Speaker #1: After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone.
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Speaker #1: I'd now like to hand the conference over to your speaker today, David Krent, Chief Financial Officer. Please go ahead.
David Krant: Thank you, Liz, and good morning, everyone. Welcome to Brookfield Infrastructure Partners' Q4 2025 earnings conference call. As introduced, my name is David Crant, and I'm the Chief Financial Officer of Brookfield Infrastructure.
Speaker #2: Thank you, Liz, and good morning, everyone. Welcome to Brookfield Infrastructure Partners' fourth quarter 2025 earnings conference call. As introduced, my name is David Krent, and I am the Chief Financial Officer of Brookfield Infrastructure.
Speaker #2: I'm joined today by our Chief Executive Officer, Sam Pollack, and our Chief Operating Officer, Ben Vaughn. Also with us today is Dave Joynt, a Managing Partner and Uday Mathyalagan, Head of our Global Data Center Businesses.
Operator: I'm joined today by our Chief Executive Officer, Sam Pollock, and our Chief Operating Officer, Ben Vaughan. Also with us today is Dave Joynt, a Managing Partner, and Udhay Mathialagan, Head of our Global Data Center Businesses. I'll begin the call today by highlighting our results for 2025, followed by a recap of our record year of capital recycling. I'll then hand the call over to Udhay, who will elaborate on our approach to AI infrastructure investing and how we have been able to turn sector tailwinds into durable value for unit holders. Finally, Sam will provide an update on our recent investments before concluding with an outlook of 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.
I'm joined today by our Chief Executive Officer, Sam Pollock, and our Chief Operating Officer, Ben Vaughan. Also with us today is Dave Joynt, a Managing Partner, and Udhay Mathialagan, Head of our Global Data Center Businesses. I'll begin the call today by highlighting our results for 2025, followed by a recap of our record year of capital recycling. I'll then hand the call over to Udhay, who will elaborate on our approach to AI infrastructure investing and how we have been able to turn sector tailwinds into durable value for unit holders. Finally, Sam will provide an update on our recent investments before concluding with an outlook of 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 #2: I'll begin the call today by highlighting our results for 2025. Followed by a recap of our record year of capital recycling. I'll then hand the call over to Uday, who will elaborate on our approach to AI infrastructure investing and how we have been able to turn sector tailwinds into durable value for unit holders.
Speaker #2: Finally, Sam will provide an update on our recent investments before concluding with an outlook of the business. At this time, I would like to remind you that in our remarks today, we may make forward-looking statements.
Speaker #2: These statements are subject to known and unknown risks and future results may differ materially. For further information on known risk factors, I would encourage you to review our latest annual report on Form 20F, which is available on our website.
Operator: 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. 2025 was another strong year for Brookfield Infrastructure. Our key accomplishments include exceeding our capital recycling target of $3 billion, investing approximately $2.2 billion of equity into growth initiatives, and completing approximately $16 billion of financing to further de-risk our operating company balance sheets. From a results perspective, we generated FFO, or funds from operations, of $2.6 billion during 2025. Normalized for the impact of asset sales and foreign exchange, FFO increased 10% compared to 2024, in line with our target and reflective of our operational performance and the strength of our business. This result includes record FFO during the Q4 of $0.87 per unit.
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. 2025 was another strong year for Brookfield Infrastructure. Our key accomplishments include exceeding our capital recycling target of $3 billion, investing approximately $2.2 billion of equity into growth initiatives, and completing approximately $16 billion of financing to further de-risk our operating company balance sheets. From a results perspective, we generated FFO, or funds from operations, of $2.6 billion during 2025. Normalized for the impact of asset sales and foreign exchange, FFO increased 10% compared to 2024, in line with our target and reflective of our operational performance and the strength of our business. This result includes record FFO during the Q4 of $0.87 per unit.
Speaker #2: 2025 is another strong year for Brookfield Infrastructure. Our key accomplishments include exceeding our capital recycling target of $3 billion, investing approximately $2.2 billion of equity into growth initiatives, and completing approximately $16 billion of financing to further de-risk our operating company balance sheets.
Speaker #2: From a results perspective, we generated FFO, or funds from operations, of $2.6 billion during 2025. Normalized for the impact of asset sales and foreign exchange, FFO increased 10% compared to 2024, in line with our target and reflective of our operational performance and the strength of our business.
Speaker #2: This result includes record FFO during the fourth quarter of $87 per unit. Given this performance, a conservative pay ratio for the year of 66%, and a strong outlook for 2026, I'm pleased to report that the Board of Directors has approved a quarterly distribution increase of 6% to $1.82 per unit on an annualized basis.
Operator: Given this performance, a conservative pay ratio for the year of 66%, and a strong outlook for 2026, I'm pleased to report that the Board of Directors has approved a quarterly distribution increase of 6% to $1.82 per unit on an annualized basis. This marks the 17th consecutive year of distribution increases of at least 5%. I'll now go through our 7% year-over-year. The base business continued to perform well during the year, driven by inflation indexation across the portfolio and the contribution of roughly $500 million of capital commissioned into rate base over the last 12 months. Moving on to our transport segment, FFO totaled $1.1 billion, in line with the prior year after normalizing for $1.8 billion of capital recycling initiatives.
Given this performance, a conservative pay ratio for the year of 66%, and a strong outlook for 2026, I'm pleased to report that the Board of Directors has approved a quarterly distribution increase of 6% to $1.82 per unit on an annualized basis. This marks the 17th consecutive year of distribution increases of at least 5%. I'll now go through our 7% year-over-year. The base business continued to perform well during the year, driven by inflation indexation across the portfolio and the contribution of roughly $500 million of capital commissioned into rate base over the last 12 months. Moving on to our transport segment, FFO totaled $1.1 billion, in line with the prior year after normalizing for $1.8 billion of capital recycling initiatives.
Speaker #2: This marks the 17th consecutive year of distribution increases of at least 5%. I'll now go through. 7% year over year. The base business continued to perform well during the year, driven by inflation indexation across the portfolio and the contribution of roughly $500 million of capital commission into rate-based over the last 12 months.
Speaker #2: Moving on to our transport segment, FFO totaled $1.1 billion in line with the prior year after normalizing for $1.8 billion of capital recycling initiatives.
Speaker #2: The loss of earnings from these sales was partially offset by higher revenues across our transportation networks, particularly in our rail and toll road segments, where volumes and rates grew on average by 2% and 3%, respectively.
Operator: The loss of earnings from these sales was partially offset by higher revenues across our transportation networks, particularly in our rail and toll road segments, where volumes and rates grew on average by 2% and 3%, respectively. Our midstream segment generated FFO of $668 million for the year, representing a 7% year-over-year increase. This growth reflects higher volumes and activity levels across our midstream assets, particularly at our Canadian natural gas gathering and processing operation, and our recently acquired US refined products pipeline system. Lastly, FFO from our data segment was $502 million, a step-change increase over a 50% compared to the prior year period. The increase is attributable to several new investments completed over the last 12 months, the most recent being our US bulk fiber network, which is now fully contributing to earnings in the Q4.
