Q3 2025 Brookfield Infrastructure Partners LP Earnings Call
Operator: Good day, and thank you for standing by. Welcome to the Brookfield Infrastructure Partners L.P. Q3 2025 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. I would now like to hand the conference over to your speaker today, David Krant, Chief Financial Officer.
Speaker #2: Good day and thank you for standing by . Welcome to the Brookfield Infrastructure Partners L.P. . Q3 2025 results Conference Call and webcast .
Speaker #2: At this time , all participants are in a listen only mode . Please be advised that today's conference is being recorded . After the speakers presentation , there will be a question and answer session .
Speaker #2: To ask a question , please press star one . One on your telephone and wait for your name to be announced . To withdraw your question , please press star one .
Speaker #2: Thank you. Again, I would now like to hand the conference over to your speaker today, David Joynt, Chief Financial Officer.
David Krant: Thank you, Josh, and good morning, everyone. Welcome to Brookfield Infrastructure Partners' Q3 2025 Earnings Conference Call. As introduced, my name is David Krant, and I am the Chief Financial Officer of Brookfield Infrastructure. I'm joined today by our Chief Executive Officer, Sam Pollock, as well as Ben Vaughan, and Dave Joynt, who will be available for the question and answer portion of today. I'll begin today with a discussion of our Q3 2025 financial and operating results, followed by a discussion of our financing activity and strong balance sheet position. I'll then hand the call over to Sam, who will provide an update on our strategic initiatives and conclude with 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, and future results may differ materially.
Speaker #3: Thank you , Josh , and good morning , everyone . Welcome to Brookfield Infrastructure Partners . Third quarter 2020 Earnings Conference call . As introduced , my name is David Krant and I am the Chief Financial officer of Brookfield Infrastructure .
Speaker #3: I'm joined today by our Chief Executive officer , Sam Pollock , as well as Ben Vaughn and David Joynt , who will be available for the question and answer portion of the call .
Speaker #3: I'll begin today with a discussion of our third quarter 2025 financial and operating results , followed by a discussion of our financing activity and strong balance sheet position .
Speaker #3: I'll then hand the call over to Sam , who will provide an update on our strategic initiatives and conclude with an outlook for the business .
Speaker #3: 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 , and future results may differ materially .
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. Brookfield Infrastructure had another solid quarter, achieving strong financial results and executing on our strategic initiatives. Beginning with our financial and operating results, we generated Q3 funds from operations, or FFO, of $654 million or $0.83 per unit. This was 9% higher compared to the previous year, driven primarily by strong organic growth, highlighting the financial strength and stability of our base business. These results were delivered despite FFO contributions forgone following a year of record asset sales and then only a partial contribution from the new investments we've made. Turning to our results by segment, our Utilities generated FFO of $190 million, slightly ahead of the prior year.
Speaker #3: 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 #3: Brookfield Infrastructure had another solid quarter achieving strong financial results and executing on our strategic initiatives . Beginning with our financial and operating results , we generated third quarter funds from operations or FFO , of $654 million , or $0.83 per unit .
Speaker #3: This was 9% higher compared to the previous year , driven primarily by strong organic growth . Highlighting the financial strength and stability of our base business .
Speaker #3: These results were delivered despite FFO contributions foregone following a year of record asset sales and only a partial contribution from the new investments we've made .
Speaker #3: Turning to our results by segment . Our utilities generated FFO of $190 million , slightly ahead of the prior year results , benefited from inflation indexation .
David Krant: Results benefited from inflation indexation in addition to contributions from over $450 million of capital added to the rate base. The strong underlying performance was partially offset by higher borrowing costs and the sale of our Mexican regulated natural gas transmission business in Q1 of this year. Moving to our transport segment, FFO was $286 million for the quarter. Headline results are lower than last year due to the sale of our interest in an Australian export terminal, DBI, and the sell-down of stabilized containers within our global intermodal logistics business. After adjusting for these capital recycling initiatives, our results were slightly ahead of the prior year. The solid underlying performance reflected strong volumes across our networks and rate increases on our rail networks and toll roads.
Speaker #3: In addition to contributions from over $450 million of capital added to the rate base . The strong underlying performance was partially offset by higher borrowing costs and the sale of our Mexican regulated natural gas transmission business in the first quarter of this year .
Speaker #3: Moving to our transport segment , FFO was $286 million for the quarter . Headline results are lower than last year due to the sale of our interest in Australian Export Terminal DB , and the Selldown of stabilized containers within our global Intermodal logistics business .
Speaker #3: After adjusting for these capital recycling initiatives , our results were slightly ahead of the prior year . The solid underlying performance reflected strong volumes across our networks and rate increases on our rail networks and toll roads .
David Krant: Our midstream segment generated FFO of $156 million, representing a 6% increase over the same period last year. We experienced strong customer activity levels and asset utilization across our portfolio, particularly at our Canadian diversified midstream operation. Notably, we completed the acquisition of Colonial Enterprises this Q3. The partial earnings contributions were offset by the lost income associated with the sale of our US gas pipeline in Q2 of this year. Lastly, FFO from our data segment was $138 million, representing a step change increase of over 60% compared to the prior year. The increase was driven by a full quarter contribution from the tech and acquisition of a tower portfolio in India completed last year, as well as strong organic growth across our data storage businesses.
