change: Early innings of this technology cycle.
Good day, and thank you for standing by welcome to the Brookfield infrastructure partners fourth quarter 2024 results conference call and webcast.
Speaker Change: Over the long term I would say our positive outlook Hasnt changed for data center demand growth and we're actually very excited by the prospect of having a more cost effective AI tool, which should accelerate innovation increase overall demand for AI in their applications and ultimately make the tech.
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Speaker Change: <unk> more widely accessible to everyone.
To withdraw your question. Please press star one again.
Speaker Change: So when we kind of dig into our business.
Please be advised that today's conference is being recorded.
Speaker Change: We don't see any material impacts over the long term with.
Speaker Change: I would now like to hand, the conference over to David Crimped, Chief Financial Officer. Please go ahead.
Speaker Change: With respect to the two most recent data center investments that we've made in the U S and Europe, we are actually already surpassed our underwriting expectations in terms of the overall pace of lease up across our existing land bank.
David Crimped: Thank you Liz and good morning, everyone.
David Crimped: Welcome to Brookfield infrastructure Partners' fourth quarter 2024 earnings conference call.
David Crimped: As introduced my name is David crash, and I'm, the Chief Financial Officer of Brookfield infrastructure.
Speaker Change: Our platform benefits from significant contracted growth, which is underpinned by some of the most creditworthy counterparties in the world on their long term ability ability based contractual frameworks and the next point I think is actually very important we have a we took a very purposeful approach and today over 90% of our development are sent.
Speaker Change: I'm joined today by our Chief Executive Officer, Sam Pollock.
Speaker Change: And joining us for the Q&A portion of the call is our Chief operating Officer Ben Vaughan.
Speaker Change: I'll begin the call today by highlighting our financial and operating results for the past year.
Speaker Change: Followed by some brief remarks on our base business and a solid foundation.
Speaker Change: <unk> homebuilding capacity in tier one data center locations.
Speaker Change: I will then turn the call over to Sam who will provide an update on our capital recycling initiatives before concluding with an outlook for the business.
Speaker Change: Which are in close proximity to GDP and population centers and therefore afford maximum flexibility as these facilities can support multiple use cases, such as cloud training influences and content given that they benefit from the lowest latency.
Speaker Change: At this time I would like to remind you that our remarks today, we may make forward looking statements.
Speaker Change: These statements are subject to known and unknown risks and future results may differ materially.
Speaker Change: We continue to expect strong data center growth with upside from emerging new use cases and future use cases that are yet to be developed.
Speaker Change: For further information on known risk factors I would encourage you to review our latest annual report on form 20-F, which is available on our website.
Speaker Change: Capital required to support digitalization is staggering and we will continue to create demand for large scale and flexible capital from infrastructure investors like us.
Speaker Change: 2024 was another excellent year for Brookfield infrastructure.
Speaker Change: Some of our key accomplishments include delivering on our capital recycling target.
Speaker Change: And with that I'll hand, the call back to saying, okay, well, thanks, Rob and.
Speaker Change: Supplying over $1 1 billion of equity into growth initiatives, adding approximately $1 8 billion of new projects to our capital backlog and completing approximately $10 billion of financing, which makes it our most active year in the capital markets.
Speaker Change: Hopefully that was a good warm up to the Q&A session.
Speaker Change: So operator, maybe I'll turn it back over to you and we'd be pleased to open up the line now for questions.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
I am pleased to report that we ended the year with funds from operations or <unk> of $3 12 per unit, representing a 6% increase compared to 2023.
Speaker Change: Draw. Your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: When normalizing for the impact of foreign exchange.
Speaker Change: Our first question comes from the line of Sharon Redburn.
Speaker Change: <unk> per unit was up 10% versus the prior year. This would be in line with our target and better reflect the current operational performance and strength of our business.
Speaker Change: With TD Cowen.
Speaker Change: Okay.
Speaker Change: Thanks, very much and good morning.
Speaker Change: Maybe sticking with the data theme for a second and thank you for those comments on deep seek.
Speaker Change: Considering our conservative payout ratio ended the year at 67% and a favorable outlook for 2025, which Sam will speak to you soon the board of directors have approved a quarterly distribution increase of 6% to $1 72 per unit or share on an annualized basis.
Speaker Change: We've been hearing anecdotally that development premiums.
Speaker Change: For Hyperscale centers have started to compress to some degree which I guess is not totally surprising given the level of activity. In this sector can you give some perspective on that comment as it relates to your own development backlog.
Speaker Change: This marks the 16th consecutive year of distribution increases within or above our target range.
Speaker Change: I'll now go through our annual results and discuss our business segments in more detail.
Speaker Change: Well, maybe I'll start and since we have Rob here, you can always jump in but.
Speaker Change: <unk> in 2024 totaled $2 5 billion, an increase of 8% compared to 2023.
Speaker Change: I think as David.
Speaker Change: Alluded to in some of his remarks cherilyn.
Speaker Change: Organic growth for the year was 7% driven by elevated levels of inflation in the countries, where we operate stronger volumes across our critical infrastructure networks and the commissioning of over $1 billion of new capital projects from our backlog.
Speaker Change: At the moment, we've been quite successful in holding our yield to cost on our projects.
Speaker Change: There's two elements to it one is.
What we can contract that and over the last year and a bit.
Speaker Change: In addition, we deployed over $2 billion into new investments during the second half of 2023 and completed three accretive tuck in acquisition. This year, which are all fully contributing to earnings.
Speaker Change: We've seen rates in fact increase.
Speaker Change: And it's been a good market from that perspective.
Speaker Change: Taking a closer look at our results by segment, starting with utilities, we generated <unk> of $760 million, which is up 7% year over year on a comparable basis.
Speaker Change: And the second component is the ability to control costs and I'd say for the most part obviously there is always in the large portfolio there'll be some where they don't go entirely according to plan, but I'd say on our large projects.
Speaker Change: After taking into account asset sales and currency and compares to $879 million in the prior year.
Speaker Change: We've been able to bring projects in on time on budget and.
Speaker Change: The reduction was primarily attributable to capital recycling activity, which included the sale of our Australian utility business in the third quarter of 2023, and a recapitalization of our Brazilian gas transmission business in the first quarter.
Speaker Change: In fact.
Speaker Change: Given we're doing a lot of large campus style projects.
Speaker Change: With the learnings, we have and some of the initial.
Speaker Change: Deployments, we are in fact, bringing costs down over time, so all in all.
Speaker Change: Base business continued to perform well during the year driven by inflation indexation and the contribution from nearly $470 million of capital commissioned into rate base.
Speaker Change: Long winded way of saying that.
Speaker Change: We're not losing our premiums.
Speaker Change: Moving onto our transport segment <unk> was $1 2 billion, representing a step change increase of nearly 40% from the prior year.
Speaker Change: That's not to say you know.
Speaker Change: Down the road competition won't tighten things a little bit but today, that's not the case.
Speaker Change: This was primarily attributable to the acquisition of our global intermodal logistics company in the third quarter of 2023.
Speaker Change: Antimatter.
Speaker Change: And I would agree I get I think it goes back to our tier one focus where I think a lot of the power bottlenecks have occurred and so there's a premium for that scarcity.
Speaker Change: And an incremental 10% stake in our Brazilian integrated rail and logistics operation in the first quarter of this year.
Speaker Change: We generated strong results.
Carolyn: Carolyn usually have two questions do you have another one.
Speaker Change: Across the remaining businesses driven by higher volumes.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: It's much more sort of macro.
Speaker Change: And average tariff increases of 7% across our rail networks and 6% across our portfolio.
Speaker Change: With respect to a stronger U S. Dollar just curious whether that impacts where youre seeing the best opportunities to invest for value.
Speaker Change: Our midstream segment generated <unk> of $625 million.
Speaker Change: Which on a comparable basis have grown 11% versus the prior year.
Speaker Change: Likewise does that have an impact on your capital recycling lineup for the year.
Speaker Change: The growth reflects higher volume increases across our midstream asset due to robust customer activity levels, particularly at our north American gas storage business.
Speaker Change: Okay.
Speaker Change: Tackle that one again.
Speaker Change: Okay.
Speaker Change: I guess.
Speaker Change: When considering the impact of asset sales and foreign exchange. The total <unk> decreased from $684 million in the prior year, primarily related to capital recycling activities at our U S gas pipeline.
Speaker Change:
Speaker Change: As far as a and.
Speaker Change: An initial or direct impact on.
Speaker Change: On where we would invest I would say.
Speaker Change: Lastly, <unk> from our data segment was $333 million, representing a 21% increase over the prior year.
Speaker Change: FX.
Speaker Change: Plays directly but it is a sign of capital flows.
Speaker Change: The increase is attributable to strong organic growth and the contribution of several new investments completed over the last 12 months, including three data center platforms and a tower portfolio in India.
Speaker Change: And obviously I think a lot of strength in the U S dollar as a result of.
Speaker Change: Just a huge capital.
Speaker Change: <unk> boom going on in the U S and that drives.
Speaker Change: Taking a closer look at our data storage numbers, we've invested over $9 billion of capital across three primary three primary digital infrastructure verticals, namely data centers fiber networks and telecom towers.
Speaker Change: The need for capital and as a result, we are probably investing more in the U S.
Speaker Change: Historically, we may have just because of that dynamic so.
Speaker Change: It isn't so much an FX thing but.
Speaker Change: Data centers are one of the most significant areas of investment with over $3 6 billion of capital invested in the last six years alone.
Speaker Change: The things are obviously all enter into.
Speaker Change: Interrelated.
Speaker Change: And as it relates to sales.
Speaker Change: Putting aside our investment in our U S retail co location business, we have approximately $2 $8 billion invested in high growth Global Hyperscale data center platforms.
Speaker Change: Most of our businesses are for the most part hedged.
Speaker Change: To a large degree and so we're not sort of.
Speaker Change: The organic growth backlog in these benefit is approximately $1 $4 billion at our share and is anchored by long term availability based contracts with highly credit worthy counterparties.
Speaker Change: Taking into account FX and determining whether or not a business is ready for sale typically we look at where we are in the business plan and do.
Speaker Change: Do we think the bid.
Speaker Change: As we execute our backlog of growth, we're very focused on maintaining our project level returns, we will not pursue growth at all costs and have maintained our yield on cost on new development.
Speaker Change: This will attract an attractive value on a local basis.
Speaker Change: <unk>.
Speaker Change: Short answer is no we're not taking that into account.
Speaker Change: We anticipate being able to enhance returns in the years ahead as we execute our strategy to sell fully contracted sites. They are built this will create liquidity to fund future growth as well as crystallized significant developer developer profit.
Speaker Change: That's all from me. Thank you. Thank you.
Speaker Change: Okay.
Speaker Change: Our next question comes from Devin Dodge with BMO capital markets.
Devin Dodge: Yeah. Thanks, Good morning, I Wonder if I had a question on Triton.
Speaker Change: Before turning it over to Sam I'd like to briefly touch on the macroeconomic backdrop and the strong positioning of our base business.
Devin Dodge: I'm just wondering if you could provide a bit more color.
Devin Dodge: On the sales of the minority interest in a portfolio of containers that you talked about in your opening remarks, there Im just trying to get a sense for how much of that.
Speaker Change: There has been a focus on a change in the government in the U S and the resulting shift in policy, including the timing and magnitude of potential tariffs on foreign imports.
Devin Dodge: How much of the fleet. This includes.
Devin Dodge: Is this like a perpetual investment or is that roll off containers or hand, it back and what that implied equity value translate in terms of implied <unk> yield or some other valuation metric.
Speaker Change: Simultaneously the U S economy is showing strength in employment levels remained robust.
Speaker Change: Long term interest rates have increased recently and remain at elevated levels as investors temper their expectations around future interest rate path and anticipate a prolonged period of higher inflation.
Devin Dodge: Okay, Thanks, Devin and as it turns out we have <unk>.
Speaker Change: As we've demonstrated we are well positioned to benefit from higher inflation in our business.
Dave: Dave joined here, who.
Dave: Is responsible for that transaction, we have and expect them to speak but since it's a direct question on trade and probably a good one for him to answer so Dave do you want to tackle that one.
Speaker Change: Our businesses provide essential services with regulated or contracted revenue streams, many of which are indexed to inflation.
Speaker Change: During the past three years inflation has contributed meaningfully to our <unk> growth averaging more than a 5% annual compound growth rate.
Dave: Yeah, Hey, good morning Devin.
Dave: Just with respect to the transaction itself.