The loss of earnings from these sales was partially offset by higher revenues across our transportation networks, particularly in our rail and toll road segments, where volumes and rates grew on average by 2% and 3%, respectively. Our midstream segment generated FFO of $668 million for the year, representing a 7% year-over-year increase. This growth reflects higher volumes and activity levels across our midstream assets, particularly at our Canadian natural gas gathering and processing operation, and our recently acquired US refined products pipeline system. Lastly, FFO from our data segment was $502 million, a step-change increase over a 50% compared to the prior year period. The increase is attributable to several new investments completed over the last 12 months, the most recent being our US bulk fiber network, which is now fully contributing to earnings in the Q4.
Speaker #2: Our midstream segment generated FFO of $668 million for the year, representing a 7% year over year increase. This growth reflects higher volumes and activity levels across our midstream assets, particularly at our Canadian natural gas gathering and processing operation, and our recently acquired US refined products pipeline system.
Speaker #2: Lastly, FFO from our data segment was $502 million—a step change increase of over 50% compared to the prior year period. The increase is attributable to several new investments completed over the last 12 months, the most recent being our U.S. bulk fiber network, which is now fully contributing to earnings in the fourth quarter.
Speaker #2: In addition, we achieved strong organic growth across our data storage business, which included the commissioning of 220 megawatts of capacity at our hyperscale data centers, 200 megawatts of new billings at our US retail colocation data center operation, and income generated by our global data center developers.
Operator: In addition, we achieved strong organic growth across our data center business, which included the commissioning of 220 megawatts of capacity at our hyperscale data centers, 200 megawatts of new billing at our US retail colocation data center operation, and income generated by our global data center developers. Our global data center platform now has development potential consisting of approximately 3.6 gigawatts, including contracted capacity of over 2.3 gigawatts today. Before turning it over to Udhay, I would like to briefly touch on our record liquidity, which totaled $6 billion at the end of 2025 and included just under $3 billion at the corporate level. Contributing to this strong position was a record $3.1 billion in asset sale proceeds raised in 2025. We believe that the elevated pace of capital recycling will continue into the year ahead. We already have two transactions secured that crystallize attractive returns.
In addition, we achieved strong organic growth across our data center business, which included the commissioning of 220 megawatts of capacity at our hyperscale data centers, 200 megawatts of new billing at our US retail colocation data center operation, and income generated by our global data center developers. Our global data center platform now has development potential consisting of approximately 3.6 gigawatts, including contracted capacity of over 2.3 gigawatts today. Before turning it over to Udhay, I would like to briefly touch on our record liquidity, which totaled $6 billion at the end of 2025 and included just under $3 billion at the corporate level. Contributing to this strong position was a record $3.1 billion in asset sale proceeds raised in 2025. We believe that the elevated pace of capital recycling will continue into the year ahead. We already have two transactions secured that crystallize attractive returns.
Speaker #2: Our global data center platform now has development potential consisting of approximately 3.6 gigawatts, including contracted capacity of over 2.3 gigawatts today. Before turning it over to Uday, I would like to briefly touch on our record liquidity, which totaled $6 billion at the end of Q4 2025 and included just under $3 billion at the corporate level.
Speaker #2: Contributing to this strong position was a record $3.1 billion in asset sale proceeds raised in 2025. We believe that the elevated pace of capital recycling will continue into the year ahead.
Speaker #2: We already have two transactions secured that crystallize attractive returns. The first, which is we agreed to sell the largest of four concessions within our Brazilian electricity transmission operation, we expect proceeds of approximately $150 million net to BIP generating an attractive IRR of 45% and over eight times multiple of capital.
Operator: The first, which is we agreed to sell the largest of four concessions within our Brazilian electricity transmission operation. We expect proceeds of approximately $150 million net to BIP, generating an attractive IRR of 45% and over 8x multiple of capital. Closing for the transaction is expected at the end of Q4 in 2026. Secondly, we formed a capital partnership for a portfolio of stabilized and under-construction data centers in North America. Proceeds from this sale are expected to be used to support the build-out of our powered land bank within the business. That concludes my remarks for this morning. I'll now pass the call over to Udhay. Thank you, David, and good morning, everyone. AI is justifiably dominating headlines with many bold predictions ranging from data centers in space to breakthrough in quantum computing that could one day redefine how the world operates.
The first, which is we agreed to sell the largest of four concessions within our Brazilian electricity transmission operation. We expect proceeds of approximately $150 million net to BIP, generating an attractive IRR of 45% and over 8x multiple of capital. Closing for the transaction is expected at the end of Q4 in 2026. Secondly, we formed a capital partnership for a portfolio of stabilized and under-construction data centers in North America. Proceeds from this sale are expected to be used to support the build-out of our powered land bank within the business. That concludes my remarks for this morning. I'll now pass the call over to Udhay.
Speaker #2: Closing for the transaction is expected at the end of the first quarter in 2026. Secondly, we formed a capital partnership for a portfolio of stabilized and under-construction data centers in North America.
Speaker #2: Proceeds from this sale are expected to be used to support the buildout of our powered land bank within the business. That concludes my remarks for this morning.
Speaker #2: I'll now pass the call over to Uday. Thank you, David, and good morning, everyone. AI is justifiably dominating headlines, with many bold predictions ranging from data centers in space to breakthroughs in quantum computing that could one day redefine how the world operates.
Udhay Mathialagan: Thank you, David, and good morning, everyone. AI is justifiably dominating headlines with many bold predictions ranging from data centers in space to breakthrough in quantum computing that could one day redefine how the world operates.
Speaker #2: At the same time, many are questioning the merits of the magnitude and velocity of capital flowing into AI and whether demand will materialize at a level that justifies this spending.
Operator: At the same time, many are questioning the merits of the magnitude and velocity of capital flowing into AI and whether demand will materialize at a level that justifies this spending. The sheer scale of investment underway to build the physical backbone that makes AI possible is staggering. In 2025 alone, corporates invested approximately $500 billion into AI-related infrastructure, with capital investment over the next two years expected to rise further. Much of this build-out is fundamental to the development of AI, enabling power-intensive workloads to run reliably, securely, and at scale in well-connected locations. The reality is driving a sustained wave of investment into the backbone infrastructure that enables AI, including data center capacity, grid resiliency, power generation, and transmission. The sector remains exposed to overbuilding, technological change, and disruption. With capital moving quickly, not all participants will be rewarded, and there will be mistakes made.
At the same time, many are questioning the merits of the magnitude and velocity of capital flowing into AI and whether demand will materialize at a level that justifies this spending. The sheer scale of investment underway to build the physical backbone that makes AI possible is staggering. In 2025 alone, corporates invested approximately $500 billion into AI-related infrastructure, with capital investment over the next two years expected to rise further. Much of this build-out is fundamental to the development of AI, enabling power-intensive workloads to run reliably, securely, and at scale in well-connected locations. The reality is driving a sustained wave of investment into the backbone infrastructure that enables AI, including data center capacity, grid resiliency, power generation, and transmission. The sector remains exposed to overbuilding, technological change, and disruption. With capital moving quickly, not all participants will be rewarded, and there will be mistakes made.
Speaker #2: The sheer scale of investment underway to build the physical backbone that makes AI possible is staggering. In 2025 alone, corporates invested approximately $500 billion into AI-related infrastructure.