Speaker #3: Our midstream segment generated FFO of $156 million , representing a 6% increase over the same period last year . We experienced strong customer activity levels and asset utilization across our portfolio , particularly at our Canadian diversified midstream operation .
Speaker #3: Notably , we completed the acquisition of Colonial Enterprises this quarter . The partial earnings contributions were offset by the lost income associated with the sale of our US gas pipeline in the second quarter of this year .
Speaker #3: Lastly , FFO from our data segment was $138 million , representing a step change increase over of over 60% compared to the prior year .
Speaker #3: The increase was driven by a full quarter contribution from the tuck in acquisition of a tower portfolio in India , completed last year , as well as strong organic growth across our data storage businesses .
David Krant: This growth included income earned by our developers, the commissioning of 80 MW of capacity at our hyperscale data centers, and 45 MW of new billings initiated at our US retail colocation data center operation. Before turning the call over to Sam, I'd like to provide an update on recent financing activity. Debt capital markets remained favorable during the quarter, with significant new issuance activity and further tightening in credit spreads. During the period, we completed financings to enhance our liquidity, support growth initiatives, and refinance near-term maturities. This included a $700 million corporate issuance of medium-term notes in September. The issuance had a weighted average interest rate of approximately 4% and was priced at the tightest credit spreads in our history.
Speaker #3: This growth included income earned by our developers , the commissioning of 80MW of capacity at our hyperscale data centers , and 45MW of new billings initiated at our US retail colocation data center operation .
Speaker #3: Before turning the call over to Sam , I'd like to provide an update on recent financing activity . Debt capital markets remained favorable during the quarter , with significant new issuance activity and further tightening in credit spreads during the period we completed financings to enhance our liquidity support growth initiatives and refinance near-term maturities .
Speaker #3: This included a $700 million corporate issuance of medium term notes in September . The issuance had a weighted average interest rate of approximately 4% and was and was priced at the tightest credit spreads in our history .
David Krant: As a result of our proactive approach to refinancing, less than 1% of our non-recourse debt is maturing over the next 12 months. We maintain a well-laddered maturity profile with a weighted average maturity of approximately 7 years. Our balance sheet remains well capitalized with liquidity at the end of Q3 totaling $5.5 billion, which includes $2.5 billion at the corporate level and over $1.4 billion in cash across our operating businesses. This strong liquidity position positions us with the confidence to pursue a variety of growth opportunities as they arise. That concludes my remarks for this morning. I'll now turn the call over to Sam.
Speaker #3: As a result of our proactive approach to refinancing , less than 1% of our non-recourse debt is maturing over the next 12 months , we maintain a well laddered maturity profile with a weighted average maturity of approximately seven years .
Speaker #3: Our balance sheet remains well capitalized with liquidity at the end of the third quarter , totaling $5.5 billion , which includes $2.5 billion at the corporate level and over $1.4 billion in cash across our operating businesses .
Speaker #3: This strong liquidity position positions us with the confidence to pursue a variety of growth opportunities as they arise . That concludes my remarks .
Speaker #3: For this morning . I'll now turn the call over to Sam . Great . Thank you , David , and good morning , everyone .
Sam Pollock: Great. Thank you, David, and good morning, everyone. For my remarks today, I'm gonna provide an update on our transaction activity, and then I'll conclude with an outlook for our business. Now, starting with investments, we've already met our deployment objective for the year, securing 6 new investments totaling over $1.5 billion. This quarter, we secured 3 new investments across diverse regions and sectors whereby BIP will deploy approximately $225 million in total. The first investment is a $1.3 billion enterprise value New Zealand natural gas infrastructure operation. The business primarily operates a leading gas transmission, distribution, and storage business that's comprised of regulated and long-term contracted revenues with inflation indexation. This value-based acquisition is highly cash generative, resulting in a short payback period of approximately 7 years.
Speaker #3: From my remarks today , I'm going to provide an update on our transaction activity . And then I'll conclude with an outlook for our business .
Speaker #4: Now .
Speaker #3: Starting with investments we've already met our deployment objective for the year . Securing six new investments totaling over $1.5 billion .
Speaker #4: This quarter . We secured three new investments across diverse regions and sectors whereby Bip will deploy approximately $225 million in total . The first investment is a $1.3 billion enterprise value .
Speaker #4: New Zealand natural gas infrastructure operation . The business primarily operates a leading gas transmission , distribution and storage business that's comprised of regulated and long term contracted revenues .
Speaker #4: With information . This value based acquisition is highly cash generative , resulting in a short payback period of approximately seven years . We expect the transaction to close in the second quarter of next year , subject to customary regulatory approvals .
Sam Pollock: We expect the transaction to close in Q2 of next year, subject to customary regulatory approvals. The second acquisition is a $1 billion enterprise value company that is a South Korean industrial gas business that supplies industrial gases to industry-leading and investment-grade semiconductor manufacturers. The majority of the business is underpinned by 20-year minimum take-or-pay offtake agreements with significant cost pass-throughs. This transaction is expected to close later this quarter. Lastly, we've secured our first AI-related project under a newly established $5 billion framework agreement with Bloom Energy to install up to 1 GW of behind-the-meter power solutions for data centers and AI factories. This project provides a hyperscale customer with 55 MW of behind-the-meter power for an AI data center in the US. With respect to capital recycling, the momentum in our asset sale program has continued.