Dave: I guess my comment on this is what we have done is we have taken a pool of leased up containers and we've sold out in annuity interest in that pool itself, which has standalone financing.
Speaker Change: Today, our business remains highly indexed to inflation, which we expect will continue to drive organic growth into 2025.
Speaker Change: At the same time, we have been proactive in managing our capital structures and mitigating risks relating to interest rates at both the corporate and portfolio company levels.
Dave: And the strategy behind all of this is that.
Dave: Triton is a a business.
Dave: Business that has tremendous unit economics on the deployment of capital.
Speaker Change: We completed over $9 billion of non recourse asset level financings during the past year.
But the real magic comes into leasing is not putting them on long term leases for people and I think we've found is that there is a pool of buyers that are interested in buying into a yield oriented vehicle.
Speaker Change: And today, our weighted average debt maturity of eight years of which 90% of our debt is fixed rate.
Speaker Change: This strong position not only mitigate the risk but allows the benefits of inflation to compound in our results with limited impact from rising interest rates.
Dave: That runs off over time over the life of the containers, which as you might know is sort of on average about 15 years and then in terms of your question around valuation I guess, all I'm, probably at Liberty to say here is that.
Speaker Change: But very simply increased revenue from inflation indexation and fixed interest cost equals greater bottom line cash flow overtime.
Dave: Given the nature of what we saw which is a derisked.
Speaker Change: That concludes my remarks for this morning, and I'll now turn the call over to Sam.
Dave: Long term cash flowing.
Sam Pollock: Thank you David Thats, great and good morning, everyone.
Dave: Portfolio.
Dave: This is done at a at a lower cost of capital than we would have in the market.
Speaker Change: For my remarks today, I'm going to discuss our capital recycling initiatives and then conclude with an outlook for the year ahead.
Dave: And David makes up about 10% of the portfolio.
Dave: Yeah on a net to the business basis is about 6%.
Speaker Change: In 2024, we achieved our targeted $2 billion of capital recycling proceeds and a challenging but improving asset sale environment.
Dave: Okay. Thanks.
Dave: Thanks, a lot good good color there.
Dave: And then just second question, just maybe sticking with capital recycling again.
Speaker Change: As we ended the year, we were seeing greater investor interest in high quality infrastructure assets and a larger universe of buyers able to transact.
Dave: We're talking about.
Dave: Staying with one noncore data center being sold but can you just provide a bit of a broader update on the self funding model for your data center platform and what forms that's likely to take.
Speaker Change: This momentum has accelerated into 2025 and I'm pleased to announce that we've already secured approximately $200 million in proceeds from asset sales just one month into the new year.
Devin Dodge: Yeah, Hi, Devin.
Speaker Change: At our global intermodal logistics operation, we agreed to sell a minority equity interest in a portfolio of fully contracted containers.
Devin Dodge: Yeah, I would expect there'll be a lot more.
Devin Dodge: News.
Devin Dodge: In the next couple of quarters regarding.
Devin Dodge: Our capital recycling program for the data centers.
Speaker Change: In total total we expect to receive over $120 million.
Devin Dodge: The ongoing exercise as new facilities.
Speaker Change: With closing expected in the first half of 2025.
Speaker Change: This inaugural sale provides the structure and framework for us to further monetize derisked and contracted assets, which will generate meaningful liquidity at attractive returns.
Devin Dodge: Come on stream we.
Devin Dodge: We do have a program of setting up stabilized pool.
Devin Dodge: Pools of data centers, and bringing in institutional investors to invest in those stabilized assets and so we have I think we are pretty advanced in both the north American and European pool of assets and we hope to have news for you and are sure of shareholders in the coming quarters on our success.
Speaker Change: At our North American Hyperscale data center platform.
Speaker Change: We secured the sale of a noncore site to a technology company.
Speaker Change: Sales transacted at an attractive capitalization rate and will generate gross proceeds of over $1 billion and crystallize developer profit approximately $350 million.
Devin Dodge: In that regard.
Speaker Change: Proceeds after debt repayment and transaction costs will be about $400 million, resulting in net proceeds to bip of over $60 million with closing expected later this year.
Speaker Change: Okay excellent. Thank you I'll turn it over thanks, Kevin.
Devin Dodge: Our next.
Western comes from Maurice Choy with RBC capital markets.
Speaker Change: Thank you and good morning, maybe just sticking with the capital recycling theme I think you mentioned that data center is positioned to be the largest sector within five years.
Speaker Change: We believe the level of asset sale activity, we've experienced so far in 2025 will be indicative of the year ahead.
Speaker Change: We have several advanced transactions that should be signed in the first half of the year and we are very confident in our ability to deliver the $5 6 billion.
Speaker Change: <unk> transport is currently the largest sector being about three to four times larger than data.
Speaker Change: You've already mentioned that you've got good growth for new capital.
Speaker Change: In asset sale proceeds that we've guided to over the next two years.
Speaker Change: But theres also self funding or recycling program for data so.
Speaker Change: Supporting this confidence is the return of buyers for core assets, which many of our mature business as target from a risk return perspective on exit.
Speaker Change: Should we think about transport has been making up a large part of your medium term asset sales.
Speaker Change: We have seen this activity firsthand and breakfasts, one super core infrastructure fund, which has been experiencing an influx of capital as fund raising increased to the highest level in almost three years at the end of 2024 and this has continued into 2025.
Speaker Change: So what about transport trends are you seeing that motivates the strategy.
Morris: Hi, Morris.
Speaker Change: That's a good question I guess.
Morris:
Morris: Theres lots of moving parts, there, though that I think maybe that might be adding to some of the confusion I think the.
Speaker Change: With respect to the outlook for growth, we feel very positive as <unk>.
Morris: First thing is.
Morris: <unk>.
Speaker Change: David mentioned in his remarks much of our data segments value is not yet reflected in our current financial results given its development focused profile.
Morris: Yes.
Morris: The data sector its not all data centers. So in the data center component of it we are probably managing the total capital and that component, but it will still grow it even though we're recycling I still expect it to grow but we're investing in.
Speaker Change: However, as projects come online, we expect them to contribute meaningfully to earnings and drive overall growth in the coming years.
Speaker Change: In terms of new development, we've entered 2025 with a pipeline of early stage capital deployment opportunities as the deepest has been in years actually.
Morris: Lots of other areas of the.
Morris: Data sector.
Morris: Complex, whether it be towers.
Speaker Change: <unk> levels continue to improve and the need for private capital to invest in critical infrastructure globally continues to rise.
Morris: Fiber optic systems.
Morris: And those.
Speaker Change: We will continue to grow and don't have the same.
Speaker Change: This creates ample opportunities for large scale, well capitalized global infrastructure owners and operators like us.
Morris: Capital recycling profile that the data centers do.
Speaker Change: Digitization remains a key driver of our current deal flow with the data sector accounted for over 40% of our anticipated capital deployment.
Speaker Change: In relation to the.
Speaker Change: The divestiture of our.
Speaker Change: Transport assets of theirs.
Speaker Change: We expect growth in this sector to persist outpacing all other areas of our business and positioning it to become our largest sector within five years.
Speaker Change: No real.
Speaker Change: <unk>.
Speaker Change:
Speaker Change: The pace of divestiture thats different than any other sector. It's all driven by where they are in their lifecycle and.
Speaker Change: We are also excited by the deployment opportunities in other segments of our portfolio that are benefiting from digitalization, such as our midstream and utility sectors.
Speaker Change: And.
Speaker Change: And whether or not we think we can get the appropriate value for them and there are probably a few.
Speaker Change: Both of which we expect to be active deploying capital in the years ahead.
Speaker Change: So that concludes my remarks.
Speaker Change: For assets that we've held for a long period of time that.
Speaker Change: But before we go into our formal Q&A.
Speaker Change: Probably coming up for sale, but that's not indicative of any view that we have regarding transportation or our ability and desire to invest in new transportation assets. We will always have a diversified pool of investments across all our sectors.
Speaker Change: We thought we call an audible and have someone from our team addressed the news that came out this week regarding deep seek.
Speaker Change: And so in that regard I would like to.
Speaker Change: Welcome.
Speaker Change: Roberto <unk>, who is the head of our.
Speaker Change: And there'll be periods of time when.
Speaker Change: Telecom business here in North America.
Speaker Change: We will deploy more in one sector to another I think all we want to do.
Speaker Change: And I thought I'd just pose a question to them, that's probably on a lot of People's minds, and Rob I guess the simple question is.
Operator: Good day, and thank you for standing by. Welcome to the Brookfield Infrastructure Partners Q4 2024 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 the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to David Krant, Chief Financial Officer. Please go ahead.
Speaker Change: In our comments.
Speaker Change: In earlier was just to highlight that today our deal flow is more centered around the digitalization theme and thus.
Speaker Change: <unk>.
Speaker Change: What happened this week what is the.
Speaker Change: The news regarding deep seeking what what they did and how does that impact our business going forward.
Speaker Change: Those sectors that are impacted by that team, which is obviously the data sector as well as the midstream sector.
Speaker Change: Okay, great Yeah. Thank you Shannon and good morning, everyone.
Speaker Change: So as Sam said earlier this week deep sea, which is a Chinese based artificial intelligence company.
Speaker Change: Is probably where you'll see most of the capital in the near term goal.
Speaker Change: <unk> announced the training of our new large language model, which effectively is capable of achieving the same performance of some of the current industry leading models.
Speaker Change: Hopefully that clarifies.
Speaker Change: Comments, yes, absolutely.
Speaker Change: And just to finish off.
David Krant: Thank you, Liz. Good morning, everyone. Welcome to Brookfield Infrastructure Partners' Q4 2024 Earnings Conference Call. As introduced, my name is David Krant, I'm the Chief Financial Officer of Brookfield Infrastructure. I'm joined today by our Chief Executive Officer, Sam Pollock, joining us for the Q&A portion of the call is our Chief Operating Officer, Ben Vaughan. I'll begin the call today by highlighting our financial and operating results for the past year, followed by some brief remarks on our base business and its solid foundation. I'll turn the call over to Sam, who will provide an update on our capital recycling initiatives before concluding with an outlook for the business. At this time, I would like to remind you that in our remarks today, we may make forward-looking statements. These statements are subject to known and unknown risks, future results may differ materially.
Speaker Change: I Couldnt help it to notice a relatively favorable update.
Speaker Change: If we kind of take a step back.
Speaker Change: The midstream segment loss for having new G&P expansions under take or pay.
Speaker Change: That announcement in of itself is not I.
Speaker Change: I think the focus is people always thought there was going to be increased competition, but what was interesting about the announcement.
Speaker Change: You've got additional pipeline connections to pipelines so.
Speaker Change: Just get your take on how you think your thesis for these two businesses are playing out.
Speaker Change: Is the deep sea was able to drive significant optimization.
Speaker Change: The initiatives we.
Speaker Change: It should be watching out for this year, such as the NBC connector.
Speaker Change: And train its model for only $6 million in less than two months, we will using approximately 2000.
Speaker Change: Great Mark.
Speaker Change: We're pleased to talk about that and in fact, I'm going to pass it over to Ben Vaughan.
Speaker Change: Older generation Nvidia chips.
Ben Vaughan: Talk a bit about.
Speaker Change: And so relative to the approach that's been used historically.
Ben Vaughan: Our enthusiasm for what's going on in that sector. Yeah, alright. Thanks for the question.
Speaker Change: This was quite novel and this.
Ben Vaughan: You mentioned the <unk> connector.
Speaker Change: Ultimately has raised a number of questions around whether less hardware less servers less power less data centers would be required to kind of propel AI forward and reach artificial general intelligence and ultimately beyond.
Ben Vaughan: That's one great opportunity that we have in the western.
Ben Vaughan: Canadian region with our assets, but it's only one of many and really what we're what we're seeing.
David Krant: For further information on known risk factors, I would encourage you to review our latest annual report on Form 20-F, which is available on our website. 2024 was another excellent year for Brookfield Infrastructure. Some of our key accomplishments include delivering on our capital recycling target, deploying over $1.1 billion of equity into growth initiatives, adding approximately $1.8 billion of new projects to our capital backlog, and completing approximately $10 billion of financings, which makes it our most active year in the capital markets. I'm pleased to report that we ended the year with funds from operations, or FFO, of $3.12 per unit, representing a 6% increase compared to 2023. When normalizing for the impact of foreign exchange, FFO per unit was up 10% versus the prior year. This would be in line with our target and better reflects the current operational performance and strength of our business.
Ben Vaughan: Across the board in Western Canada, as our fleet of assets.
Speaker Change: Faced with that uncertainty that obviously the stock market reacted quite quickly.