Speaker #2: With capital investment over the next two years expected to rise further. Much of this buildout is fundamental to the development of AI, enabling power-intensive workloads to run reliably securely and at scale.
Speaker #2: In well-connected locations, the reality is driving a sustained wave of investment into the backbone infrastructure that enables AI, including data center capacity, grid resiliency, power generation, and transmission.
Speaker #2: The sector remains exposed to overbuilding, technological change, and disruption, with capital moving quickly, not all participants will be rewarded, and there will be mistakes made.
Speaker #2: Our approach is designed to protect against such exuberance. Brookfield Infrastructure is applying a prudent risk-focused approach to participating in the buildout of AI infrastructure.
Operator: Our approach is designed to protect against such exuberance. Brookfield Infrastructure is applying a prudent, risk-focused approach to participating in the build-out of AI infrastructure, maintaining strict guardrails to safeguard our capital. First, our development projects are underpinned by long-term contracts with favorable terms. We do not build speculatively, and earn an attractive return within the initial contract period, mitigating technology risk. Second, the second guardrail is that we selectively focus on the strongest investment-grade counterparties, who are some of the largest well-capitalized and most profitable technology companies in the world. Third, we concentrate on top-tier workload-agnostic locations for our data centers that can support the full spectrum of demand, reducing the risk of the single-theme exposure and increases the durability of demand through cycles. The fourth is our discipline strategy. We are deliberate in how much land and power shells we control and develop.
Our approach is designed to protect against such exuberance. Brookfield Infrastructure is applying a prudent, risk-focused approach to participating in the build-out of AI infrastructure, maintaining strict guardrails to safeguard our capital. First, our development projects are underpinned by long-term contracts with favorable terms. We do not build speculatively, and earn an attractive return within the initial contract period, mitigating technology risk. Second, the second guardrail is that we selectively focus on the strongest investment-grade counterparties, who are some of the largest well-capitalized and most profitable technology companies in the world. Third, we concentrate on top-tier workload-agnostic locations for our data centers that can support the full spectrum of demand, reducing the risk of the single-theme exposure and increases the durability of demand through cycles. The fourth is our discipline strategy. We are deliberate in how much land and power shells we control and develop.
Speaker #2: Maintaining strict guardrails to safeguard our capital. First, our development projects are underpinned by long-term contracts with favorable terms. We do not build speculatively. And earn an attractive return within the initial contract period, mitigating technology risk.
Speaker #2: Second, the second guardrail is that we selectively focus on the strongest investment-grade counterparties, where some of the largest, well-capitalized, and most profitable technology companies in the world.
Speaker #2: Third, we concentrate on top-tier, workload-agnostic locations for our data centers that can support the full spectrum of demands, reducing the risk of single-theme exposure and increasing the durability of demand through cycles.
Speaker #2: The fourth is our discipline strategy. We are deliberate in how much land and power shells we control and develop. We have created a self-funding model that provides funding for future development and locks in attractive developer economics.
Operator: We have created a self-funding model that provides funding for future development and locks in attractive developer economics, as well as reduces the size of our platform while maintaining the benefits of scale. And fifth, we match the capital structure to the tenor of the contracted cash flows, with a focus on preserving flexibility and ensuring that we can finance growth responsibly. To illustrate the benefits of our approach, during 2025, we experienced exceptional demand at our data center platforms, securing record growth, commercialization, capital recycling, and capital markets activities. For example, at our US colocation data center business, we experienced 11 consecutive quarters of record bookings, and it's now fully utilized across several markets. During the quarter, we signed several large contracts at a data center in Illinois, achieving 100% occupancy, and adding approximately $45 million of annual EBITDA on a run rate basis, commencing later this year.
We have created a self-funding model that provides funding for future development and locks in attractive developer economics, as well as reduces the size of our platform while maintaining the benefits of scale. And fifth, we match the capital structure to the tenor of the contracted cash flows, with a focus on preserving flexibility and ensuring that we can finance growth responsibly. To illustrate the benefits of our approach, during 2025, we experienced exceptional demand at our data center platforms, securing record growth, commercialization, capital recycling, and capital markets activities. For example, at our US colocation data center business, we experienced 11 consecutive quarters of record bookings, and it's now fully utilized across several markets. During the quarter, we signed several large contracts at a data center in Illinois, achieving 100% occupancy, and adding approximately $45 million of annual EBITDA on a run rate basis, commencing later this year.
Speaker #2: As well as reduces the size of our platform while maintaining the benefits of scale. And fifth, we've matched the capital structure to the tenor of the contracted cash flows, with a focus on preserving flexibility and ensuring that we can finance growth responsibly.
Speaker #2: To illustrate the benefits of our approach, during 2025 we experienced exceptional demand at our data center platforms, securing record growth, commercialization, capital recycling, and capital markets activities.
Speaker #2: For example, at our US colocation data center business, we experienced 11 consecutive quarters of record bookings, and this now fully utilized across several markets.
Speaker #2: During the quarter, we signed several large contracts at a data center in Illinois, achieving 100% occupancy. And adding approximately 45 million of annual EBITDA on a run rate basis, commencing later this year.
Speaker #2: Without investing any further equity, we acquired and added a 40-site data center portfolio in January 2024 to our existing business and subsequently increased EBITDA from a combined base of approximately $200 million to approximately $500 million on a contracted basis.
Operator: Without investing any further equity, we acquired and added a 40-site data center portfolio in January 2024 to our existing business and subsequently increased EBITDA from a combined base of approximately $200 million to approximately $500 million on a contracted basis. The exciting part is that the growth journey is expected to continue, led by high-returning under-roof densification and in-footprint expansion capacity, which total over 600MW of identified growth potential. Across our global data center platform, we achieved a significant lease-up of our land bank during the Q4, which is expected to be commissioned over the next three years. We executed agreements for approximately 800MW of capacity, predominantly in North America. The vast majority of these leases are with investment-grade customers, and underpinned by long-term contracts.
Without investing any further equity, we acquired and added a 40-site data center portfolio in January 2024 to our existing business and subsequently increased EBITDA from a combined base of approximately $200 million to approximately $500 million on a contracted basis. The exciting part is that the growth journey is expected to continue, led by high-returning under-roof densification and in-footprint expansion capacity, which total over 600MW of identified growth potential. Across our global data center platform, we achieved a significant lease-up of our land bank during the Q4, which is expected to be commissioned over the next three years. We executed agreements for approximately 800MW of capacity, predominantly in North America. The vast majority of these leases are with investment-grade customers, and underpinned by long-term contracts.
Speaker #2: The exciting part is that the growth journey is expected to continue, led by high-returning, under-roof densification and in-footprint expansion capacity, which total over 600 megawatts of identified growth potential.
Speaker #2: Across our global data center platform, we achieved a significant lease-up of our land bank during the fourth quarter, which is expected to be commissioned over the next three years.
Speaker #2: We executed agreements for approximately 800 megawatts of capacity, predominantly in North America, the vast majority of these leases are with investment-grade customers and underpinned by long-term contracts.
Speaker #2: Since acquiring our North American and European platforms, our adherence to the guardrails outlined above has allowed us to maintain a consistent greenfield data center yield on cost.