Speaker #4: Now , the second acquisition is a $1 billion enterprise value company that is a self Korean industrial gas business that supplies industrial gases to industry leading and investment grade semiconductor manufacturers .
Speaker #4: The majority of the business is underpinned by 20 year minimum take or pay off , take agreements with significant cost , pass through this transaction is expected to close later this quarter .
Speaker #4: And then lastly , we've secured our first AI related project under a newly established $5 billion framework agreement with Blue Energy to install up to one gigawatt of behind the meter power solutions for data centers and AI factories .
Speaker #4: This project provides a hyperscale customer with 55MW of behind the meter power for an AI data center in the United States . Now , with respect to capital recycling , the momentum in our asset sale program has continued during the quarter .
Sam Pollock: During the quarter, we progressed a number of initiatives and we've now generated over $3 billion in proceeds for the year and are on track to achieve a further $3 billion over the next 12 to 18 months. One of the most significant asset sales completed in mid-October was the partial sale of our North American gas storage platform in what is the largest IPO in the TSX since May 2022. In total, we raised CAD 810 million, and BIP's share of the net proceeds from the offering was approximately $230 million. Since the formation of Rockpoint, which is our natural gas business, which was done through a series of acquisitions, EBITDA has grown by more than 4 times, driven by operational improvements and favorable market fundamentals.
Speaker #4: We progressed a number of initiatives, and we've now generated over $3 billion in proceeds for the year and are on track to achieve a further $3 billion over the next 12 to 18 months.
Speaker #4: One of the most significant asset sales completed in mid-October , was the partial sale of our North American gas storage platform and what is the largest IPO in the TSX since May of 2022 .
Speaker #4: In total , we raised 810 million Canadian and Bip's share of the net proceeds from the offering was approximately $230 million US . Since the formation of Rockpoint , which is our natural gas business .
Speaker #4: Which was done through a series of acquisitions , EBITDA has grown by more than four times , driven by operational improvements and favorable market fundamentals .
Sam Pollock: As a result of various strategic initiatives which enhance the stability and quality of earnings, along with the sale of two non-core assets in 2023, we have now realized a 3.2x multiple on our invested capital while continuing to own a significant interest in the business. The outlook for Brookfield Infrastructure for the balance of the year and looking into next year remains favorable. As mentioned at our recent Investor Day in September, we believe BIP is at an inflection point in its growth profile. Each of our new investments this year is expected to deliver returns above our 12% to 15% target range, and it's backed by credible business plans that support potential upside returns over 20%.
Speaker #4: As a result of various strategic initiatives which enhance the stability and quality of earnings , along with the sale of two non-core assets in 2023 , we have now realized a 3.2 times multiple on our invested capital while continuing to own a significant interest in the business .
Speaker #4: Now , the outlook for Brookfield Infrastructure for the balance of the year and looking into next year remains favorable . As mentioned at our recent Investor Day in September , we believe Bip is at an inflection point in its growth profile .
Speaker #4: Each of our new investments this year is expected to deliver returns above our 12 to 15% target range , and it's backed by credible business plans that support potential upside returns .
Speaker #4: Over 20% . We also have a robust pipeline of new investment opportunities across each of our existing segments , driven by the long term mega trends that we've talked about many times in the past of digitalization , Deglobalization and decarbonization .
Sam Pollock: We also have a robust pipeline of new investment opportunities across each of our existing segments, driven by the long-term mega trends that we've talked about many times in the past of digitalization, deglobalization, and decarbonization. We're also seeing a significant new growth vertical emerging from the rapid build-out of AI infrastructure, a $7 trillion opportunity set that remains in its early stages and continues to expand. We expect to deploy up to $500 million annually into AI-related infrastructure in the coming years, with AI factories and behind-the-meter power solutions representing a natural, compelling extension of our investment activities. These growth factors, paired with a macroeconomic backdrop that is trending very favorably, set the stage for BIP's FFO per unit growth to inflect higher. That concludes my remarks, and I'll pass it back to Josh to open the line for Q&A.
Speaker #4: We're also seeing a significant new growth vertical emerging from the rapid build out of AI infrastructure . A $7 trillion opportunity set that remains in its early stages and continues to expand .
Speaker #4: We expect to deploy up to $500 million annually into AI related infrastructure in the coming years , with AI factories and behind the meter power solutions representing a natural , compelling extension of our investment activities .
Speaker #4: These growth factors, paired with a macroeconomic backdrop that is trending very favorably, set the stage for BIP's FFO per unit growth to inflect higher.
Speaker #4: So that concludes my remarks, and I'll pass it back to Josh to open the line for Q&A.
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Maurice Choy with RBC Capital Markets. You may proceed.
Speaker #2: Thank you . As a reminder to ask a question , please press star one one on your telephone and wait for your name to be announced .
Speaker #2: To withdraw your question , please press star one one again . One moment for questions . Our first question comes from Maurice Choi with RBC Capital Markets .
Speaker #2: You may proceed .
Maurice Choy: Thank you, good morning, everyone. If I could just start off with the capital deployment opportunities. It is clear that data infrastructure and energy have been quite thematic of late, and that's consistent with your Investor Day messaging. Just your thoughts on the rising competition for these types of assets. If you could break it down, whether that be types of, you know, subsectors within a new vertical or even geographically. You know, what does that mean to your ability to source these opportunities?