Ben Vaughan:
Ben Vaughan: Being in becoming fully utilized and then the market calling on us to expand our capacity and so we have about $1 billion of backlog of projects today, we see another potential for $2 billion to $3 billion of very attractive.
Speaker Change: And effectively erased hundreds of billions of dollars of market cap value from companies. There are a number of different sectors that benefited from the <unk>.
Speaker Change: Enthusiasm related to AI.
And so from our perspective, while this may be true in the short term.
Ben Vaughan: Growth projects and with the current sentiment of needing more of that energy.
Speaker Change: We never really expected that demand for compute with scale on a straight line basis, our expectation and as we've seen a number of other technologies is that we would always see a level of continuous improvement whether it's at the server hardware level of practice of our software and then those improvements would ultimately be offset by new.
Ben Vaughan: Pretty excited about the projects they're generally.
Ben Vaughan: Very straightforward in nature.
Ben Vaughan: I would describe them as relatively.
Ben Vaughan: Bite sized given the size of the overall assets and relatively low risk in terms of their execution. So we just have a lot of additional projects to provide our clients with access to our either processing systems or our transportation networks and so in general the connectors one of <unk>.
Speaker Change: New use cases and in most cases more complex use cases, whether it's things like robotics, which will ultimately more compute.
Speaker Change: You actually have those.
Speaker Change: Robots running so the deep seek announcements from our perspective is really just a piece of that improvement puzzle and we expect more advancements to come as we are still very early in the.
David Krant: Considering our conservative payout ratio ended the year at 67% and a favorable outlook for 2025, which Sam will speak to soon, the board of directors have approved a quarterly distribution increase of 6% to $1.72 per unit or share on an annualized basis. This marks the 16th consecutive year of distribution increases within or above our target range. I'll now go through our annual results and discuss our business segments in more detail. FFO in 2024 totaled $2.5 billion, an increase of 8% compared to 2023. Organic growth for the year was 7%, driven by elevated levels of inflation in the countries where we operate, stronger volumes across our critical infrastructure networks, and the commissioning of over $1 billion of new capital projects from our backlog.
Ben Vaughan: Many projects and we see them.
Ben Vaughan: This is part of our midstream growth wedge for the coming years as being pretty strong.
Speaker Change: Very early innings of this technology cycle.
Speaker Change: So over the long term I would say our positive outlook Hasnt changed for data center demand growth and we're actually very excited by the prospect of having a more cost effective AI tool, which should accelerate innovation increase overall demand for AI in their applications and ultimately make the.
Ben Vaughan: And maybe just to add to that Ben.
Ben Vaughan: I guess, we would say.
Ben Vaughan: Pretty much all brownfield expansions connectors to pipelines or expanding plants and the build multiples.
Ben Vaughan: These expansions are very very attractive and thats, probably what gets us really excited.
Speaker Change: Technology more widely accessible to everyone.
Ben Vaughan: Particularly.
Ben Vaughan: Given that many of them are contracted out of the gate.
Speaker Change: So when we kind of dig into our business.
Speaker Change: We don't see any material impacts over the long term.
Ben Vaughan: So maybe we will leave it there, but hopefully that gives you a sense of why we are very enthusiastic about the midstream sector at the moment.
Speaker Change: With respect to the two most recent data center investments that we've made in the U S and Europe, we are actually already surpassed our underwriting expectations in terms of the overall pace of lease up across our existing land bank.
Ben Vaughan: No that's great. Thank you very much about the commentary.
David Krant: In addition, we deployed over $2 billion into new investments during H2 2023 and completed 3 accretive tuck-in acquisitions this year, which are all fully contributing to earnings. Taking a closer look at our results by segment, starting with utilities, we generated FFO of $760 million, which is up 7% year over year on a comparable basis. After taking into account asset sales and currency and compares to $879 million in the prior year. The reduction was primarily attributable to capital recycling activity, which included the sale of our Australian utility business in Q3 2023 and a recapitalization of our Brazilian gas transmission business in Q1. The base business continued to perform well during the year, driven by inflation indexation and the contribution from nearly $470 million of capital commissioned into rate base.
Speaker Change: Our next question comes from Robert Hope with Scotiabank.
Speaker Change: Our platform benefits from significant contracted growth, which is underpinned by some of the most creditworthy counterparties in the world on their long term availability base contractual frameworks and the next point I think is actually very important we have we took a very purposeful approach and today over 90% of our development or <unk>.
Robert Hope: Good morning, everyone.
Robert Hope: Wanted to circle back on the data center commentary you speak about the data sector accounting for about 40% of the anticipated capital deployment just wanted to ask some clarification. There is that 40% of the expected deal flow that you expect to see over the next let's say coming years and then when you take a look at your organic backlog.
Speaker Change: <unk> homebuilding capacity in tier one data center locations.
Robert Hope: That would be kind of secondary to that just given the fact that you do have.
Speaker Change: Which are close proximity to GDP and population centers and therefore afford maximum flexibility as these facilities can support multiple use cases, such as cloud training influences and content given that the benefit from the lowest latency we.
Robert Hope: Quite a lot of wood to chop there as well.
Robert Hope: Yeah look I can it's Dave here Hi, Rob.
Speaker Change: So on the first point I think what we're referring to on the 40% was our pipeline today is highly comprised.
Speaker Change: We continue to expect strong data center growth with upside from emerging new use cases and future use cases that are yet to be developed.
Speaker Change: Investment opportunity in the digital space. So yeah. That's currently what we see.
Speaker Change: Ahead of us for the near term.
Sam Pollock: The capital required to support digitalization is staggering and we will continue to create demand for large scale and flexible capital from infrastructure investors like us and with that I'll hand, the call back to Sam.
David Krant: Moving on to our transport segment, FFO was $1.2 billion, representing a step change increase of nearly 40% from the prior year. This was primarily attributable to the acquisition of our global intermodal logistics company in Q3 2023 and an incremental 10% stake in our Brazilian integrated rail and logistics operation in Q1 of this year. We generated strong results across remaining businesses, driven by higher volumes and average tariff increases of 7% across our rail networks and 6% across our road portfolio. Our midstream segment generated FFO of $625 million, which on a comparable basis had grown 11% versus the prior year. The growth reflects higher volume increases across our midstream assets due to robust customer activity levels, particularly at our North American gas storage business.
Speaker Change: Youre right. In addition, the other thing worth highlighting is we have highlighted in previous calls that our backlog is at a record level of nearly $8 billion over the next three years and if you were to look at what factor that primarily driven by it is going to be over 70% in the data side as well.
Sam Pollock: Okay, well, thanks, Rob and.
Sam Pollock: Hopefully that was a good warm up to the Q&A session.
Speaker Change: So operator, maybe I'll turn it back over to you and we'd be pleased to open up the line now for questions.
Speaker Change: As Sam alluded to not just data centers, but also our partnership on the foundry side as well as the build out.
Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.
Speaker Change: Fiber and in build to suit towers in Germany and France.
Speaker Change: It is broad based and that will continue to drive our positive outlook for the organic growth profile, rather than me that new department. So those two together are what give us the.
Speaker Change: Or withdraw your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: We believe that data will continue to be an increasing increasingly meaningful part of our business.
Speaker Change: Our first question comes from the line of Cheryl Lynn Radbourne with.
Speaker Change: With TD Cowen.
Speaker Change: Alright.
Speaker Change: Okay.
Speaker Change: Thanks for that and then maybe just going back to kind of maurice's comments.
Speaker Change: Thanks, very much and good morning.
Speaker Change: Maybe sticking with the data steam for a second and thank you for those comments on deep seek.
Speaker Change: Regarding data center data being the largest sector in five years.
David Krant: When considering the impact of asset sales and foreign exchange, the total FFO decreased from $684 million in the prior year, primarily relating to capital recycling activities at our US gas pipeline. Lastly, FFO from our data segment was $333 million, representing a 21% increase over the prior year. The increase is attributable to strong organic growth and the contribution of several new investments completed over the last 12 months, including three data center platforms and a tower portfolio in India. Taking a closer look at our data storage numbers, we've invested over $9 billion of capital across three primary digital infrastructure verticals, namely data centers, fiber networks, and telecom towers. Data centers are one of the most significant areas of investment, with over $3.6 billion of capital invested in the last six years alone.
Speaker Change: We've been hearing anecdotally that development premiums for Hyperscale centers have started to compress to some degree which I guess is not totally surprising given the level of activity in this sector.
Speaker Change: Transport does have a $900 million of asphalt so head start here so back of the envelope math it doesn't imply significant amount of capital that's kind of not in the backlog to get there.
Speaker Change: You give some perspective on that comment as it relates to your own development backlog.
Speaker Change: Can you maybe just help us frame the roadmap of how data gets the largest contributor to cash flow.
Speaker Change: Yes, Hi, Robert I think the short answer is there is.
Speaker Change: Well, maybe I'll start.
Speaker Change: Since we have Rob here, you can always jump in but.
Speaker Change: New investments and divestitures so youll.
David: I think as David.
David: Alluded to in some of his remarks cherilyn.
Speaker Change: Yeah.
Speaker Change: Kind of a general directional comment from our part but.
Speaker Change: At the moment, we've been quite successful in holding our yield to cost on our projects.
Speaker Change: How you get there is some assets will be sold that will reduce that and then.
David: There's two elements to it one is.
Speaker Change: You'll have just more investments on the data side and obviously, we may be wrong.
David: What we can contract that and over the last year and a bit.
Speaker Change: And where it ends up it was but it was just to give a sense of direction.
David Krant: Putting aside our investment in a US retail colocation business, we have approximately $2.8 billion invested in high-growth global hyperscale data center platforms. The organic growth backlog in these businesses is approximately $1.4 billion at our share and is anchored by long-term availability-based contracts with highly creditworthy counterparties. As we execute our backlog of growth, we are very focused on maintaining our project-level returns. We will not pursue growth at all costs and have maintained our yield on cost on new developments. We anticipate being able to enhance returns in the years ahead as we execute our strategy to sell fully contracted sites as they are built. This will create liquidity to fund future growth, as well as crystallize significant developer profits. Before turning it over to Sam, I'd like to briefly touch on the macroeconomic backdrop and the strong positioning of our base business.
David: You've seen rates in fact increase.
Speaker Change: A direction, where we think things are going.
David: And it's been a good market from that perspective.
Speaker Change: Alright, thank you.
David: Then.
Speaker Change: Our next question comes from Robert <unk> with CIBC capital markets.
David: The second component is the ability to control costs and I'd say for the most part obviously there is always in a large portfolio there'll be some where they don't go entirely according to plan, but I would say on our large projects.
Speaker Change: Hey, good morning, everyone I just wanted to go back to the comments again.
Speaker Change: First of all thank you for addressing the steep seek news right upfront.
David: We've been able to bring projects in on time on budget and.
Speaker Change: Take it from your comments that.
Speaker Change: You know there is still rather bullish on the on the outlook for for data in general data centers as well.
David: In fact.
David: Given we're doing a lot of large campus style projects.
Speaker Change: I was just wondering how this week's news may influence your approach to making new investments in data for example.
David: With the learnings, we have and some of the initial.
David: Deployments, we are in fact, bringing costs down over time, so all in all.
Speaker Change: Will you shift here.
Speaker Change: Your investment a bit to some of the other verticals that you mentioned like the towers.
David: Long winded way of saying that.
Speaker Change: And then if not how are you going to manage your commercial approach to.
David: Yes, we're not losing our premiums.
David: That's not to say.
Speaker Change: Data centers to mitigate any emerging whereas you might see from the D C.
David Krant: There has been focus on a change in the government in the US and the resulting shift in policy, including the timing and magnitude of potential tariffs on foreign imports. Simultaneously, the US economy is showing strength and employment levels remain robust. Long-term interest rates have increased recently and remain at elevated levels as investors temper their expectations around future interest rate cuts and anticipate a prolonged period of higher inflation. As we've demonstrated, we are well-positioned to benefit from higher inflation in our business. Our businesses provide essential services with regulated or contracted revenue streams, many of which are indexed to inflation. During the past 3 years, inflation has contributed meaningfully to our FFO growth, averaging more than a 5% annual compound growth rate.
David: Down the road competition won't tighten things a little bit but today, that's not the case.
Speaker Change: Yeah.
Speaker Change: Yeah Yeah.
David: Standing address.
Speaker Change: I would agree I get I think it goes back to our tier one focus where I think a lot of the power bottlenecks have occurred and so there's a premium for that scarcity.
Speaker Change: Hi, Rod thanks for that for that question and.