Operator: Since acquiring our North American and European platforms, our adherence to the guardrails outlined above has allowed us to maintain a consistent greenfield data center yield on cost. In 2025, we partnered on almost 850 megawatts of stabilized and operating sites in North America and Europe, crystallizing developer premiums and demonstrating strong demand. Taken together, we hope these examples highlight both the strength of demand we are seeing and the importance of disciplined execution, converting demand into durable returns. As AI workloads scale, the value of well-located powered infrastructure intensifies. In this environment, scale, reliability, and access to capital are differentiating factors to counterparties, and we believe our global operating capabilities and long-standing relationships benefit us. Our risk-focused approach and strict adherence to guardrails will enable us to continue investing in the core infrastructure needed to deliver AI at scale while protecting our downside.
Since acquiring our North American and European platforms, our adherence to the guardrails outlined above has allowed us to maintain a consistent greenfield data center yield on cost. In 2025, we partnered on almost 850 megawatts of stabilized and operating sites in North America and Europe, crystallizing developer premiums and demonstrating strong demand. Taken together, we hope these examples highlight both the strength of demand we are seeing and the importance of disciplined execution, converting demand into durable returns. As AI workloads scale, the value of well-located powered infrastructure intensifies. In this environment, scale, reliability, and access to capital are differentiating factors to counterparties, and we believe our global operating capabilities and long-standing relationships benefit us. Our risk-focused approach and strict adherence to guardrails will enable us to continue investing in the core infrastructure needed to deliver AI at scale while protecting our downside.
Speaker #2: In 2025, we partnered on almost 850 megawatts of stabilized and operating sites in North America and Europe, crystallizing developer premiums and demonstrating strong demand.
Speaker #2: Taken together, we hope these examples highlight both the strength of demand we're seeing and the importance of disciplined execution converting demand into durable returns.
Speaker #2: As AI workloads scale, the value of well-located, powered infrastructure intensifies. In this environment, scale, reliability, and access to capital are differentiating factors to counterparties.
Speaker #2: And we believe our global operating capabilities and long-standing relationships benefit us. Our risk-focused approach and strict adherence to guardrails will enable us to continue investing in the core infrastructure needed to deliver AI at scale, while protecting our downside.
Speaker #2: That concludes my remarks for this morning, and I will now pass the call over to Sam.
Operator: That concludes my remarks for this morning, and I will now pass the call over to Sam. All right. Thank you, Udhay. That was great. Good morning, everyone. For my remarks today, I'm going to discuss some of our strategic initiatives and then conclude with an outlook for the year ahead. In 2025, transaction activity accelerated, and as a result, we deployed approximately $1.5 billion into new investments. We expect this momentum to carry into 2026 based on our robust pipeline of new investment opportunities that continues to be diversified across sectors and geographies. During the quarter, we completed the inaugural project under the framework agreement with Bloom Energy, installing 55MW of behind-the-meter power for a data center site in the United States. We have since secured additional projects under the framework for several hyperscaler customers, bringing the total to approximately 230MW of power generation.
That concludes my remarks for this morning, and I will now pass the call over to Sam.
Sam Pollock: All right. Thank you, Udhay. That was great. Good morning, everyone. For my remarks today, I'm going to discuss some of our strategic initiatives and then conclude with an outlook for the year ahead. In 2025, transaction activity accelerated, and as a result, we deployed approximately $1.5 billion into new investments. We expect this momentum to carry into 2026 based on our robust pipeline of new investment opportunities that continues to be diversified across sectors and geographies. During the quarter, we completed the inaugural project under the framework agreement with Bloom Energy, installing 55MW of behind-the-meter power for a data center site in the United States. We have since secured additional projects under the framework for several hyperscaler customers, bringing the total to approximately 230MW of power generation.
Speaker #1: All right, thank you. That was great. And good morning, everyone. For my remarks today, I'm going to discuss some of our strategic initiatives and then conclude with a look ahead.
Speaker #1: an outlook for the year In 2025, transaction activity accelerated, and as a result, we deployed approximately 1.5 billion into new investments. We expect this momentum to carry into 2026 based on our robust pipeline of new investment opportunities that continues to be diversified across sectors and geographies.
Speaker #1: During the quarter, we completed the inaugural project under the Framework Agreement with Bloom Energy, installing 55 megawatts of behind-the-meter power for a data center site in the United States.
Speaker #1: We have since secured additional projects under the framework for several hyperscaler customers, bringing the total to approximately 230 megawatts of power generation. These additional projects have contract terms of at least 15 years in length.
Operator: These additional projects have contract terms of at least 15 years in length. BIP's total equity investment associated with these projects to date is expected to be approximately $50 million and fully deployed by mid-2027. Also, during the quarter, we closed the acquisition of a South Korean industrial gas business, which is the leading supplier of industrial gases to investment-grade semiconductor manufacturers in the country. The total equity purchase price is $125 million for our share. And on 1 January, we closed the acquisition of a leading railcar leasing platform in partnership with a best-in-class railcar lessor. The business is highly cash-generative, providing stable cash flows that are supported by a diversified and large investment-grade customer base. BIP's total equity consideration is approximately $300 million. Now, turning to our growth outlook, we see a highly constructive backdrop for infrastructure in 2026.
These additional projects have contract terms of at least 15 years in length. BIP's total equity investment associated with these projects to date is expected to be approximately $50 million and fully deployed by mid-2027. Also, during the quarter, we closed the acquisition of a South Korean industrial gas business, which is the leading supplier of industrial gases to investment-grade semiconductor manufacturers in the country. The total equity purchase price is $125 million for our share. And on 1 January, we closed the acquisition of a leading railcar leasing platform in partnership with a best-in-class railcar lessor. The business is highly cash-generative, providing stable cash flows that are supported by a diversified and large investment-grade customer base. BIP's total equity consideration is approximately $300 million. Now, turning to our growth outlook, we see a highly constructive backdrop for infrastructure in 2026.
Speaker #1: BIP's total equity investment associated with these projects to date is expected to be approximately $50 million and fully deployed by mid-2027. Also, during the quarter, we closed the acquisition of a South Korean industrial gas business, which is the leading supplier of industrial gases to investment-grade semiconductor manufacturers in the country.
Speaker #1: The total equity purchase price is $125 million, for our share. And on January 1st, we closed the acquisition of a leading railcar leasing platform in partnership with a best-in-class railcar lessor.
Speaker #1: The business is highly cash-generative, providing stable cash flows that are supported by a diversified and largely investment-grade customer base. BIP's total equity consideration is approximately $300 million.
Speaker #1: Now, turning to our growth outlook, we see a highly constructive backdrop for infrastructure in 2026. The asset class has a long history of delivering resilient, growing cash flows through a variety of market environments, and is squarely positioned at the center of three powerful structural themes, which we've talked about quite a bit in the past: digitalization, decarbonization, and deglobalization.