Speaker #5: Thank you and good morning , everyone . If I could just start off with the capital deployment opportunities . It is clear that data infrastructure and energy have been quite somatic of late , and that's consistent with your Brookfield Day messaging .
Speaker #5: Just your thoughts on the rising competition for these types of assets . And if you could break it down , whether that be types of , you know , subsectors within the new vertical or even geographically , what does that mean to your ability to source these opportunities ?
Sam Pollock: Hi, Maurice. This is Sam. I'll talk to that one. You know, I think, you know, what we flagged at Investor Day, and I guess what we talked about for a number of years now is that we have seen, you know, a significant increase in the number of opportunities to deploy capital, particularly in the data sector and in sectors impacted by digitalization. You're right that, you know, there are new players who are competing for those opportunities with us. Frankly, over the last, you know, 15, 20 years, you know, we've seen new entrants into the infrastructure sector.
Speaker #4: Hi Maurice , this is Sam . I'll tackle that one . You know , I think you know what we've what we've flagged at Investor Day .
Speaker #4: And I guess what we I think we've talked about for a number of years now is that we have seen , you know , a significant increase in the number of opportunities to deploy capital , particularly in the data sector .
Speaker #4: And in sectors impacted by digitalization and and you're right , that , you know , there's always there are new players who are competing for those opportunities with us .
Speaker #4: And and frankly , over the last , you know , 15 , 20 years , you know , we've seen new entrants into the infrastructure sector .
Sam Pollock: You know, we remain confident that, you know, because we have a global franchise and access to, you know, the most significant amounts of capital of any player that, you know, we, you know, remain, you know, with a distinct advantage in sourcing, you know, the best opportunities to deploy capital. In sectors and regions where, you know, capital is plentiful, you know, we'll avoid entering into those cost of capital shootouts and look for areas where capital is more scarce or where people are looking for, you know, partners that they can rely on to be long-term counterparts. Those are the things that I think historically have made it successful.
Speaker #4: You know , we remain confident that , you know , because we have a global franchise and access to , you know , the most significant amounts of capital of any player that , you know , we we , you know , remain , you know , with a distinct advantage in sourcing , you know , the best opportunities to deploy capital and , and , you know , in sectors and regions where , you know , capital is plentiful , you know , we'll we'll avoid entering into those cost of capital shootouts and look for areas where capital is more scarce or where people are looking for , you know , partners that they can rely on and , and have trust in , you know , to be long term counterparties and those are the things that I think historically have made us successful .
Sam Pollock: I think, you know, today, many of the large, you know, tech companies, you know, who are making significant investments, you know, in the many billions of dollars, they're looking for players like us that they can have confidence in to deliver the projects and be there for them, you know, through thick and thin. I know that was probably a bit of a general answer to your question, but I think hopefully you get the tone that, yes, there are new players. However, the opportunity set is still very large and our specific expertise and skill sets, you know, position us to get the best returns and not be competed down to the lowest common denominator, which is, I think what you're worried about, and I don't think that's an issue.
Speaker #4: And I think , you know , today , many of the large , you know , tech companies , you know , who are making significant investments , you know , in the many billions of dollars they're looking for , players like us that they can have confidence in to deliver the projects and be there for them , you know , through thick and thin .
Speaker #4: So, I know that was probably a bit of a general answer to your question, but I think, hopefully, you get the tone that, yes, there are new players.
Speaker #4: However , the opportunity set is still very large and our and our specific expertise and and skill set , you know , position us to to get the best returns and not be competed down to the lowest common denominator , which is , I think , what you're worried about .
Speaker #4: And I don't think that's an issue .
Maurice Choy: No, that's great color, and thank you for that. If I could just finish off with a question about the LP unit repurchases and establishment of the ATM program for the BPC shares. Wanted to get your view about the timing of any action and also what does success for both these two actions and programs look like in your, in your view? How do you measure that? Over what time period would you measure that? Conversely, what would be an unsuccessful outcome?
Speaker #5: That's great color and thank you for that . If I could just finish off with a question about the LP unit repurchases and establishment of the ATM program for the BBC , shares , I wanted to get your view about the timing of any action .
Speaker #5: And also what does success for both these two actions and programs look like in your in your view , how do you measure that over what time period would you measure that ?
Speaker #5: And conversely , what would be an unsuccessful outcome ?
David Krant: Hey, Maurice, it's David. I can start. Look, I think at this point, as you would have seen in our release, you know, it's something we're contemplating at this time. We still have obviously filings to do to be in a position to execute the program. I'll just caveat with that first. I think the key point and, you know, I don't think we'll get into measuring success or failure of the program. I think what we're looking to do, one of our objectives has been to increase the liquidity of BPC. I think that is, in essence, what the announcement today will look to do if we go ahead with it. I think given the success we've had on the capital recycling front, we don't need the capital.
Speaker #3: Hey Maurice , it's David . I can start . Look , I think at this point , as you would have seen in our release , you know , it's something we're contemplating at this time .
Speaker #3: We still have, obviously, filings to do to be in a position to execute the program. So, I'll just caveat with that.
Speaker #3: First , I think the key point in I don't think we'll get into measuring success or failure of the program . I think what we're looking to do , and one of our objectives has been to increase the liquidity of Bipc .