Speaker Change: I guess I would.
Speaker Change: We make two comments in that regard first.
Speaker Change: <unk>.
Speaker Change: We.
Speaker Change: Cherilyn usually have two questions you have another one.
Speaker Change: When we evaluate any new opportunities.
David: Sure.
David: Yes.
Speaker Change: It's always on a risk adjusted basis, and so to the extent that.
David: Much more sort of macro.
David: With respect to a stronger U S. Dollar just curious whether that impacts where youre seeing the best opportunities to invest for value.
Speaker Change: We can buy towers at a better risk adjusted return than than new investments into data centers, we will do that and we always have done that and that will continue to be our.
David: And likewise does that have an impact on your capital recycling lineup for the year.
Speaker Change: <unk>.
Speaker Change: Playbook going forward.
David: Okay.
Speaker Change: As it relates to managing.
David: Tackle that one again.
David: Okay.
David Krant: Today, our business remains highly indexed to inflation, which we expect will continue to drive organic growth into 2025. At the same time, we've been proactive in managing our capital structures and mitigating risks relating to interest rates at both the corporate and portfolio company levels. We completed over $9 billion of non-recourse asset level financings during the past year, and today our weighted average debt maturity is 8 years, of which 90% of our debt is fixed rate. This strong position not only mitigates the risk, but allows the benefits of inflation to compound in our results with limited impact from rising interest rates. Very simply, increased revenue from inflation indexation and fixed interest costs equals greater bottom-line cash flow over time. That concludes my remarks for this morning, and I'll now turn the call over to Sam.
Speaker Change: Our.
I guess.
Speaker Change: Development activities with our existing platforms in data centers.
David: As far as a.
Speaker Change: We look we don't really build anything.
David: And initial or direct impact on.
Speaker Change: Anything of a particular size on spec, there's always nuances to what I. Just said there we do need to buy land and we control the amount of land that we have in inventory at any one moment in time, so that we're not overexposed to.
David: Where we would invest I would say.
David: FX.
David: Plays directly but it is a sign of capital flows and obviously I think a lot of strength in the U S. Dollar as a result of.
David: Just a huge capital expenditure boom going on in the U S and that drives.
Speaker Change: Slowdowns in leasing activity.
Speaker Change: And obviously, we try to mitigate that by giving them options on land and things like that.
David: The need for capital and as a result, we are probably investing more in the U S.
Speaker Change: And then.
David: Historically, we may have just because of that dynamic so.
Speaker Change: To extent, we think it makes sense to to improve the land a little bit too.
David: It isn't so much an FX thing but.
David: Things are obviously all enter.
Speaker Change: Speed up the delivery.
David: Interrelated.
David: And as it relates to the sale.
Sam Pollock: Thank you, David. That was great. Good morning, everyone. For my remarks today, I'm going to discuss our capital recycling initiatives and then conclude with an outlook for the year ahead. In 2024, we achieved our targeted $2 billion of capital recycling proceeds in a challenging but improving asset sale environment. As we ended the year, we were seeing greater investor interest in high-quality infrastructure assets and a larger universe of buyers able to transact. This momentum has accelerated into 2025, and I'm pleased to announce that we've already secured approximately $200 million in proceeds from asset sales just one month into the new year. At our global intermodal logistics operation, we agreed to sell a minority equity interest in a portfolio of fully contracted containers. In total, we expect to receive over $120 million, with closing expected in H1 2025.
Speaker Change: For clients when they can.
David: <unk>.
Speaker Change: Secondly commission it.
David: Most of our businesses are for the most part hedged to a large degree and so we're not sort of.
Speaker Change: Again, we manage how much capital we ever have that risk in that regard so.
Speaker Change: There is a lot of analysis that goes on with that but.
David: Taking into account FX and determining whether or not a business is ready for sale typically we look at where we are in the business plan and.
Speaker Change: So to say.
Speaker Change: Our overall.
Speaker Change: Thesis is building.
David: Do we think the.
Speaker Change: New facilities with contracts in hand, and with certainty around.
David: Business will attract and attractive value on a local basis. So.
Speaker Change: Commercial applications, and we don't really do things on spec.
David: Short answer is no we're not taking that into account.
Speaker Change: With with all those nuances that I mentioned there.
David: That's all from me thank you.
David: Yes.
Rob: Rob anything you want.
David: Okay.
Speaker Change: Okay.
David: Our next question comes from Devin Dodge with BN.
Speaker Change: Hopefully it looks great.
Speaker Change: Absolutely. Thank you. Thanks again for addressing this issue right upfront in an open manner.
Speaker Change: <unk> capital markets.
Speaker Change: Yeah. Thanks, good morning.
Speaker Change: Wonder if I heard the question on Triton.
Speaker Change: So my next question is do you have a comment on the unit holder letter about interest rates and investor sentiment impacting the price towards the end of last year.
Speaker Change: I'm just wondering if you could provide a bit more color.
Speaker Change: On the sales of the minority interest in a portfolio of containers that you talked about in your opening remarks, there Im just trying to get a sense for how much of that.
Sam Pollock: This inaugural sale provides a structure and framework for us to further monetize, de-risk, and contracted assets, which will generate meaningful liquidity at attractive returns. At a North American hyperscale data center platform, we secured the sale of a non-core site to a technology company. The sale was transacted at an attractive capitalization rate and will generate gross proceeds of over $1 billion and crystallize developer profit of approximately $350 million. Proceeds after debt repayment and transaction costs will be about $400 million, resulting in net proceeds to BIP of over $60 million, with closing expected later this year. We believe the level of asset sale activity we've experienced so far in 2025 will be indicative of the year ahead.
Speaker Change: And at the same time, we have a very strong organic backlog. So it makes me wonder what's that background. What your current view might be on unit price repurchases before.
Speaker Change: How much of the fleet just includes.
Speaker Change: Is this like a perpetual investments that roll off containers or hand, it back and what that implied equity value translate in terms of implied <unk> yield or some other valuation metric.
Speaker Change: Making new investments in the current environment, particularly if maybe there's some uncertainty and some things like deep seek or the change in U S Presidential administration.
Devin: Okay, Thanks, Devin and <unk>.
Speaker Change: Turns out we have.
Speaker Change: Yeah sure it's David here.
Speaker Change: Dave joined here, who.
Speaker Change: Thanks, Rob I think where youre getting it and happy to.
Speaker Change: Is responsible for that transaction, we havent expect him to speak but since it's a direct question on trade and probably a good win for him to answer so Dave do you want to tackle that one.
Is around just our capital allocation approach and whether we see it more attractive to be buying units rather than deploy capital on and I think as you would've seen in our later in her on this call we feel pretty.
Speaker Change: Yeah, Hey, good morning, Kevin.
Speaker Change: Just with respect to the transaction itself.
Speaker Change: Really good about the investment environment is it's quite balanced.
Speaker Change: I guess my comment on this is what we have done is we have taken a pool of leased up containers and we've sold out and minority interests in that pool itself, which has standalone financing.
We're excited about be the pace of our asset sale program, but also believe that those proceeds.
Sam Pollock: We have several advanced transactions that should be signed in H1, we are very confident in our ability to deliver the $5 to $6 billion in asset sale proceeds that we've guided to over the next 2 years. Supporting this confidence is the return of buyers for core assets, which many of our mature businesses target from a risk-return perspective on exit. We have seen this activity firsthand in Brookfield's own Super-Core infrastructure fund, which has been experiencing an influx of capital as fundraising increased to the highest levels in almost 3 years at the end of 2024, this has continued into 2025. With respect to the outlook for growth, we feel very positive. As David mentioned in his remarks, much of our data segment's value is not yet reflected in our current financial results given its development-focused profile.
Speaker Change: Would you find really attractive investment opportunities to compound returns over long periods of time. So as we've said in the path, we're going to affect the relative risk adjusted returns on buying units back depending on price and the investment pipeline. We have in front of us at any given time. So today I think we're in a good position as you would've seen in our letter.
And the strategy behind all of this is that.
Speaker Change: Triton is a.
Speaker Change: Business that has tremendous unit economics on the deployment of capital.
Speaker Change: But the real magic comes into leasing is that putting them on long term leases for people and I think we've found is that there is a pool of buyers.
Speaker Change: Okay. Thanks, everyone.
Speaker Change: Thank you.
Speaker Change: As a reminder, if you'd like to ask a question at this time. Please press star one one on your Touchtone phone.
Speaker Change: Interest in buying into a yield oriented vehicle.
Speaker Change: That runs off over time over the life of the containers, which as you might know is sort of on average about 15 years and then in terms of your question around valuation I guess, all I'm, probably at Liberty to say here is that.
Speaker Change: Our next question comes from Frederic Bastien with Raymond James.
Speaker Change: Okay.
Speaker Change: Hi, Good morning, guys. So one platform, we haven't talked much about is utilities.
Speaker Change: Given the nature of what we saw which is a derisked long term cash flowing.
Speaker Change: And it's conspicuously absent from your recycling efforts.
Speaker Change: Portfolio.
Speaker Change: So far this year, so I'm sure it is simply a function of timing but.
Speaker Change: Is done.
Speaker Change: At a lower cost of capital than we would have in the market.
Sam Pollock: However, as projects come online, we expect them to contribute meaningfully to earnings and drive overall growth in the coming years. In terms of new development, we've entered 2025 with a pipeline of early-stage capital deployment opportunities that is the deepest it's been in years. Activity levels continue to improve, and the need for private capital to invest in critical infrastructure globally continues to rise. This creates ample opportunity for large-scale, well-capitalized global infrastructure owners and operators like us. Digitalization remains a key driver of our current deal flow, with the data sector accounting for over 40% of our anticipated capital deployment. We expect growth in this sector to persist, outpacing all other areas of our business and positioning it to become our largest sector within 5 years.
Speaker Change: Hoping you can provide a bit of color here.
Speaker Change: And David makes up about 10% of the portfolio on a net basis is about 6% 6%.
Hey, Brett.
Speaker Change: Yeah I guess.
Speaker Change: Okay. Okay.
Speaker Change: You probably.
Speaker Change: Thanks, a lot good good color there.
Speaker Change: <unk> answered your own question there.
Speaker Change: And then just second question, just maybe sticking with capital recycling again.
Speaker Change: We.
Speaker Change: For the most part our larger utilities.
Speaker Change: You guys were talking about.
Speaker Change: You have significant growth ahead of them and so we're not looking to monetize them at this point in time.
Speaker Change: The sale of one noncore data center being sold but can you just provide a bit of a broader update on the self funding model for your data center platform in what form thats likely to take.
Speaker Change: There is though.
Speaker Change: A number of businesses that.
Devin: Yes, Hi, Devin.
Speaker Change: Either we have in there.
Speaker Change: That sector, which we have sold like loss from bonus.
Speaker Change: Yes, I would expect there'll be a lot more.
Speaker Change: Which is more recent and then I think we've telegraphed that we'd be looking to monetize a portion of our Brazilian.
Speaker Change: News.
Speaker Change: In the next couple of quarters regarding.
Speaker Change: Our capital recycling program for the data centers.
Speaker Change: Ongoing exercise as new facilities.
Sam Pollock: We are also excited by the deployment opportunities in other segments of our portfolio that are benefiting from digitalization, such as our midstream and utility sectors, both of which we expect to be actively deploying capital in the years ahead. That concludes my remarks. Before we go into our formal Q&A, we thought we'd call an audible and have someone from our team address the news that came out this week regarding DeepSeek. In that regard, I'd like to welcome Roberto Marcogliese, who is the head of our telecom business here in North America. I thought I'd just pose a question to him that's probably on a lot of people's minds. Rob, I guess the simple question is, what happened this week? What is the news regarding DeepSeek and what they did, and how does that impact our business going forward?
Speaker Change: Electricity transmission business in the coming year as well and so there always is it maybe it's not as meaningful as some of the other sectors.
Speaker Change: Come on stream we.
Speaker Change: We do have a program.
Speaker Change: Maybe we don't.
Speaker Change: Setting up stabilized pool.
Speaker Change: Talk about them enough.
Speaker Change: Pools of data centers, and bringing in institutional investors to invest in those stabilized assets and so we have I think we are pretty advanced in both the north American and European pool of assets and we hope to have news for you and our share of shareholders in the coming quarters on our success.
Speaker Change: They've been great investments for us our returns on loss from almost or over 20% our returns in U S dollars for Brazil.
Speaker Change: Brazilian transmission business will be well into the twenty's in local currency as well in the thirties and so.
Speaker Change: No.