Operator: The asset class has a long history of delivering resilient, growing cash flows through a variety of market environments and is squarely positioned at the center of three powerful structural themes, which we've talked about quite a bit in the past: digitalization, decarbonization, and deglobalization. Together, these forces are driving an infrastructure investment supercycle that is broadening in both scope and scale. We have entered 2026 from a position of considerable strength as well. Our base business is delivering resilient, growing cash flows, and we have clear visibility into a multi-year runway of organic growth and capital deployment. In addition, the rapid build-out of AI-related infrastructure is materially expanding our opportunities set across data centers, power, and network connectivity. As a scaled global owner and operator of critical infrastructure, we are well placed to deploy capital into these themes at attractive risk-adjusted returns.
The asset class has a long history of delivering resilient, growing cash flows through a variety of market environments and is squarely positioned at the center of three powerful structural themes, which we've talked about quite a bit in the past: digitalization, decarbonization, and deglobalization. Together, these forces are driving an infrastructure investment supercycle that is broadening in both scope and scale. We have entered 2026 from a position of considerable strength as well. Our base business is delivering resilient, growing cash flows, and we have clear visibility into a multi-year runway of organic growth and capital deployment. In addition, the rapid build-out of AI-related infrastructure is materially expanding our opportunities set across data centers, power, and network connectivity. As a scaled global owner and operator of critical infrastructure, we are well placed to deploy capital into these themes at attractive risk-adjusted returns.
Speaker #1: Together, these forces are driving an infrastructure investment supercycle that is broadening in both scope and scale. We have entered 2026 from a position of considerable strength as well.
Speaker #1: Our base business is delivering resilient, growing cash flows, and we have clear visibility into a multi-year runway of organic growth and capital deployment. In addition, the rapid buildout of AI-related infrastructure is materially expanding our opportunity set across data centers, power, and network connectivity.
Speaker #1: As a scaled global owner and operator of critical infrastructure, we are well placed to deploy capital into these themes at attractive, risk-adjusted returns. These factors combined with a stable interest rate and foreign exchange backdrop position us well to return to our 10% or higher per-unit growth target in 2026 and beyond.
Operator: These factors, combined with a stable interest rate and foreign exchange backdrop, position us well to return to our 10% or higher per unit growth target in 2026 and beyond. So that concludes my remarks. I'll now pass it back over to Liz to open up the line for Q&A. As a reminder, if you'd like to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Thank you. Our first question comes from the line of Maurice Choy with RBC Capital Markets. Thank you, and good morning, everyone. I'll just ask one question, but I'll admit it is a multi-part question on data centers and data infrastructure. Udhay, in your prepared remarks, you highlighted how your contract approach aims to mitigate technology risk.
These factors, combined with a stable interest rate and foreign exchange backdrop, position us well to return to our 10% or higher per unit growth target in 2026 and beyond. So that concludes my remarks. I'll now pass it back over to Liz to open up the line for Q&A.
Speaker #1: So that concludes my remarks. I'll now pass it back over to Liz to open up the line for
Operator: As a reminder, if you'd like to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Thank you. Our first question comes from the line of Maurice Choy with RBC Capital Markets.
Speaker #2: As a reminder, if you'd like 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. Please stand by while we compile the Q&A.
Speaker #2: roster. Thank
Speaker #3: you.
Speaker #2: Our first question comes from the line of Maurice Choi with RBC Capital.
Speaker #2: Markets. Thank
Maurice Choy: Thank you, and good morning, everyone. I'll just ask one question, but I'll admit it is a multi-part question on data centers and data infrastructure. Udhay, in your prepared remarks, you highlighted how your contract approach aims to mitigate technology risk. Can you elaborate a little bit more on that, and also what risk do you think is underappreciated by the market? And my quick follow-up is going to be on returns. Obviously, I would expect the returns are superior to the 12% to 15% target range. So maybe you could help us understand a little better how much more better, even if it's just a range, or even some factors for us to consider and quantify these premium returns. Thank you.
Speaker #4: you. And good morning, everyone. I'll just ask one question, but I'll admit it is a multi-part question on data centers and data infrastructure. Uday, in your prepared remarks, you highlighted how your contract approach aims to mitigate technology risk.
Speaker #4: Can you elaborate a little bit more on that? And also, what risk do you think is underappreciated by the market? And my quick follow-up is going to be on returns.
Operator: Can you elaborate a little bit more on that, and also what risk do you think is underappreciated by the market? And my quick follow-up is going to be on returns. Obviously, I would expect the returns are superior to the 12% to 15% target range. So maybe you could help us understand a little better how much more better, even if it's just a range, or even some factors for us to consider and quantify these premium returns. Thank you. Hi, I'm Sam Pollock here. Maybe I'll start off with the returns, and then I'll have Udhay talk about the contract items and the risks that you also asked. So on the return front, I'll keep it high level and simple.
Speaker #4: Obviously, I would expect the returns are superior to the 12 to 15% target range so maybe you could help us understand a little better how much more better, even if it's just a range or even some factors for us to consider and quantify these premium returns.
Sam Pollock: Hi, I'm Sam Pollock here. Maybe I'll start off with the returns, and then I'll have Udhay talk about the contract items and the risks that you also asked. So on the return front, I'll keep it high level and simple.
Speaker #1: Hi, I'm Maurice
Speaker #1: and Sam here. Maybe I'll start off with the returns. And Thank you. then I'll have Uday talk about the contract items and the risks that you also asked.
Speaker #1: So on the return front, I'll keep it high level and simple. But in essence, we develop new data centers at a yield-to-cost anywhere on average between 9% and 10%.
Operator: But in essence, we develop new data centers that yield the cost anywhere on average between 9% and 10%, and we monetize them at cap rates between 5.5% and 6% on average. And so that gives us a rough development profit of 3 to 400 basis points. And with leverage in the development 70% range, that pencils into equity returns if we do everything right into high teens or 20s. And I think that's a profitable industry. So that's the rough goal, and I think we'll leave it on that from a returns perspective. And then maybe I'll throw it over to Udhay to answer your first two questions. Sure. Thanks, Sam. Look, I think taking a step back, the basis of pretty much all our data center businesses is around providing the core infrastructure and staying out of the real technology that our tenants, our customers use.
But in essence, we develop new data centers that yield the cost anywhere on average between 9% and 10%, and we monetize them at cap rates between 5.5% and 6% on average. And so that gives us a rough development profit of 3 to 400 basis points. And with leverage in the development 70% range, that pencils into equity returns if we do everything right into high teens or 20s. And I think that's a profitable industry. So that's the rough goal, and I think we'll leave it on that from a returns perspective. And then maybe I'll throw it over to Udhay to answer your first two questions.
Speaker #1: And we monetize them at cap rates between 5.5% and 6% on average. And so that gives us a rough development profit of 300 to 400 basis points.
Speaker #1: And with leverage in the development, 70% range, that pencils into equity returns if we do everything right. And to high teams over 20s. And I think that's profitable industry.
Speaker #1: So that's the rough goal. And I think we'll leave it on that from a returns perspective. And then maybe I'll throw it over to Uday to answer your first two questions.
Udhay Mathialagan: Sure. Thanks, Sam. Look, I think taking a step back, the basis of pretty much all our data center businesses is around providing the core infrastructure and staying out of the real technology that our tenants, our customers use.
Speaker #4: Sure. Thanks, Sam. Look, I think taking a step back, the basis of pretty much all our data center businesses is around providing the core infrastructure and staying out of the real technology that our tenants are customers use.