Speaker #3: And I think that is , in essence , what the announcement today will look to do if we go ahead with it . And I think we , given the success we've had on the capital recycling front , we don't need the capital .
David Krant: Issuing BPC under an ATM on its own isn't helpful to the business. We felt pairing it potentially with an NCIB would be a way to avoid any dilution to our existing shareholders and to our business. I think that was the ultimate intent of the program if we do decide to go ahead with it.
Speaker #3: So issuing Bipc under an ATM on its own isn't isn't helpful to the business . So we felt pairing it potentially with an NCIB would be a way to avoid any dilution to our existing shareholders and to our business .
Speaker #3: And so I think that was the ultimate intent of the program. If we do decide to go ahead with it.
Maurice Choy: Maybe just a quick follow-up, and maybe this is also somewhat related to the float of BPC shares. Is the secondary target also to perhaps tighten up the spread between the two securities?
Speaker #5: And maybe just a quick follow-up, and maybe this is also somewhat related to the float of Pepsi shares, is a secondary target.
Speaker #5: Also to perhaps tighten up the spread between the two securities .
Sam Pollock: Yeah. Hi, Maurice. Look, we obviously don't know, you know, what will happen. That would be purely speculative. I think at this stage, you know, we're just focused on the objective that Dave mentioned. You know, we'll see what happens.
Speaker #4: Yeah . Hi , Maurice . Look , we obviously don't know . You know , what will happen . So that would be purely speculative .
Speaker #4: I think at this stage , you know , we're just focused on the objective that Dave mentioned . And you know , we'll see what happens .
Maurice Choy: Understood. Thank you very much.
Speaker #5: Thank you very much .
Operator: Thank you. Our next question comes from Devin Dodge with BMO Capital Markets. You may proceed.
Speaker #2: Thank you . Our next question comes from Devin Dodge with BMO Capital Markets . You may proceed .
Devin Dodge: Yeah, thanks. Good morning. I wanted to start with Rockpoint. With the IPO now obviously completed, should we expect it to pursue more exits via the public markets going forward, either for the midstream assets or across the, you know, the broader portfolio, or was Rockpoint more of a one-off?
Speaker #6: Yeah . Thanks . Good morning . I wanted to start with ROC Point with the IPO . Now obviously completed . Should we expect Bip to pursue more exits via the public markets going forward ?
Speaker #6: Other for the midstream assets or across the , you know , the broader portfolio or was rockpoint more of a one off ?
Sam Pollock: Hi, Devin. It's Sam here. Look, we've always had the public markets as a potential, you know, exit strategy. You know, we did do it with the DBI a number of years ago. You know, I think, you know, we just considered it as, you know, one of the tools in our toolkit to monetize assets. You know, for a period of time, you know, there wasn't the market conditions that allowed, you know, for good execution of IPOs. I think that has changed. To the extent that, you know, the market remains open, then, you know, we would very much look at it as a potential option. It doesn't change, though, you know, our views on favoring one or the other.
Speaker #4: Hi , Devin . It's Sam here . Look , we've always had the public markets as a potential , you know , exit strategy .
Speaker #4: You know , we did do it with DB number of years ago . You know I think you know we just consider it as you know one of the tools in our toolkit to monetize assets and you know , for a period of time , you know there there they're wasn't the market conditions that allowed , you know , for good execution of IPOs ?
Speaker #4: I think that has changed . And to the extent that , you know , the market remains open , then , you know , we we would very much look at it as a potential option .
Speaker #4: It doesn't change , though . You know , our views on on favoring one or the other . It's really about execution maximizing value .
Sam Pollock: It's really about execution, maximizing value and basically position the companies themselves for future growth and success. We weigh all those factors, and, you know, we were, you know, thrilled with the outcome that we had, and we think, you know, Rockpoint's gonna be an amazing company in the Canadian markets for a long period of time.
Speaker #4: And and basically positioning the the companies themselves for future growth . And success . So we weigh all those factors . And you know , we were thrilled with the with the outcome that we had .
Speaker #4: And we think , you know , it's going to be an amazing company in the Canadian markets for a long period of time .
Devin Dodge: Okay. Thanks for that. Second question, I wanted to ask about CenterSquare. Look, lots of progress after combining Evoque and Cyxtera. I think there were some more sites added more recently. Just wondering, what's the investment thesis from here? Is this a platform that you're gonna continue to add scale? Is there more, you know, improvement opportunities, or has a lot of the heavy lifting already been done?
Speaker #6: Okay . Thanks for that second question I wanted to ask about Centersquare . Look , lots of progress after combining Evoque and six ERA , I think there were some more sites added .
Speaker #6: More recently . Just wondering what's the investment thesis from here ? Is this a platform that you're going to continue to add ? Scale ?
Speaker #6: Is there more improvement opportunities? Or has a lot of the heavy lifting already been done?
Sam Pollock: Again, I'll start, and I know Ben might jump in as well. Look, I think we're just at the beginning. I think this is an unbelievable business and the opportunities, you haven't been more favorable since we've owned it. It sounds crazy given, you know, how well it's done. I think, you know, we've increased EBITDA there 4x over the last number of years through acquisitions and, you know, leasing of space. What's really exciting is the fact that, you know, many of these sites, which are legacy telco sites, are significantly overpowered. We have a tremendous number of under-roof expansion opportunities that have build multiples, you know, three or four times, which is just unheard of in this sector.