Speaker Change: You are right to point out that we probably should.
Speaker Change: In that regard.
Speaker Change: Okay excellent. Thank you I'll turn it over thanks, Kevin.
Speaker Change: Mentioned those assets more than and the success we have so.
Speaker Change: Yes.
Speaker Change: Our next question comes from Maurice Choy with RBC capital markets.
Speaker Change: We are looking for new opportunities in utilities.
Speaker Change: And we will be monetizing some of the existing assets.
Speaker Change: Okay.
Speaker Change: Thank you and good morning, maybe sticking with the capital recycling theme I think you mentioned that data center is positioned to be the largest sector within five years by episode Transport is currently the largest sector being about three to four times larger than data.
Speaker Change: As they.
Speaker Change: Mature.
Thanks, Tom that's helpful.
Speaker Change: I'm wondering also.
Speaker Change: Maybe it hasnt been asked directly but is this new U S administration positive.
Roberto Marcogliese: Great. Yep. Thank you, Sam, and good morning, everyone. As Sam said earlier this week, DeepSeek, which is a Chinese-based artificial intelligence company, announced the training of a new large language model, which effectively is capable of achieving the same performance of some of the current industry-leading models. If we take a step back, that announcement in and of itself is not I think where the focus is. People always thought there was going to be increased competition. What was interesting about the announcement is that DeepSeek was able to drive significant optimization and train its model for only $6 million in less than two months while using approximately 2,000 older generation NVIDIA chips.
Speaker Change: If you've already mentioned that you've got good growth for new capital.
Speaker Change: For your business.
Speaker Change: But theres also self funding recycling program for data so.
Speaker Change:
Speaker Change: So without.
Speaker Change: Taking any.
Speaker Change: Should we think about transport has been making up the large part of your medium term asset sale.
Speaker Change: Any views one way or another.
Speaker Change: Political perspective.
Speaker Change: Look I think.
Speaker Change: So what about transport trends are you seeing that motivates the strategy.
Speaker Change: We view as positive any.
Speaker Change: Steps that reduce.
Speaker Change: Regulatory burden and encourage growth and I think we've seen a lot of positive steps being taken in that regard.
Speaker Change: Hi, Morris.
Speaker Change: That's a good question I guess.
Speaker Change: There's lots of moving parts, there, though that I think maybe that might be adding to some of the confusion I think the first thing is.
Speaker Change: And I think as an infrastructure owner of those can only be helpful to our business.
Speaker Change: <unk>.
Speaker Change: In the data sector its not all data centers. So on the data center component of it we are probably managing.
Speaker Change: Yeah, we can.
Speaker Change: Can't comment on all of the other.
Speaker Change: Things that might go on tariffs or whatnot, that's more complicated.
Speaker Change: I don't think tariffs.
Speaker Change: The total capital and that component, but it will still grow it even though we're recycling I still expect it to grow but we're investing in.
Speaker Change: <unk>.
Speaker Change: We will affect us in a direct way.
Roberto Marcogliese: Relative to the approach that's been used historically, this was quite novel, and this ultimately has raised a number of questions around whether less hardware, less servers, less power, less data centers would be required to propel AI forward and reach artificial general intelligence and ultimately beyond. Faced with that uncertainty, obviously the stock market reacted quite quickly and effectively erased hundreds of billions of dollars of market cap value from companies in a number of different sectors that benefited from the enthusiasm related to AI. From our perspective, while this may be true in the short term, we never really expected that demand for compute would scale on a straight line basis. Our expectation, and as we've seen in a number of other technologies, is that we'd always see a level of continuous improvement, whether it's at the server or hardware level or software.
Speaker Change: Negatively obviously it does have impacts that we need to manage from a capex perspective might impact some of our clients, which could have a longer term impact, but obviously inflation if it has a uptick.
Speaker Change: Lots of other areas of the.
Speaker Change: Data sector.
Speaker Change: Complex, whether it be towers.
Speaker Change: Fiber optic systems.
Speaker Change: Tick on inflation and Thats good for us as well so.
Speaker Change: And dose.
Speaker Change: We will continue to grow and don't have the same.
Speaker Change: Look I'll kind of leave it at that.
Speaker Change: The reduction in regulatory burden and increase in growth is good for us and at the moment that seems to be the direction that the new administration is taking.
Speaker Change: Capital recycling profile that the Datacenters do.
Speaker Change: In relation to the.
Speaker Change: Yes.
Speaker Change: Best richer of our.
Speaker Change: Transport assets.
Speaker Change: That's very good color. Thanks, so much.
Speaker Change: There is no real.
Speaker Change: Our next question comes from Ryan Levine with Citi.
Speaker Change: The pace of divestiture that.
Speaker Change: Different than any other sector, it's all driven by where they are in their lifecycle.
Ryan Levine: Hi, everybody.
Ryan Levine: In terms of the recent announcement around Stargate in Abilene, Texas, given your strategic position in that region can you speak to the impact to both data and data center development that it may have for Brookfield.
Speaker Change: And.
Speaker Change: And.
Speaker Change: And whether or not we think we can get the appropriate value for them and.
Speaker Change: There are probably a few.
Speaker Change: Transfer assets that we've held for a long period of time that our <unk>.
Roberto Marcogliese: Those improvements would ultimately be offset by new use cases, and in most cases, more complex use cases, whether it's things like robotics, which will ultimately more compute to actually have those robots run. The DeepSeek announcement, from our perspective, is really just a piece of that improvement puzzle, and we expect more advancements to come as we are still very early innings of this technology cycle. Over the long term, I would say our positive outlook hasn't changed for data center demand growth, and we're actually very excited by the prospect of having a more cost-effective AI tool, which should accelerate innovation, increase overall demand for AI and their applications, and ultimately make the technology more widely accessible to everyone. When we dig into our business, we don't see any material impacts over the long term.
Speaker Change: Probably coming up for sale, but that's not indicative of any view that we have regarding transportation or our ability and desire to invest in new transportation assets. We will always have a diversified pool of investments across all our sectors.
Ryan Levine: Sure.
Ryan Levine: Obviously, it's.
Ryan Levine: It's all very new and.
Ryan Levine: And the good news is.
Ryan Levine: We are in discussions with all the different stakeholders related to two stargate on many different levels.
Speaker Change: And there'll be periods of time when.
Speaker Change: We will deploy more in one sector than other I think all we want to do.
Ryan Levine: So we're close to what those people are doing and then I think we will have a role to play in and any major developments in the U S and in that regard but.
Speaker Change: Our comments.
Speaker Change: Earlier was just to highlight that today our deal flow is more centered around the digitalization theme and thus.
Ryan Levine: That's kind of at the macro level on the micro level of what it means to any of our existing investments today, Rob I know, maybe you can address that but.
Speaker Change: Those sectors that are impacted by that team, which is obviously the data sector as well as the midstream sector.
Ryan Levine: Yes sure.
Speaker Change: I think the impact is limited for us in the Texas market.
Speaker Change: Is probably where you'll see most of the capital in the near term goal.
Ryan Levine: We have one large campus.
Speaker Change: Hopefully that clarifies.
Ryan Levine: About 360 megawatts gets fully leased and under construction. So it's gonna be leased up 15 year basis.
Speaker Change: Our comments, yes, absolutely.
Roberto Marcogliese: With respect to the two most recent data center investments that we made, in the US and Europe, we have actually already surpassed our underwriting expectations in terms of the overall pace of lease-up across our existing land bank. Our platform benefits from significant contracted growth, which is underpinned by some of the most creditworthy counterparties in the world on their long-term availability-based contractual frameworks. The next point, I think, is actually very important. We took a very purposeful approach, and today, over 90% of our development are centered on building capacity in Tier 1 data center locations, which are in close proximity to GDP and population centers, and therefore afford maximum flexibility as these facilities can support multiple use cases such as cloud, training, inferences, and content, given that they benefit from the lowest latency.
Speaker Change: And just to finish off.
Speaker Change: I Couldnt help it to notice relatively favorable update.
Ryan Levine: So we don't think that necessarily has implications to what we have to date.
At the midstream segment.
Speaker Change: Thanks for having me G&P expansions under the take or pay.
Ryan Levine: Obviously, theres lots of land development being being pursued across the country and again I think.
Speaker Change: You've got additional pipeline connections to pipelines so.
Speaker Change: Just get your take on how you think your thesis for these two businesses up playing out.
Ryan Levine: Our perspective.
Ryan Levine: <unk> targeted the tier one data center markets and we're seeing great demand, where again, we see a lot of scarcity of power.
Speaker Change: Some of the initiatives, we should be watching out for this year such as the NBC connector.
Ryan Levine: And if we decide to look at other markets, we will be focused on ensuring we get the right contractual protections.
Speaker Change: Great Mark.
Speaker Change: We're pleased to talk about that and in fact, I'm going to pass it over to Ben Vaughan to talk a bit about.
Speaker Change: Thanks, and then in terms of the uncertainties surrounding deep sea.
Speaker Change: Our enthusiasm for what's going on in that sector.
Speaker Change: Alright, thanks for the question.
Ryan Levine: Demand for infrastructure.
Speaker Change: Does that give you pause around developing new assets you mentioned.
Speaker Change: You mentioned the <unk> connector.
Speaker Change: That's one great opportunity that we have in the western.
Speaker Change: A portion of your pipeline is tied to that opportunity.
Roberto Marcogliese: We continue to expect strong data center growth, with upside from emerging new use cases and future use cases that are yet to be developed. The capital required to support digitalization is staggering and will continue to create demand for large-scale and flexible capital from infrastructure investors like us. With that, I'll hand the call back to Sam.
Speaker Change: Canadian region with our assets, but it's only one of many and really what we're what we're seeing.
Speaker Change: Are you expecting to see a slowdown in that deal flow or pace of those transactions.
Speaker Change: Across the board in Western Canada, as our fleet of assets.
Speaker Change: So at a high level across all of our data center platforms were largely.
Speaker Change: Being and becoming fully utilized and then the market calling on us to expand our capacity and so we have about $1 billion of backlog of projects today, we see another potential for $2 billion to $3 billion of very attractive.
Speaker Change:
Speaker Change: Sold out from a development capacity perspective over the next three or four years. So we don't see a slowdown in terms of our own build out.
Sam Pollock: Okay. Well, thanks, Rob, hopefully that was a good warm-up to the Q&A session. Operator, maybe I'll turn it back over to you, and we'd be pleased to open up the line now for questions.
Speaker Change: I think as Sam alluded to earlier in the call.
Speaker Change: Growth projects and with the current sentiment of needing more of that energy.
Speaker Change: Obviously been very selective in terms of our land banking approach and we've taken a I call. It like a ladder approach, where we're buying land at different stages of development that we think will will tied to when that capacity will be required, but ultimately speaking I mean, we don't have a ton of excess land bank today.
Operator: Our first question comes from the line of Cherilyn Radbourne with TD Cowen.
Speaker Change: Pretty excited about the projects they're generally.
Speaker Change: Very straight forward in nature.
Speaker Change: I would describe them as relatively.
Speaker Change: Bite sized given the size of the overall assets and relatively low risk in terms of their execution. So we just have a lot of additional projects to provide our clients with access to our either processing systems or our transportation networks and so in general the connectors one of <unk>.
Speaker Change: And so we can.
Speaker Change: Throttle up and down how much land, we want to buy and develop it. So in the short term, we don't see any impacts to our business and long term.
Cherilyn Radbourne: Thanks very much, and good morning. Maybe sticking with the data theme for a second, and thank you for those comments on DeepSeek. We've been hearing anecdotally that development premiums for hyperscale centers have started to compress to some degree, which I guess is not totally surprising given the level of activity in the sector. Can you give some perspective on that comment as it relates to your own development backlog?
Speaker Change: As I said in my remarks earlier I think we're very bullish on on bringing the cost of AI applications down and I think that will just drive more demand for the product, which will ultimately take training or inferencing to actually be able to deliver to the end customer and so we think there's there may be bumps along the way.
Speaker Change: Many projects and we see.
Speaker Change: This is part of our midstream growth, which for the coming years as being pretty strong.
Ben Vaughan: And maybe just to add to that Ben.
Speaker Change: I guess, we'd say.
Speaker Change: In the short to medium term, but long term, we're bullish in terms of the compute requirement.
Speaker Change: Pretty much all brownfield expansions connectors to pipelines or expanding plants and the build multiples for.
Speaker Change: Look I would say too.
Rob: As Rob mentioned.