Speaker #4: And so my earlier remarks around being managing the technology risk is really around the way the environment within the data centers are being designed for longer-term use and for changes that are happening at the compute infrastructure level.
Operator: And so my earlier remarks around managing the technology risk is really around the way the environment within the data centers are being designed for longer-term use and for changes that are happening at the compute infrastructure level. That predominantly translates into how power and cooling works in the data centers. So by making sure we've got very long-term contracts, so let's say 15-year contracts, which are very specific in terms of what we deliver, we're staying completely out of any technology change that could take place in that 15-year period at a customer's sort of end. And in case it necessitates any change in the underlying infrastructure, then those are specific changes that are not to our cost at that point in time.
And so my earlier remarks around managing the technology risk is really around the way the environment within the data centers are being designed for longer-term use and for changes that are happening at the compute infrastructure level. That predominantly translates into how power and cooling works in the data centers. So by making sure we've got very long-term contracts, so let's say 15-year contracts, which are very specific in terms of what we deliver, we're staying completely out of any technology change that could take place in that 15-year period at a customer's sort of end. And in case it necessitates any change in the underlying infrastructure, then those are specific changes that are not to our cost at that point in time.
Speaker #4: That predominantly translates into how power and cooling works in the data centers. So, by making sure we've got very long-term contracts—so let's say 15-year contracts—which are very specific in terms of what we deliver, we're staying completely out of any technology change that could take place in that 15-year period at a customer's sort of end.
Speaker #4: And in case it necessitates any change in the underlying infrastructure, then those are specific changes that are not to our cost at that point in time.
Speaker #4: So that was the underlying sort of comment around how we're managing our the committed cash flows, I guess, over that period of time. In terms of technology risk.
Operator: So that was the underlying sort of comment around how we're managing the committed cash flows, I guess, over that period of time in terms of technology risk. Understood. Thank you very much. Thanks, Maurice. Our next question comes from a line of Devin Dodge with BMO Capital Markets. All right. Thank you. Good morning. Maybe to the extent that you're able, can you provide some additional color for the transaction where KKR acquired a stake in a portfolio of data centers from Compass? And just trying to get a sense for how many assets are included, the timing. It sounded like it might be phased into that partnership and maybe the net proceeds to BIP. Hi, Devin. Sam here. I can't really speak to the details of it because we don't get into those levels of granularity on specific transactions that are private in nature.
So that was the underlying sort of comment around how we're managing the committed cash flows, I guess, over that period of time in terms of technology risk.
Maurice Choy: Understood. Thank you very much.
Speaker #4: Understood. Thank you very much.
Sam Pollock: Thanks, Maurice.
Speaker #1: Thanks,
Operator: Our next question comes from a line of Devin Dodge with BMO Capital Markets.
Speaker #2: Our Maurice. next question comes from a line of Devin Dodge with VMO Capital
Speaker #2: Markets.
Devin Dodge: All right. Thank you. Good morning. Maybe to the extent that you're able, can you provide some additional color for the transaction where KKR acquired a stake in a portfolio of data centers from Compass? And just trying to get a sense for how many assets are included, the timing. It sounded like it might be phased into that partnership and maybe the net proceeds to BIP.
Speaker #4: All right. Thank
Speaker #4: you. Good morning. Maybe to the extent that you're able, can you provide some additional color for the transaction where KKR acquired Mistake and a portfolio of data centers from Compass?
Speaker #4: And just trying to get a sense for how many assets are included, the timing, it sounded like it might be phased into that proceeds to partnership and maybe the net
Speaker #1: Tidbit . .
Sam Pollock: Hi, Devin. Sam here. I can't really speak to the details of it because we don't get into those levels of granularity on specific transactions that are private in nature.
Speaker #2: Hi , Devin , it's Sam here can't the to speak really . I don't it because of get level details of we granularity on specific nature , transactions that are private but what I can of it , don't because we get those into level of granularity on specific transactions that are private in nature , what I but can tell you is that , you know , and we this earlier call , in the you know , we've we've effectively JV with into entered a number of institutional investors , of which I would include KKR in that group across not just North America , but Europe as well , totaling about 850MW .
Operator: But what I can tell you is that, and we mentioned this earlier in the call, we've effectively entered into JV arrangements with a number of institutional investors, which I would include KKR in that group, across not just North America, but Europe as well, totaling about 850MW. And effectively, the way these arrangements work is these are, for the most part, passive vehicles in the sense that we retain operational control of the assets, and we retain a significant ownership stake to have alignment with our partners. And so we've done this, as I said, in all our markets. And it's kind of part of our playbook to recycle capital from developments to crystallize some profits to reinvest back in the business so we can fund future growth. Okay. Okay. Thanks for that. Second question.
But what I can tell you is that, and we mentioned this earlier in the call, we've effectively entered into JV arrangements with a number of institutional investors, which I would include KKR in that group, across not just North America, but Europe as well, totaling about 850MW. And effectively, the way these arrangements work is these are, for the most part, passive vehicles in the sense that we retain operational control of the assets, and we retain a significant ownership stake to have alignment with our partners. And so we've done this, as I said, in all our markets. And it's kind of part of our playbook to recycle capital from developments to crystallize some profits to reinvest back in the business so we can fund future growth.
Speaker #2: And .
Speaker #3: But and .
Speaker #2: know , the Effectively , you way these arrangements work is these are for the most part , passive vehicles in the sense operational that we retain control of the And , you know , retain a significant ownership stake we to have alignment with , with our partners .
Speaker #2: And said , so markets in all our as I our playbook to this , , and it's recycle capital from developments crystallize to some some profits , to reinvest back in the can business so we future growth .
Devin Dodge: Okay. Okay. Thanks for that. Second question. For Brookfield's $10 billion AI infrastructure fund, I believe BIP is one of the pools of capital that could be used to meet Brookfield's commitment. I'm just wondering if you could provide a bit of a framework or thoughts on what types of investments made by the fund may be suitable or not suitable for BIP.
Operator: For Brookfield's $10 billion AI infrastructure fund, I believe BIP is one of the pools of capital that could be used to meet Brookfield's commitment. I'm just wondering if you could provide a bit of a framework or thoughts on what types of investments made by the fund may be suitable or not suitable for BIP. Yeah. Hi, Devin. So that's correct. So BIP is one of the entities that will fund opportunities that come from that strategy. And I think the way to think about it is transactions that have the profile that we have in our flagship fund, so returns that are, let's say, 12% and higher in sectors that are suited for BIP, so things that are, say, outside of renewable energy, and investments that probably don't have a development profile that's too, too long.
Speaker #1: Okay , okay . Thanks for that second question for , $10 billion AI the infrastructure fund , I believe Bip is one of the pools of capital that could be used to meet Brookfield's commitment .
Speaker #1: Just wondering if you could provide a bit of a framework or thoughts on what investments types of made fund by the may be suitable or not suitable for Bip ?
David Krant: Yeah. Hi, Devin. So that's correct. So BIP is one of the entities that will fund opportunities that come from that strategy. And I think the way to think about it is transactions that have the profile that we have in our flagship fund, so returns that are, let's say, 12% and higher in sectors that are suited for BIP, so things that are, say, outside of renewable energy, and investments that probably don't have a development profile that's too, too long.