Speaker #4: Again , I'll start and Ben might jump in as well . Look , I think we're just at the beginning . I think this is an unbelievable business .
Speaker #4: And the opportunities you have haven't been more favorable since we've owned it , which is sounds crazy , given how well it's done .
Speaker #4: I think we've increased EBITDA there . Forex over the last number of years through acquisitions and you know , leasing of . Of space .
Speaker #4: But what's what's really exciting is the fact that , you know , many of these sites which are legacy telco sites are significantly overpowered and we have a tremendous number of under roof expansion opportunities that have built multiples in the 3 or 4 times , which is just unheard of in in the sector .
Sam Pollock: You know, we're gonna take advantage of that. I think the capital deployment opportunity in the business, Dave, correct me if I'm wrong, is in the order of magnitude of $300 to 400 million over the next couple of years of CapEx.
Speaker #4: So , you know , we're going to take advantage of that . I think the capital deployment opportunity in the business , Dave , correct me if I'm wrong , is an order of magnitude of 3 to $400 million over the next couple of years of CapEx .
David Krant: That's right.
Sam Pollock: You can kinda do the math on, you know, how much EBITDA that can drive. In fact, the opportunity may even be bigger than that. I'm probably under-understanding it. Suffice it to say, and I know I'm running on here, the company is incredibly well-positioned. It's unique in the market in the sense that, you know, there's not really many others who are serving, you know, that smaller, you know, 1 to 5 MW demand from customers. You know, I think this, you know, the explosion in AI inference and agent models, it's gonna provide us tons of customers, along with the corporate customers. It's a great story, and I think there's lots more to come.
Speaker #4: And so you can kind of do the math on how much EBITDA that can drive . In fact , the opportunity may even be bigger than that .
Speaker #4: I'm probably understating it , but I suffice it to say , and I know I'm running on here , the company is incredibly well positioned .
Speaker #4: It's unique in the market , in the sense that , you know , there's not really many others who are serving , you know , that smaller , you know , 1 to 5 megawatt .
Speaker #4: You know , demand from customers and , you know , I think this , you know , the the explosion in , in AI inference and , and agent models is going to provide us tons of customers along with the corporate customers .
Speaker #4: So it's a great story . And I think there's lots , lots more to come .
Devin Dodge: Okay. Great color. Appreciate it. I'll turn it over.
Speaker #6: Okay . Great color . Appreciate it I'll turn it over .
Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from Patrick Sullivan with TD Cowen. You may proceed.
Speaker #2: Thank you . And as a reminder to ask a question , please press star one one on your telephone . Our next question comes from Patrick Sullivan with TD Cowan .
Speaker #2: You may proceed .
Patrick Sullivan: Good morning. Thanks for taking my question. Can you just talk about the level of market interest you saw in the stabilized data center portfolio that you monetized during Q3? I guess, how are you making decisions on the size of the portfolios you're bringing to market right now?
Speaker #7: Morning . Thanks for taking my question . Can you talk about the level of market interest you saw in the stabilized data center portfolio that you monetized during the quarter ?
Speaker #7: And I guess how are you making decisions on the size of the portfolios you're bringing to market right now ?
David Krant: Yeah. I can start, it's David Krant here. I'll repeat the question. I think it's around the sizing of our stabilized data center program and how we determine what to bring to market. Look, I think this was just the first of hopefully several programs that we undertake over the next few years. Data4 in Europe had probably the largest operating portfolio of data centers when we acquired it, so it was a logical candidate to be the first for our capital recycling initiatives within it. As you would've seen, it was over 200 MW of operating sites. They weren't all commissioned, so we still have some build-out to complete. Think of it as a bit more of a program where over time we'll continue to execute on the sites as we commission them.
Speaker #3: Yeah , I can I can start and it's David here . And just to make sure , I'll repeat the question , I think it's around the sizing of our stabilized data center program and how we determine what to bring to market .
Speaker #3: Look , I think this was just the first of of hopefully several programs that we undertake over the next few years . Data for in Europe had probably the largest operating portfolio of data centers .
Speaker #3: When we acquired it . So it was a logical candidate to be the first for our capital recycling initiatives within it . As you would have seen , it was over 200MW of operating sites .
Speaker #3: They weren't all commissioned , so we still have some build out to to complete . So think of it as a bit more of a program where over time we'll continue to execute on the sites as we commission them .
David Krant: Essentially, we were able to identify the program in terms of the perimeter of assets that we felt would be either revenue generating today or generate in the next 6 to 12 months. We felt that it was about a $1.4 billion equity check. We thought that was the right size in the market in Europe to target, you know, financial investors to come in and partners to join us to own these types of assets. We're seeing significant demand for this return profile in the market. As I said, Europe will be the first of our programs, and we'll look to replicate that in other markets as well.
Speaker #3: But essentially we were able to identify the program in terms of the perimeter of assets that we felt would be either revenue generating or generating in the next 6 to 12 months.
Speaker #3: And we felt that for it was about a $1.4 billion equity check . We thought that was the right size in the market in Europe to target , you know , financial investors to come in and partners to join us to own these types of assets .