Sam Pollock: Well, maybe I'll start, and since we have Rob here, you can always jump in. I think as David alluded to in some of his remarks, Cherilyn, at the moment, we've been quite successful in holding our yield on cost on our projects. There's two elements to it. One is what we can contract at. Over the last year and a bit, we've seen rates in fact increase. The second component is the ability to control costs. I'd say for the most part, obviously there's always, in a large portfolio, there'll be some where they don't go entirely according to plan.
Rob: Growth isn't going to be linear for for data centers, but.
Speaker Change: These expansions are very very attractive and thats, probably what gets us really excited.
Rob: We expect growth to remain robust what we have is the leading developers in pretty much every market in the world in the U S. We have campus, which is one of the best and we think if not the best developer data for in Europe.
Speaker Change: Particularly.
Speaker Change: Given that many of them are contracted out of the gate.
Speaker Change: So maybe we will leave it there, but hopefully that gives you a sense of why we are very enthusiastic about the midstream sector at the moment.
No that's great. Thank you very much for the commentary.
Rob: <unk> down in South America, and then we've got.
Rob: Smaller, but growing businesses in Asia, and so to extent that there is going to be.
Speaker Change: Our next.
Speaker Change: Western comes from Robert Hope with Scotiabank.
Yes.
Speaker Change: Good morning, everyone.
Rob: Data Center development, we're going to get our market share because the large technology companies are going to want to use the best developers and added on top of that as you know our relationship with our renewable power group, which is helping source.
Speaker Change: Wanted to circle back on the data center commentary.
Speaker Change: When you speak about the data sector accounting for about 40% of the anticipated capital deployment just wanted to ask some clarification. There is that 40% of the expected deal flow that you expect to see over the next let's say coming years and then when you take a look at your organic backlog would that be kind of secondary to that just given the fact that you do have.
Rob: New renewable sites in a market that's quite constrained and so.
Sam Pollock: I'd say on our large projects, we've been able to bring projects in on time, on budget, and in fact, given we're doing a lot of large campus style projects, with the learnings we have in some of the initial deployments, we are in fact bringing costs down over time. All in all, a long-winded way of saying that we're not losing our premiums. That's not to say, down the road, the competition won't tighten things a little bit, but today that's not the case. Anything to add, Rob?
Rob: So the Brookfield complex has obviously the best ingredients of any group to play a big role in Digitization.
Speaker Change: Quite a lot of wood to chop there as well.
Speaker Change: Yes look I can if Dave here Hi, Rob.
Rob: No.
Rob: Yeah, I mean, I get that advertising out there but.
Speaker Change: So on the first point I think what we're referring to on the 40% was our pipeline today is highly comprise.
Rob: Nothing has really changed as far as.
Rob: Our views and the opportunity ahead.
Speaker Change: The investment opportunity in the digital space. So that's currently what we see.
Rob: Okay and then just last question just to clarify in terms of the contractual protections that were just highlighted.
Speaker Change: <unk>.
Speaker Change: Ahead of us for the near term.
Speaker Change: Youre right. In addition, the other thing worth highlighting is we have highlighted in previous calls that our backlog is at a record level of nearly $8 billion over the next three years and if you were to look at west sector that primarily driven by its going to be over 70% in the data side as well.
Speaker Change: Are there do you feel comfortable that if demand for load.
Speaker Change: Is materially less than what the industry is forecasting legal protections to de risked.
Roberto Marcogliese: No. I would agree. Again, I think it goes back to our Tier 1 focus, where I think a lot of the power bottlenecks have occurred, and so there's a premium for that scarcity.
Speaker Change: Opportunity for investors and other stakeholders.
Speaker Change: As Sam alluded to not just data centers, but also our partnership on the foundry side as well as the build out.
Yes.
Speaker Change: We do have take.
Speaker Change: Take or pay contracts, yes.
Sam Pollock: Cherilyn, I know you have two questions. Do you have another one?
Speaker Change: The Big thing is we don't have terms in our contract where people can can't support convenience that that is probably the the biggest risk. Some are developers might have as they might agree to some of those terms, we do not agree to those terms.
Speaker Change: Fiber and in build to suit towers in Germany and France.
Cherilyn Radbourne: Yes. Much more sort of macro. With respect to a stronger US dollar, just curious whether that impacts where you're seeing the best opportunities to invest for value. Likewise, does that have an impact on your capital recycling lineup for the year?
Speaker Change: It's broad based and that will continue to drive our positive outlook for the organic growth profile, rather than the EBIT New department. So those two together are what give us the.
Speaker Change: Alright, thank you.
Speaker Change: We believe that data will continue to be an increasing increasingly meaningful part of our business.
Speaker Change: That concludes today's question and answer session I would like to turn the call back to Sam Pollock for closing remarks.
Speaker Change: Alright.
Speaker Change: And thanks for that and then maybe just going back to kind of maurice's comments.
Sam Pollock: Okay. Maybe I'll tackle that one again. Look, I guess, as far as an initial or direct impact on where we would invest, I wouldn't say the FX plays directly, but it is a sign of capital flows. Obviously, I think a lot of the strength in the US dollar is the result of just a huge capital expenditure boom going on in the US, and obviously, that drives the need for capital. As a result, we are probably investing more in the US than historically we may have, just because of that dynamic. It isn't so much an FX thing, but the things are obviously all interrelated. As it relates to sales, our businesses are, for the most part, hedged to a large degree, we're not taking into account FX in determining whether or not a business is ready for sale.
Speaker Change: Alright.
Sam Pollock: Well listen thank you very much.
Regarding data center data being the largest sector in five years.
Sam Pollock: For helping us with the call and we'd like to thank everyone, who joined US. This morning, we hope it's been.
Speaker Change: Transport does have a $900 million asphalt toe head start here so back of the envelope math doesn't imply significant amount of capital that's kind of not in the backlog to get there.
Sam Pollock: Useful for everyone, particularly on the deep seek conversation and and we just again reiterate that we've had a great start to the year and look forward to providing our first quarter results at the end of April.
Speaker Change: Can you maybe just help us frame the roadmap of how data gets the largest contributor to cash flow.
Goodbye.
Sam Pollock: This concludes today's conference call. Thank you for participating you may now disconnect.
Robert Hope: Yes, Hi, Robert I think the short answer is there is.
Sam Pollock: Okay.
Speaker Change: New investments and divestitures so youll.
Sam Pollock: Yes.
Speaker Change: It's kind of a general directional comment from our part but.
Sam Pollock: Okay.
Sam Pollock: [music].
Speaker Change: How you get there is some assets will be sold that will reduce that and then.
Sam Pollock: Okay.
Speaker Change: Youll have just more investments on the data side and obviously, we may be wrong.
Sam Pollock: [music].
Speaker Change: Where it ends up it was.
Speaker Change: But it was just to give a sense of.
Speaker Change: Direction, where we think things are going.
Speaker Change: Alright, thank you.
Speaker Change: Our next question comes from Robert <unk> with CIBC capital markets.
Speaker Change: Hey, good morning, everyone I just wanted to go back to the debt.
Sam Pollock: Typically, we look at where we are in the business plan, and do we think the business will attract an attractive value on a local basis. I guess the short answer is no, we're not taking that into account.
Speaker Change: Comments again.
Speaker Change: First of all thank you for addressing the deep Sea news right at the front.
Speaker Change: But I take it from your comments that.
Sam Pollock: Yes.
Speaker Change: Okay.
Sam Pollock: Yes.
Speaker Change: There is still rather bullish on the on the outlook for for data in general data centers as well.
Sam Pollock: [music].
Cherilyn Radbourne: That's all for me. Thank you.
Speaker Change: I was just wondering how this week's news may influence your approach to making new investments in data for example.
Sam Pollock: Thank you.
Operator: Our next question comes from Devin Dodge with BMO Capital Markets.
Speaker Change: Will you shift your your.
Speaker Change: Your investment a bit to some of the other verticals that you mentioned like the towers.
Devin Dodge: Yeah. Thanks. Good morning. I wanted to start with a question on Triton. I'm just wondering if you could provide a bit more color on the sale of the minority interest in the portfolio of containers that you talked about in your opening remarks there. I'm just trying to get a sense for how much of the fleet this includes. Is this like a perpetual investment, or does it roll off as the containers are handed back? What that implied equity value translate in terms of implied FFO yield or some other valuation metric?
Speaker Change: And then if not how are you going to manage your commercial approach to.
Speaker Change: Data centers to mitigate any emerging risk that you might see from the D C.
Speaker Change: <unk>.
Rob: Yes, hi, Rob Thanks for that for that question and.
Speaker Change: I guess I would.
Rob: Make two comments in that regard first.
Speaker Change: We.
Speaker Change: When we evaluate any new opportunities.
Sam Pollock: Okay. Thanks, Devin. As it turns out, we have Dave Joynt here, who is responsible for that transaction. We hadn't expected him to speak, since it's a direct question on Triton, probably a good one for him to answer. Dave, do you want to tackle that one?
Speaker Change: Yes, it's always on a risk adjusted basis, and so to extent that.
Speaker Change: We can buy towers at a better risk adjusted return than than new investments into data centers, we will do that and we always have done that and that will continue to be our.
Dave Joynt: Yeah. Hey, good morning, Devin. Just with respect to the transaction itself, I guess my comment on this is, what we have done is we have taken a pool of leased-up containers, and we've sold out a minority interest in that pool itself, which has standalone financing. The strategy behind all of this is that Triton is a business that has tremendous unit economics on the deployment of capital. The real magic comes into leasing these up, putting them on long-term leases for people. I think we've found is that there is a pool of buyers that have interest in buying into a yield-oriented vehicle that runs off over time, over the life of the containers, which, as you might know, is on average, about 15 years.
Speaker Change: Playbook going forward.
Speaker Change: As it relates to managing.
Speaker Change: Our.
Speaker Change: Development activities with our existing platforms in data centers.
Speaker Change: We.
Speaker Change: We don't really build anything.
Speaker Change: Of a particular size on spec, there's always nuances to what I just said there we do need to buy land and we control the amount of land that we have in inventory at any one moment in time, so that we're not overexposed to slowdowns in leasing activity.
Speaker Change: And obviously, we try to mitigate that by giving them options on land and things like that.
Speaker Change: And then.
Dave Joynt: In terms of your question around valuation, I guess all I'm probably at liberty to say here is that, given the nature of what we sold, which is a de-risked long-term cash-flowing portfolio, this is done at a lower cost of capital than we would have in the market.
Speaker Change: To.
Speaker Change: The extent, we think it makes sense to to improve the land a little bit too.
Speaker Change: Okay speed up the delivery.
Speaker Change: For clients when they can.
Speaker Change: Actively commission it.
Sam Pollock: Dave, it makes up about 10% of the portfolio, would you say?
Speaker Change: Again, we manage how much capital we ever have at risk in that regard so.
Dave Joynt: Yeah. On a net-of-the-business basis, it's about 6%.
Sam Pollock: 6%.
Speaker Change: Yes, there is.
Speaker Change: A lot of analysis that goes on with that but suffice it to say.
Devin Dodge: Okay. Thanks for that. Good color there. This second question, just maybe sticking with capital recycling again. You guys were talking about the sale of one non-core data center being sold, but can you just provide a bit of a broader update on the self-funding model for your data center platform and what forms that's likely to take?
Speaker Change: Our overall.
Speaker Change: <unk> is building.
Speaker Change: New facilities with contracts in hand, and with certainty around.
Sam Pollock: Yes.
Sam Pollock: [music].
Speaker Change: Commercial applications, and we don't really do things on spec.
Speaker Change: With with all of those nuances that I mentioned there.
Rob: Rob anything you want to add.
Sam Pollock: Hi, Devin. I'd expect there will be a lot more news in the next couple of quarters regarding our capital recycling program for the data centers. It is an ongoing exercise as new facilities come on stream. We do have a program of setting up stabilized pools of data centers and bringing in institutional investors to invest in those stabilized assets. I think we're pretty advanced in both the North American and the European pool of assets, and we hope to have news for you and our shareholders in the coming quarters on our success in that regard.
Speaker Change: Okay.
Speaker Change: Hopefully it looks great.
Speaker Change: So actually thank you and thanks again for addressing this issue right upfront and then the open manner.
Speaker Change: So my next question is do you have a comment on the unit holder letter about interest rates and investor sentiment impacting the price towards the end of last year.
Speaker Change: And at the same time, we have a very strong organic backlog. So that makes me wonder what that background. What your current view might be on unit price repurpose. This before.
Sam Pollock: Okay.
Sam Pollock: Okay.
Sam Pollock: Okay.