Speaker #2: Yeah . Hi , Devin . So so that's correct . So so Bip is one of the . Entities will fund opportunities that come from that strategy .
Speaker #2: And I think , you know , the to way think it is about , you know , transactions that know have , you , the profile that we have in our flagship fund .
Speaker #2: So you know , returns that are let's say , you know , 12% and higher in sectors that are suited for , for , for Bip .
Speaker #2: So things that are say outside of renewable energy and , and investments that , you know , probably don't have a , a development profile that's too , too long , you know , if the development cycle is excessively long then that may not make it appropriate for Bip .
Operator: If the development cycle is excessively long, then that may not make it appropriate for BIP. But otherwise, I think keeping in mind peripheral construction objectives for BIP, if it's in the data center sector, if it's gas-related, if it's utility-related, those are all sectors. And if the returns fit, then we would invest through BIP for those types of transactions. Okay. Good color. Appreciate it. I'll turn it over. All right. Thank you. Our next question comes from Cherilyn Radbourne with TD Cowen. Thanks very much, and good morning. On the data center side, I did want to ask if you could talk about how you think about sovereigns versus hyperscalers as counterparties and how you think the mix of your basket of counterparties could end up between those two groups. Hi, Cherilyn. It's great to have you on the call.
If the development cycle is excessively long, then that may not make it appropriate for BIP. But otherwise, I think keeping in mind peripheral construction objectives for BIP, if it's in the data center sector, if it's gas-related, if it's utility-related, those are all sectors. And if the returns fit, then we would invest through BIP for those types of transactions.
Speaker #2: But otherwise I think . You know , keeping in mind , you know , portfolio construction objectives for for , if Bip it's in the data center sector , if it's gas it's utility related , if related , are those all sectors .
Devin Dodge: Okay. Good color. Appreciate it. I'll turn it over.
Speaker #2: And if the fit , returns then we would invest through through Bip for those type of transactions .
Sam Pollock: All right. Thank you.
Operator: Our next question comes from Cherilyn Radbourne with TD Cowen.
Speaker #1: Okay. Good color. Appreciate it. I'll turn it over.
Cherilyn Radbourne: Thanks very much, and good morning. On the data center side, I did want to ask if you could talk about how you think about sovereigns versus hyperscalers as counterparties and how you think the mix of your basket of counterparties could end up between those two groups.
Speaker #2: All right . Thank you .
Speaker #4: Our next question comes from Cherilyn Radbourne with TD Cowan .
Speaker #5: much and Thanks very good morning . On the data center side , I did want to ask if you could talk about how you think about sovereigns versus hyperscalers as counterparties and how you think the mix basket of counterparties end up could between those two groups ?
Sam Pollock: Hi, Cherilyn. It's great to have you on the call.
Operator: So maybe I'll touch on this, and Udhay can add anything else he'd like to. I think we like both of the counterparties because it gives diversity. One of the things that serves us well across all our business is diversity of counterparties. And obviously, the hyperscalers, while amazing credits, are few in number and have similar exposures to AI and other data-related cash flows. And sovereign nations diversify from those risks. The other reason we've been focused on some of these sovereign AI factories is because we think it gives us a differentiated strategy than many others who are just focused on building the large mega sites for the hyperscalers. Here, we can work on a more bespoke basis to assist sovereign nations build ecosystems in their countries.
So maybe I'll touch on this, and Udhay can add anything else he'd like to. I think we like both of the counterparties because it gives diversity. One of the things that serves us well across all our business is diversity of counterparties. And obviously, the hyperscalers, while amazing credits, are few in number and have similar exposures to AI and other data-related cash flows. And sovereign nations diversify from those risks. The other reason we've been focused on some of these sovereign AI factories is because we think it gives us a differentiated strategy than many others who are just focused on building the large mega sites for the hyperscalers. Here, we can work on a more bespoke basis to assist sovereign nations build ecosystems in their countries.
Speaker #2: Hi , Sherilyn , it's great to have you on the call . So maybe I'll touch on this . And Uday can add anything else to .
Speaker #2: you'd like I think we both like of us , the counterparties , because it gives diversity . You know , one of the things that serves us well across all our business diversity is of counterparties .
Speaker #2: And obviously , you know , the hyperscalers , while amazing credits are few in number and have similar exposures , you know , to AI and other data related cash flows and , and , sovereign nations , you know , diversifies from those risks .
Speaker #2: It , the also other reason , you know , we've been focused on some of these sovereign AI factories is because , you know , we think it gives us a differentiated strategy than many others who are just focused on building the large mega sites for the hyperscalers here .
Speaker #2: work on we can You know , a more bespoke basis to assist , you know , you know , sovereign nations build ecosystems in their countries .
Operator: The challenge with it is that governments tend to move a bit slower than corporates, and so the time to market can sometimes be a bit longer. But as far as what the mix will be, that's a little bit too hard for me to predict at this stage. I mean, we'd love to have a broad base of both hyperscalers and sovereign credits, but it's a little premature for me to speculate on that. That's helpful color. And then more of a straight-up question for David. Can you give us a sense of what we can expect from inflation indexation across your various geographies in 2026? Hi, Cherilyn. Good morning. Look, I think as we look forward, the two biggest drivers of growth from an organic perspective in 2026 will be the inflation indexation you highlighted, as well as a significant commissioning of CapEx out of our backlog.
The challenge with it is that governments tend to move a bit slower than corporates, and so the time to market can sometimes be a bit longer. But as far as what the mix will be, that's a little bit too hard for me to predict at this stage. I mean, we'd love to have a broad base of both hyperscalers and sovereign credits, but it's a little premature for me to speculate on that.
Speaker #2: challenge The with it is that , you know , governments tend to move a bit slower with than than corporates . And so the time to market can sometimes be a bit longer .
Speaker #2: But as far as you know , what the mix will be , that's a little bit too hard for me to , to predict at this stage .
Speaker #2: I mean , we'd love to have a broad base of of both hyperscalers and sovereign credits , but it's a little premature for me to speculate on that .
Cherilyn Radbourne: That's helpful color. And then more of a straight-up question for David. Can you give us a sense of what we can expect from inflation indexation across your various geographies in 2026?
Speaker #5: That's helpful. Color, and then more of a straight-up question for David. Can you give us a sense of what we can expect from inflation indexation across your various geographies in 2026?
David Krant: Hi, Cherilyn. Good morning. Look, I think as we look forward, the two biggest drivers of growth from an organic perspective in 2026 will be the inflation indexation you highlighted, as well as a significant commissioning of CapEx out of our backlog.
Speaker #2: Hi , Cheryl . Good morning . Look , I think as .
Speaker #6: We look forward , the two biggest drivers of growth from an organic perspective in 26 will be . The inflation indexation . You highlighted , as well as the significant commissioning of CapEx out of our backlog .