Speaker #3: And we're seeing significant demand for this return profile in the market . So as I said , Europe will be the first of our programs .
Speaker #3: And we'll look to replicate that in other markets as well .
Sam Pollock: Yeah. The only thing I'd add is, you know, we return capital two ways. One is through, you know, a issuance of ABS securities, which we do very programmatically, almost monthly it feels like. Let's just say quarterly, as facilities get established. Similarly, you know, our goal would be to, you know, as facilities get completed, to programmatically sell down, you know, pieces of the equity, quarterly or semiannually as they get built, because that will be what the profile will look like over the next number of years.
Speaker #4: Yeah . The only thing I'd add is , you know , we return capital two ways . One is through issuance of ABS securities , which we do very programmatically , almost , almost monthly .
Speaker #4: It feels like . But that's say quarterly as , as facilities get established and then similarly , you know , we'll , you know , our goal would be to , you know , as facilities get completed to programmatic programmatically sell down , you know , pieces of the equity caudally or semi-annually as they get built because that's that will be what the profile will look like over the next number of years .
Patrick Sullivan: Okay. Great. Thanks. I guess more on data center stuff. Like in a recent Brookfield podcast, on the Data4 deal, you know, it discussed that Europe has one of the largest infrastructure gaps relative to the other regions and essentially no sovereign compute. You've made some announcements related to these sovereign compute opportunities. Can you just talk about, you know, some of the differences between that sovereign compute opportunity set versus the more hyperscale AI lab driven opportunity set that we see in the US? Is there anything there to, you know, contrast and compare between the two?
Speaker #7: Okay , great . Thanks . And then I guess more on more on data center stuff . So in a recent Brookfield podcast on the data floor deal , you know , discussed that Europe has one of the largest infrastructure gaps relative to the other regions .
Speaker #7: And essentially no sovereign compute . And you've made you've made some announcements related to these sovereign compute opportunities . But can you just talk about , you know , some of the differences between that sovereign compute opportunity set versus the more hyperscale AI lab driven opportunity set that we see in the United States ?
Speaker #7: Is there anything there to , you know , contrast and compare between the two ?
Sam Pollock: Yeah, look, I think they're both very exciting. You know, for us, you know, we've had a focus on the sovereign compute, primarily because, you know, as I kind of alluded to in some earlier answers, it's a way to use our particular skill set to create bilateral transactions in the sector where we can, you know, come up with more complex solutions for, you know, governments, to bring all the various players together to solve, you know, what for them is a sovereign issue in the sense that they want to retain data as well as AI capabilities in their home markets and not be dependent on just all the US hyperscalers. It really is a distinct market.
Speaker #4: Yeah . Look , I , I think the I think they're both very exciting , you know , for us , you know , we've had a focus on the sovereign compute primarily because , you know , as I kind of alluded to in some earlier answers , it's a way to use our particular skill set to create bilateral transactions in the sector where we can , you know , come up with more complex solutions for , you know , governments to bring all the various players together to solve what for them is a , you know , a sovereign issue in the sense that they want to retain data as well as AI capabilities in their home markets .
Speaker #4: And not be dependent on just all the US hyperscalers . And so it really is a distinct market . Obviously , we still focus on servicing our our hyperscale customers , but , you know , we thought we could create kind of a niche market for ourselves working with , you know , today is probably 6 or 7 sovereign nations on building , you know , you know , smaller but more dedicated facilities for their home needs .
Sam Pollock: Obviously, we still focus on servicing our hyperscale customers, but, you know, we thought we could create kind of a niche market for ourselves, working with, you know, today there's probably six or seven sovereign nations on building, you know, smaller but more dedicated facilities for their home needs. You know, we're excited about the progress we've made. You know, the only drawback to it is, often, you know, dealing with sovereigns tends to be a bit slower and, you know, the investment cycle, you know, has probably taken longer than, you know, we might have thought initially. We're excited about, you know, the projects we're working on, and we hope to have announcements, you know, in the coming quarters.
Speaker #4: And , you know , we're we're excited about the progress we've made . You know , the only drawback to it is often , you know , dealing with sovereigns tends to be a bit slower .
Speaker #4: And , you know , the the investment cycle has probably taken longer than , you know , we might have thought initially , but but we're excited about , you know , the projects we're working on .
Speaker #4: And we hope to have announcements , in the coming quarters .
Patrick Sullivan: Great. Thanks. I'll get back in the queue.
Speaker #7: Great . Thanks . So get back in the queue .
Sam Pollock: Thanks.
Speaker #4: Thanks .
Operator: Thank you. I would now like to turn the call back over to Sam Pollock for any closing remarks.
Speaker #2: Thank you . I would now like to turn the call back over to Sam Pollock for any closing remarks .
Sam Pollock: All right.
Speaker #4: All right . I guess that .
David Krant: Looks like there's one more question we can take.
Speaker #3: Looks like there's one more question we can take.
Sam Pollock: Okay.
Operator: Yes. One moment for questions. Our next question comes from Frederic Bastien with Raymond James. You may proceed.
Speaker #4: Okay .
Speaker #2: Yes . One moment for questions . Our next question comes from Frederick Bastian with Raymond James . You may proceed .
Frédéric Bastien: Thanks. Thanks for taking my question. Appreciate it. Guys, are you able to quantify the organic growth rates your various data businesses are enjoying? How would these be tracking versus your underwriting assumptions?