Speaker Change: Making new investments in the current environment, particularly if maybe there is some uncertainty and some things like deep seek or with Janssen U S Presidential administration.
Sam Pollock: Okay.
Sam Pollock: Yes.
Sam Pollock: Okay.
Sam Pollock: Okay.
Sam Pollock: Yes.
Sam Pollock: [music].
Speaker Change: Yeah sure David good to hear.
Speaker Change: Thanks, Rob I think where youre getting it and happy to.
Devin Dodge: Okay. Excellent. Thank you. I'll turn it over.
Speaker Change: Is around just our capital allocation approach and whether we see it more attractive to be buying units rather than deploy capital on and I think as you would've seen in our ladder in her on this call we feel pretty.
Sam Pollock: Okay. Thanks, Devin.
Operator: Our next question comes from Maurice Choy with RBC Capital Markets.
Maurice Choy: Thank you, and good morning. Maybe sticking with the capital recycling team. I think you mentioned that data center is positioned to be your largest sector within 5 years. By FFO, transport is currently your largest sector, being about 3 or 4 times larger than data. You've already mentioned that you got good growth for new capital, but there's also, obviously, a self-funding or recycling program for data. Should we think about transport as making up a large part of your medium-term asset sales? If so, what about transport trends are you seeing that motivates this strategy?
Speaker Change: Pretty good about the investment environment, it's quite balanced we're excited about the the pace of our asset sale program, but also believe that those proceeds.
Speaker Change: We can find really attractive investment opportunities to compound returns over long periods of time. So as we've said in the past we're going to affect the relative risk adjusted returns on buying units back depending on price and the investment pipeline. We have in front of us at any given time. So today I think we're in a good position as you would've seen in our letter.
Sam Pollock: Okay.
Sam Pollock: [music].
Speaker Change: Okay. Thanks, everyone.
Sam Pollock: Thank you.
Speaker Change: Thank you.
Sam Pollock: Okay.
Speaker Change: As a reminder, if you'd like to ask a question at this time. Please press star one one on your Touchtone phone.
Sam Pollock: [music].
Sam Pollock: Hi, Maurice. That's a good question. I guess, there's lots of moving parts there, though, that I think maybe might be adding to some of the confusion. I think the first thing is, in the data sector, it's not all data centers. In the data center component of it, we are probably managing the total capital in that component, but it will still grow. Even though we're recycling, I still expect it to grow. We're investing in lots of other areas of the data sector complex, whether it be towers, fiber optic systems, and those will continue to grow and don't have the same capital recycling profile that the data centers do. In relation to the divestiture of our transport assets, there's no real pace of divestiture that's different than any other sector.
Unknown Moderator/Host: Our next question comes from Frederic Bastien with Raymond James.
Speaker Change: Okay.
Frederic Bastien: Hey, good morning, guys. So one platform, we haven't talked much about is utilities.
Speaker Change: Conspicuously absent from your recycling efforts.
Sam Pollock: Thank you.
Sam Pollock: [music].
Frederic Bastien: So far this year, so I'm sure, it's simply a function of timing but.
Sam Pollock: Okay.
Frederic Bastien: Hoping you can provide a bit of color here.
Sam Pollock: Okay.
Sam Pollock: Yes.
Sam Pollock: [music].
Speaker Change: Hey, Brett.
Frederic Bastien: Sure.
Frederic Bastien: Yes, I guess.
Frederic Bastien: You probably.
Frederic Bastien: Answered your own question there.
Frederic Bastien: We.
Frederic Bastien: For the most part our larger utilities.
Sam Pollock: Okay.
Frederic Bastien: Have.
Frederic Bastien: Significant growth ahead of them and so we're not looking to monetize them at this point in time.
Sam Pollock: [music].
Sam Pollock: Yes.
Sam Pollock: <unk>.
Sam Pollock: [music].
Frederic Bastien: There is though.
Frederic Bastien: A number of businesses that.
Frederic Bastien: Either we have in that sector, which we have sold like loss from bonus.
Frederic Bastien: Which is more recent and then.
Frederic Bastien: We've telegraphed that we'd be looking to monetize a portion of our Brazilian.
Frederic Bastien: Electricity transmission business.
Sam Pollock: It's all driven by where they are in their life cycle and whether or not we think we can get the appropriate values for them. There are probably a few transfer assets that we'd held for a long period of time that are probably coming up for sale, but that's not indicative of any view that we have regarding transportation or our ability and desire to invest in new transportation assets. We will always have a diversified pool of investments across all our sectors. There'll be periods of time when we'll deploy more in one sector than others. I think all we wanted to do in our comments earlier was just to highlight that today our deal flow is more centered around the digitalization theme, and thus those sectors that are impacted by that theme, which is obviously the data sector as well as the midstream sector.
Frederic Bastien: Coming year as well and so there always is that maybe it's not as meaningful as some of the other sectors.
Sam Pollock: Okay.
Sam Pollock: [music].
Frederic Bastien: Maybe we don't.
Frederic Bastien: Talk about them enough.
Frederic Bastien: They've been great investments for us our returns on loss from animals or over 20%.
Frederic Bastien: Our returns in U S dollars for.
Frederic Bastien: Brazilian transmission business will be well into the twenty's in local currency as well in the <unk> and so.
Frederic Bastien: Yes.
Frederic Bastien: You are right to point out that we probably should.
Frederic Bastien: Mentioned those assets more than the success we have so.
Sam Pollock: Sure.
Sam Pollock: Okay.
Sam Pollock: Okay.
Sam Pollock: Yes.
Frederic Bastien: Looking for new opportunities in utilities, and we will be monetizing some of the existing assets.
Sam Pollock: [music].
Frederic Bastien: As they mature.
Tom: Thanks, Tom that's helpful.
Frederic Bastien: I'm wondering also.
Speaker Change: Maybe it hasnt been asked directly but is this new U S administration positive for.
Sam Pollock: Yes.
Sam Pollock: [music].
Frederic Bastien: For your business.
Frederic Bastien: Okay.
Sam Pollock: That is probably where you'll see most of the capital in the near term go. Hopefully, that clarifies our comments.
Frederic Bastien: So without.
Frederic Bastien: Taking any.
Frederic Bastien: Any views one way or another.
Frederic Bastien: Good perspective.
Maurice Choy: Yep, absolutely. It does. Just to finish off, I couldn't help but to notice a relatively favorable update at the midstream segment, Moss River having new GMP expansions on the Take or Pay. You've got additional pipeline connections set into pipeline. Can I just get your take on how you think your thesis for these two businesses are playing out? What are some of the initiatives we should be watching out for this year, such as the NEBC Connector?
Frederic Bastien: Look I think.
Frederic Bastien: We view as positive any.
Sam Pollock: Okay.
Frederic Bastien: Steps that reduce.
Sam Pollock: Thanks.
Sam Pollock: Sure.
Frederic Bastien: Regulatory burden and encourage growth and I think we've seen a lot of positive steps being taken in that regard.
Sam Pollock: Okay.
Sam Pollock: Yes.
Sam Pollock: Sure.
[music].
And I think as an infrastructure owner of those can only be helpful to our business.
Frederic Bastien: We can't comment on all of the other.
Frederic Bastien: Things that might go on tariffs or whatnot that's more.
Sam Pollock: Great. Maurice, we're pleased to talk about that. In fact, I'm going to pass it over to Ben Vaughn to talk a bit about our enthusiasm for what's going on in that sector.
Frederic Bastien: More complicated.
Sam Pollock: Okay.
Sam Pollock: [music].
Frederic Bastien: I don't think tariffs.
Frederic Bastien: No.
Frederic Bastien: Will affect us in a direct way.
Frederic Bastien: Negatively obviously it does have impacts that we need to manage from a capex perspective might impact some of our clients, which could have a longer term impact, but obviously inflation if it has a.
Ben Vaughan: Yeah. Maurice, thanks for the question. You mentioned the NEBC Connector. That's one great opportunity that we have in the Western Canadian region with our assets, but it's only one of many. Really what we're seeing across the board in Western Canada is our fleet of assets being and becoming fully utilized, and then the market calling on us to expand our capacity. We have about $1 billion of backlog of projects today. We see another potential for $2 to $3 billion of very attractive growth projects. With the current sentiment of needing more of that energy, we're pretty excited about the projects. They're generally very straightforward in nature. I would describe them as relatively bite-sized, given the size of the overall assets, and relatively low risk in terms of their execution.
Speaker Change: Nick on inflation, that's good for us as well so.
Speaker Change: Look I'll kind of leave it at that any reduction in regulatory burden and increase in growth is good for us.
Speaker Change: And at the moment that seems to be the direction that the new administration is taking.
Speaker Change: That's very good color. Thanks, so much.
Speaker Change: Our next question comes from Ryan Levine with Citi.
Ryan Levine: Hi, everybody.
Speaker Change: Okay in terms of the <unk>.
Speaker Change: <unk> announced around Stargate in Abilene, Texas, given your strategic position in that region can you speak to the impact to both data and data center development that it may have for Brookfield.
Speaker Change: Sure.
Speaker Change: Obviously, it's.
Ben Vaughan: We just have a lot of additional projects to provide our clients with access to our either processing systems or our transportation networks. In general, the connector is one of many projects, and we see this as part of our midstream growth wedge for the coming years as being pretty strong.
It's all very new and.
Speaker Change: And the good news is.
Speaker Change: We are in discussions with all the different stakeholders related to Stargate on many different levels.
Speaker Change: So we're close to what those people are doing and then I think we will have a role to play in any major developments in the U S in that regard.
Sam Pollock: I maybe just add to that, Ben. I guess we'd say that they're pretty much all brownfield expansions, connectors to pipelines, or expanding plants. The build multiples for these expansions are very attractive. That's probably what gets us really excited, particularly given that many of them are contracted out of the gate. Maybe we'll leave it there, but hopefully, that gives you a sense of why we're very enthusiastic about the midstream sector at the moment.
Speaker Change: But.
That's kind of at the macro level on the micro level of what it means to any of our existing investments today, Rob I know, maybe you can address that but yes.
Speaker Change: Yes sure.
Speaker Change: I think the impact is limited for us in the Texas market.
Speaker Change: We have one large campus.
Speaker Change: About 360 megawatts gets fully leased and under construction. So it's going to be leased on a 15 year basis.
Maurice Choy: No, that's great. Thank you very much for the commentary.
Speaker Change: So we don't think that necessarily has implications to what we have to date.
Operator: Our next question comes from Robert Hope with Scotiabank.
Speaker Change: Obviously, theres lots of land development being being pursued across the country and again I think.
Robert Hope: Good morning, everyone. Wanted to circle back on the data center commentary. You speak about the data sector accounting for about 40% of the anticipated capital deployment. Just wanted to have some clarification there. Is that 40% of the expected deal flow that you expect to see over the next, we'll say, coming years? When you take a look at your organic backlog, would that be secondary to that, just given the fact that you do have quite a lot of wood to chop there as well?
Speaker Change: From our perspective, we.
Speaker Change: Targeted the tier one data center markets, and we're seeing great demand and where again, we see a lot of scarcity of power.
Speaker Change: And if we decide to look at other markets, we will be focused on ensuring we get the right contractual protections.
Speaker Change: Thanks, and then in terms of the uncertainty surrounding deep sea.
Speaker Change: Demand for infrastructure.
David Krant: Yeah, look, it's Dave here. Hi, Rob. On the first point, I think what we were referring to on the 40% was our pipeline today is highly comprised of investment opportunities in the digital space. Yeah, that's currently what we see ahead of us for the near term. You're right. In addition, the other thing worth highlighting is, we have highlighted previous calls that our backlog is at a record level, nearly $8 billion over the next 3 years. If you were to look at what sector that's primarily driven by, it's going to be over 70% in the data side as well. That's, as Sam alluded to, not just data centers, but also our partnership on the foundry side, as well as the build-out of fiber and build-to-suit towers in Germany and France.
Speaker Change: Does that give you pause around.
Speaker Change: Hoping new assets and you mentioned a large portion of your pipeline is tied to that opportunity.
Speaker Change: Are you expecting to see a slowdown in that deal.
Speaker Change: <unk> or pace of those transactions.
Speaker Change: So at a high level across all of our data center platforms were largely.
Speaker Change: Sold out from a development capacity perspective over the next three or four years. So we don't see a slowdown in terms of our own build out and then I think as Sam alluded to earlier in the call.
Speaker Change: <unk>, obviously been very selective in terms of our land banking approach and we've taken a call. It like a ladder approach, where we're buying land at different stages of development that we think will.
David Krant: I'd say it's broad-based, and that will continue to drive our positive outlook for the organic growth profile rather than the new deployment. Those two together are what give us the belief that data will continue to be an increasingly meaningful part of our business.
Speaker Change: Tied to when that capacity will be required, but ultimately speaking I mean, we don't have a ton of excess land bank today and so we can.
Speaker Change: Throttle up and down on how much land, we want to buy and develop it. So in the short term, we don't see any impacts to our business and long term.
Robert Hope: All right. Thanks for that. Maybe just going back to kind of Maurice Choy's comments or questions regarding data being the largest sector in five years. Transport does have a $900 million FFO head start here. Back of the envelope math does imply significant amount of capital that's not in the backlog to get there. Can you maybe just help us frame the roadmap of how data gets the largest contributor to cash flow?
Speaker Change: As I said in my remarks earlier I think we're very bullish on on bringing the cost of AI applications down and I think that will just drive more demand for the product, which will ultimately take training or inferencing to actually be able to deliver to the end customer and so we think there is there may be bumps along the way.
Speaker Change: In the short to medium term to long term, we are bullish in terms of the compute requirements.
Speaker Change: Look I would say too.
Robert Hope: As Rob mentioned.
Sam Pollock: Yeah. Hi, Robert. I think the short answer is there's new investments and divestitures. It's kind of a general directional comment from our part. How you get there is some assets will be sold that will reduce that, and then you'll have just more investments on the data side. Obviously, we may be wrong in where it ends up, but it was just to give a sense of direction where we think things are going.
Robert Hope: Growth isn't going to be linear for for data centers, but.
Robert Hope: We expect growth to remain robust while we have is the leading developers in pretty much every market in the world in the U S. We have campus, which is one of the best and we think if not the best developer data for in Europe.
Robert Hope: <unk> down in South America, and then we got.
Robert Hope: Smaller, but growing businesses in Asia, and so to extent that there is going to be.
Robert Hope: Data data center development, we're going to get our market share because the large technology companies are going to want to use the best developers and added on top of that is our relationship with our renewable power group, which is helping source.
Robert Hope: All right. Thank you.
Operator: Our next question comes from Robert Catellier with CIBC Capital Markets.
Robert Catellier: Hey, good morning, everyone. I just want to go back to the data comments again. First of all, thank you for addressing the DeepSeek news right at the front. I take it from your comments that you're still rather bullish on the outlook for data in general, data centers as well. I'm just wondering, though, how this week's news may influence your approach to making new investments in data. For example, will you shift your investment a bit to some of the other verticals that you mentioned, like the towers? If not, how are you going to manage your commercial approach to data centers to mitigate any emerging risks that you might see from the DeepSeek news?
Robert Hope: New renewable sites in a market that's quite constrained and so the Brookdale complex has obviously the best ingredients of any group to play a big role in Digitization.
Robert Hope: No.
Robert Hope: Yes, that'll make it that advertising out there but.
Robert Hope: Yeah.
Robert Hope: Nothing has really changed as far as.
Robert Hope: Our views and the opportunity ahead.
Speaker Change: Okay and then just last question just to clarify in terms of the contractual protections that were just highlighted.
Are there do you feel comfortable that if demand for load.
Is materially less than what the industry is forecasting you have legal protections to de.
Sam Pollock: Yeah. Hi, Rob. Thanks for that question. I guess I would make 2 comments in that regard. First, when we evaluate any new opportunities, it's always on a risk-adjusted basis. To the extent that we can buy towers at a better risk-adjusted return than new investments into data centers, then we'll do that. We always have done that, and that will continue to be our playbook going forward. As it relates to managing our development activities with our existing platforms in data centers. Look, we don't really build anything of any particular size on spec. There's always nuances to what I just said there. We do need to buy land, and we control the amount of land that we have in inventory at any one moment in time so that we're not overexposed to slowdowns in leasing activity.
Speaker Change: De risk the opportunity for investors and other stakeholders.
Speaker Change: Yes, we.
Speaker Change: We do have.
Speaker Change: Take or pay contracts, yes.
Speaker Change: The Big thing is we don't have terms in our contract where people can cancer for convenience that that is probably the the biggest risk some.
Speaker Change: Developers might have as they might agree to some of those terms, we do not agree to those terms.
Speaker Change: Thank you.
Speaker Change: That concludes today's question and answer session I would like to turn the call back to Sam Pollock for closing remarks.
Speaker Change: Alright.
Sam Pollock: Listen thank you very much.
Speaker Change: For helping us with the call and we'd like to thank everyone, who joined US. This morning, we hope it's Ben.
Speaker Change: Yes.
Speaker Change: Useful for everyone, particularly on the deep seek conversation and.
Speaker Change: And we just again reiterate that we've had a great start to the year and look forward to providing our first quarter results at the end of April.
Speaker Change: Goodbye.
Speaker Change: This concludes.
Speaker Change: Today's conference call. Thank you for participating you may now disconnect.
David Krant: Obviously, we try to mitigate that by getting options on land and things like that. Then, to the extent we think it makes sense to improve the land a little bit to speed up the delivery for clients when they can effectively commission it. Again, we manage how much capital we ever have at risk in that regard. There is a lot of analysis that goes on with that, but suffice it to say, our overall thesis is building new facilities with contracts in hand and with certainty around.
Sam Pollock: commercial applications. We don't really do things on spec with all those nuances that I mentioned there. Rob, anything you want to add there?
Robert Catellier: Okay.
Sam Pollock: No, okay. Hope that helped.
Robert Catellier: That's great. It is, actually. Thank you, and thanks again for addressing this issue, Rob, right up front in an open manner. My next question is, you had a comment in the unitholder letter about interest rates and investor sentiment impacting the unit price towards the end of last year. At the same time, you have a very strong organic backlog. It makes me wonder, with that background, what your current view might be on unit price repurchases before making new investments in the current environment, particularly if maybe there's some uncertainty in some things like DeepSeek or the change in US presidential administration.
David Krant: Yeah, sure. It's Dave here. Thanks, Rob. I think where you're getting at, and happy to, is around just our capital allocation approach and whether we see it more attractive to be buying units rather than deploying capital. I think, as you would've seen in our letter and heard on this call, we feel pretty good about the investment environment. It's quite balanced. We're excited about the pace of our asset sale program, but also believe that those proceeds, we can find really attractive investment opportunities to compound returns over long periods of time. As we've said in the past, we're going to assess the relative risk-adjusted returns on buying units back depending on our unit price and the investment pipeline we have in front of us at any given time. Today, I think we're in a good position, as you would've seen in our letter.
Robert Catellier: Okay. Thanks, everyone.
Sam Pollock: Dave, thank you.
Operator: As a reminder, if you'd like to ask a question at this time, please press star one one on your touch-tone phone. Our next question comes from Frederic Bastien with Raymond James.
Frederic Bastien: Good morning, guys. One platform we haven't talked much about is utilities, and it's conspicuously absent from your recycling efforts so far this year. I'm sure it's simply a function of timing, but hoping that you can provide a bit of color here.
Sam Pollock: Hey, Fred. Yeah, I guess you probably answered your own question there. For the most part, our larger utilities have significant growth ahead of them, we're not looking to monetize them at this point in time. There is, though, a number of businesses that either in that sector, which we have sold, like Los Ramones, which is more recent, I think we've telegraphed that we'd be looking to monetize a portion of our Brazilian electricity transmission business in the coming year as well. There always is, and maybe it's not as meaningful as some of the other sectors, and maybe we don't talk about them enough. They've been great investments for us. Our returns on Los Ramones are over 20%.
Sam Pollock: Our returns in US dollars for the Brazilian transmission business will be well into 20s, and in local currencies, well in the 30s. You are right to point out that we probably should mention those assets more and the success we have. We are looking for new opportunities in utilities, and we will be monetizing some of the existing assets as they mature.
Frederic Bastien: Thanks. No, that's helpful. Wondering also, maybe it hasn't been asked directly, is this new US administration positive for your business?
Sam Pollock: Without taking any views one way or another from a political perspective. Look, I think we view as positive any steps that reduce regulatory burden and encourage growth. I think we've seen a lot of positive steps being taken in that regard. I think, as an infrastructure owner, those can only be helpful to our business. We can't comment on all the other things that might go on, tariffs or whatnot, that's more complicated. I don't think tariffs will affect us in a direct way, negatively. Obviously, it does have impacts that we need to manage from a CapEx perspective. It might impact some of our clients, which could have a longer-term impact. Obviously, inflation, if it has a uptick on inflation, that's good for us as well. Look, I'll leave it at that.
Sam Pollock: Any reduction in regulatory burden and increase in growth is good for us. At the moment, that seems to be the direction that the new administration is taking.
Frederic Bastien: That's very good color. Thanks so much.
Operator: Our next question comes from Ryan Levine with Citi.
Ryan Levine: Hi, everybody. In terms of the recent announcement around Stargate in Abilene, Texas, given your strategic position in that region, can you speak to the impact to both data and data center development that it may have for Brookfield?
Sam Pollock: Sure. Obviously, it's all very new. The good news is we are in discussions with all the different stakeholders related to Stargate on many different levels. We're close to what those people are doing. I think we'll have a role to play in any major developments in the US in that regard. That's at the macro level. On the micro level of what it means to any of our existing investments today, Rob, I know maybe you can address that.
Roberto Marcogliese: Yeah, sure. I think the impact is limited for us in the Texas market. We have one large campus, about 360 megawatts. It's fully leased and under construction. It's going to be leased on a 15-year basis. We don't think that necessarily has implications to what we have today. Obviously, there's lots of land development being pursued across the country. Again, I think from our perspective, we have targeted the Tier 1 data center markets, and we're seeing great demand where, again, we see a lot of scarcity of power. If we decide to look at other markets, I know we will be focused on ensuring we get the right contractual protections.
Ryan Levine: Thanks. In terms of the uncertainty surrounding DeepSeek and demand for infrastructure, does that give you a pause around developing new assets? You mentioned a large portion of your pipeline is tied to that opportunity. Are you expecting to see a slowdown in that deal flow or pace of those transactions?
Roberto Marcogliese: At a high level, across all of our data center platforms, we're largely sold out from a development capacity perspective over the next 3 or 4 years. I think as Sam alluded to earlier in the call, we've obviously been very selective in terms of our land banking approach, and we've taken, I call it, a laddered approach, where we're buying land at different stages of development that we think will tie to when that capacity will be required. Ultimately speaking, we don't have a ton of excess land bank today, and so we can throttle up and down how much land we want to buy and develop. In the short term, we don't see any impacts to our business.
Roberto Marcogliese: In the long term, as I said in my remarks earlier, I think we're very bullish on bringing the cost of AI applications down, and I think that'll just drive more demand for the product, which will ultimately take training or inferencing to actually be able to deliver to the end customer. We think there may be bumps along the way in the short to midterm, but long term, we're bullish in terms of the compute requirement.
Sam Pollock: Yeah. Look, I would say as Rob mentioned, growth isn't going to be linear for data centers, but we expect growth to remain robust. What we have is the leading developers in pretty much every market in the world. In the US, we have Compass, which is one of the best, and we think, if not the best developer. DATA4 in Europe. Ascenty down in South America. We've got smaller but growing businesses in Asia. To the extent that there's going to be data center developments, we are going to get our market share because the large technology companies are going to want to use the best developers. Added on top of that is our relationship with our Renewable Power group, which is helping source new renewable sites in a market that's quite constrained.
Sam Pollock: The Brookfield complex has obviously the best ingredients of any group to play a big role in digitalization. I'm going to get that advertisement out there, but nothing has really changed as far as our views and the opportunity ahead.
Ryan Levine: Great. Just last question, just to clarify, in terms of the contractual protections that were just highlighted, do you feel comfortable that if demand for load is materially less than what the industry is forecasting, you have legal protections to de-risk the opportunity for investors and other stakeholders?
Sam Pollock: We do, yeah. We do have take-or-pay contracts. Yeah. The big thing is we don't have terms in our contract where people can cancel for convenience. That is probably the biggest risk some developers might have, is they might agree to some of those terms. We do not agree to those terms.
Ryan Levine: Sure. Thank you.
Operator: That concludes today's question and answer session. I'd like to turn the call back to Sam Pollock for closing remarks.
Sam Pollock: All right. Well, Liz, thank you very much for helping us with the call, and we'd like to thank everyone who joined us this morning. We hope it's been useful for everyone, particularly on the DeepSeek conversation. We just, again, reiterate that we've had a great start to the year, and look forward to providing our Q1 results at the end of April. Goodbye.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.