Speaker #8: Thanks . Thanks for taking my question . Appreciate it . Guys . Are you are you able to quantify the organic growth rates , your various data businesses are enjoying and and how would these be tracking versus your underwriting assumptions ?
David Krant: We're happy to start. It's David here. Look, I think the overarching theme across the data businesses, and maybe we'll stick to towers and transmission and then data centers as two separate categories. I'd say on the transmission and tower side, I would say that's a much more predictable, stable execution of our backlog there. We are building out towers for our customers in France, in Germany, some in India as well in terms of rooftops and antennas. I'd say that the case there is much more predictable, and I'd say it's slightly ahead of underwriting, but generally in line. That's going well.
Speaker #3: Okay . We're happy to to start as David here I think look I think the the overarching theme across the data businesses and maybe we'll stick to towers and transmission .
Speaker #3: And then data centers as two separate categories . I'd say on the transmission and tower side , I'd say our I would say that's a much more predictable stable execution of our backlog .
Speaker #3: We are building out towers for our customers in France and Germany, and some in India as well, in terms of rooftops and antennas.
Speaker #3: So I'd say that the case there is much more predictable , and I'd say it's it's slightly ahead of underwriting , but generally in line .
Speaker #3: So that's going well on . When we bought these hyperscale platforms , we underwrote a of land bank that they had in place , and we've executed and continued to execute that on schedule and on pace .
David Krant: When we bought these hyperscale platforms, we underwrote a land bank that they had in place, and we've executed and continue to execute that on schedule and on pace. I think we're excited about what the next, call it, what we'd call the shadow backlog looks like in these businesses, where, you know, we could see up to 1 GW across the globe of new projects coming in the coming years. That, that is something we never underwrote. The pace of growth and organic growth in those businesses will be dramatic. Like the percentage I don't think is that meaningful because it's coming from such a small base in these platforms. That's what you're starting to see come through the numbers.
Speaker #3: And I think we're excited about what the next call it , what we call the shadow backlog looks like in these businesses where , you know , we could see up to a gigawatt across the globe of of new projects coming in the coming years .
Speaker #3: And that that is something we never underwrote . So the pace of growth in organic growth in those businesses will be dramatic . Like the percentage , I don't think is that meaningful because it's coming from such a small base in these in these platforms .
Speaker #3: But that's what you're starting to see come through the numbers . I think in the last year alone , Fred , we've commissioned 175MW across the globe , which is which is pretty impressive .
David Krant: I think in the last year alone, Fred, we've commissioned 175 MW across the globe, which is pretty impressive.
Frédéric Bastien: That's great, caller. Thanks. Thanks, David. Just building on that, you flagged some promising AI factory opportunities shaping up for BIP during your Investor Day. I was wondering if these are along the lines of the partnership you signed with Bloom Energy to install BTM solutions, or do they vary depending on the partnership you're pursuing?
Speaker #8: That's great color . Thanks . Thanks , David . Just building on that . You flagged some promising AI factory opportunities shaping up for bit during your investor day .
Speaker #8: And I was wondering if there these are along the lines of the partnership you signed with Bloom Energy to install BTM solutions . Or do they vary depending on the partnership you're pursuing ?
Sam Pollock: Hey, Fred. Look, as you can imagine, they vary. You know, I think there are some that are very similar to the Bloom Energy arrangement, where, you know, we're facilitating, you know, capital needs for a number of the data center and hyperscaler companies, you know, to finance all the capital, you know, that they need to put into these data centers. You know, obviously, you know, building out AI factories is gonna be a different type of arrangement. You know, we expect that probably to be the majority of what we do in our AI activities.
Speaker #4: Hey Fred , look , I as you can imagine , they vary . You know , I , I think there are some that are very similar to to the bloom energy arrangement where , you know , we're facilitating , you know , capital needs for a number of the data center and hyperscaler companies , you know , to finance all the capital , you know , that they need to put into these data centers .
Speaker #4: But then , you know , obviously , you know , you know , building out a AI factories is going to be a different type of arrangement .
Speaker #4: And , you know , we expect that probably to be the majority of what we do in our AI activities .
Frédéric Bastien: That's great. Thank you. I'll turn it over.
Speaker #8: That's great . Thank you . I'll turn it over .
Sam Pollock: All right. Thanks, Fred. Okay. I think that's probably it. I'm glad we got Fred in there. Yeah, thank you, operator Josh for today, and thank you to everyone on the call for joining us. I know this is our last call before the end of the year, on behalf of everyone here at Brookfield Infrastructure, we'd like to wish you a healthy and happy upcoming holiday season. We look forward to providing you more updates on the Q4 and year-end results early in the new year. Take care. Thanks.
Speaker #9: All right. Thanks, Fred.
Speaker #4: Okay . So I think that's probably it . I'm glad we got Fred in there . So yeah . Thank you . Operator .
Speaker #4: Josh , for for today . And thank you to everyone on the on the call for joining us . I know this is our last call before the end of the year .
Speaker #4: So on behalf of everyone here at Brookfield Infrastructure , we'd like to wish you a healthy and happy upcoming holiday season . And we look forward to providing you more updates on the fourth quarter and year end results early in the new year .
Speaker #4: So take care . Thanks .
Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.