Operator: As you've seen, it's a record level now. On the inflation front, I'd say in OECD markets, we're probably averaging between 2% and 3% on our escalators. Then on the emerging markets, it ranges depending on which metric you're looking at. But I'd say between India and Brazil is the two biggest emerging market exposures we have inflation pass-through in. It's probably also in the 2% to 4% depending on the metric. So I think it's more manageable. It's still above probably 25 to 50 basis points above our historical averages that you would have observed, but certainly not as elevated as you saw in 2022. That's all for me. Thanks. Thank you. Our next question comes from Robert Hope with Scotiabank. Thank you. Morning all. Can we dive a little bit deeper into the data operations capital backlog?
As you've seen, it's a record level now. On the inflation front, I'd say in OECD markets, we're probably averaging between 2% and 3% on our escalators. Then on the emerging markets, it ranges depending on which metric you're looking at. But I'd say between India and Brazil is the two biggest emerging market exposures we have inflation pass-through in. It's probably also in the 2% to 4% depending on the metric. So I think it's more manageable. It's still above probably 25 to 50 basis points above our historical averages that you would have observed, but certainly not as elevated as you saw in 2022.
Speaker #6: As you've seen , it's a record level now on the inflation front . You know , I'd say in in . OECD markets , we're probably averaging between 2 and 3% on our escalators .
Speaker #6: And then on the emerging markets , it ranges depending on which metric you're looking at . But I'd say between India , Brazil is the two biggest emerging market exposures .
Speaker #6: We have inflation pass through in . It's probably also in the 2 to 4% depending on the metric . So I think it's it's more manageable .
Speaker #6: It's still above , you know , probably 2550 basis points above our historical averages . That you would have observed . But but certainly not as elevated as you saw in 2022 .
Cherilyn Radbourne: That's all for me. Thanks.
David Krant: Thank you.
Operator: Our next question comes from Robert Hope with Scotiabank.
Robert Hope: Thank you. Morning all. Can we dive a little bit deeper into the data operations capital backlog?
Speaker #5: That's all for me . Thanks .
Speaker #2: .
Speaker #4: Our Thank you next question comes from Robert Hope with Scotiabank .
Operator: Looks like it's up just over $1 billion versus Q3, with about $900 million of that driven by the hyperscale backlog. So can you maybe dive a little bit deeper into what is driving the significant increase in Q4, as well as kind of what is the outlook and how large could this get? I can start, and Udhay or Sam can jump in. Look, I think, Rob, you certainly pointed it out. I think across the data segment, the data center platform had the most growth. We've also onboarded the bulk fiber backlog and order book in Hotwire that we acquired in the fall. So those are another key driver in the increase in the last half of the year. But on data centers itself, I think it is a little chunky in terms of when we sign new contracts.
Looks like it's up just over $1 billion versus Q3, with about $900 million of that driven by the hyperscale backlog. So can you maybe dive a little bit deeper into what is driving the significant increase in Q4, as well as kind of what is the outlook and how large could this get?
Speaker #7: Thank you. Can we dive a little bit deeper into the data operations? Capital backlog? Looks like it's up just over $1 billion versus Q3, with about $900 million of that driven by the hyperscale backlog.
Speaker #7: So can you maybe dive a little bit deeper into what is driving the significant increase in Q4 , as well as kind of what is the outlook to and how large could this get ?
David Krant: I can start, and Udhay or Sam can jump in. Look, I think, Rob, you certainly pointed it out. I think across the data segment, the data center platform had the most growth. We've also onboarded the bulk fiber backlog and order book in Hotwire that we acquired in the fall. So those are another key driver in the increase in the last half of the year. But on data centers itself, I think it is a little chunky in terms of when we sign new contracts.
Speaker #6: I can start and Uday or Sam can can jump in . Look , I think , Rob , you certainly pointed out , I think across the data segment , the the data center platform had the most growth .
Speaker #6: We've also onboarded the the bulk fiber backlog and order book and Hotwire that we acquired in the fall . So those are another key driver in the in the increase in the last half of the year .
Operator: And as we highlighted this quarter, we had significant momentum on the leasing activity. So there was about 800 megawatts signed globally. When we sign those contracts, that's effectively when we'll put in the backlog associated with those projects. And so up until then, as you heard through our call, there's very little investment until a contract is signed. And then at that point, we then effectively consider the project FID, and it adds into our backlog. And so, as you heard, it's probably a mixture of North America, Europe, as well as a few in Asia Pacific that drove those signings, drove the addition to backlog. All right. Thanks for that. And then maybe sticking with data centers, so $3.9 billion of the backlog relates to Intel. Can you update us in terms of timing, how you're thinking about cash flow and returns there and any potential follow-on investments?
And as we highlighted this quarter, we had significant momentum on the leasing activity. So there was about 800 megawatts signed globally. When we sign those contracts, that's effectively when we'll put in the backlog associated with those projects. And so up until then, as you heard through our call, there's very little investment until a contract is signed. And then at that point, we then effectively consider the project FID, and it adds into our backlog. And so, as you heard, it's probably a mixture of North America, Europe, as well as a few in Asia Pacific that drove those signings, drove the addition to backlog.
Speaker #6: It centers itself. Data, I think, is a little chunky in terms of when we sign new contracts, and as we highlighted this quarter, we had significant momentum on the leasing activity.
Speaker #6: So there was about 800MW signed globally when we signed those contracts . That's effectively when we'll put in the backlog associated with those projects .
Speaker #6: And so up until then , as you heard through our call , there's very little investment until a signed . And contract is then at that point , we then effectively consider , you know , the project FID and it adds into our backlog .
Speaker #6: And so , you know , as you heard , it's probably a mixture of North American and European as well as a few in Asia Pacific that drove those those signings drove the additions to backlog .
Robert Hope: All right. Thanks for that. And then maybe sticking with data centers, so $3.9 billion of the backlog relates to Intel. Can you update us in terms of timing, how you're thinking about cash flow and returns there and any potential follow-on investments?
Speaker #7: All right . Thanks for that . And then maybe sticking with data centers . So $3.9 billion of the backlog relates to Intel .
Speaker #7: Can you update us in terms of timing ? You know , how you're thinking about cash flow and returns there and any potential follow on investments ?
Operator: Ben, do you want to give an update on the in-service date for the Intel facility? Yeah, sure. So for the Intel facility, our JV has two fabs, and one of which has reached its in-service date. So it's now producing wafers, which is great. The second fab is making good progress towards completion. So the actual underlying operations that underpin our JV and the construction activity is progressing very well for Intel. Thank you. Next question comes from Robert Catellier with CIBC Capital Markets. Hey, good morning, everyone. You seem to have a pretty high level of conviction in the capital recycling, having just come off a record year, and you're also continuing to make new investments. But I'm curious about the rate of commissioning capital from the backlog in 2026, given this is an important part of the capital allocation process.
Sam Pollock: Ben, do you want to give an update on the in-service date for the Intel facility?
Ben Vaughan: Yeah, sure. So for the Intel facility, our JV has two fabs, and one of which has reached its in-service date. So it's now producing wafers, which is great. The second fab is making good progress towards completion. So the actual underlying operations that underpin our JV and the construction activity is progressing very well for Intel.
Speaker #2: Ben , do you want to give an update on the in-service date for the Intel facility ?
Speaker #8: Yeah , sure . So for the Intel facility , our JV has two fabs and one of which has reached its in-service date .
Speaker #8: So it's now producing wafers , which is great . And the second fab is making good progress towards completion . So the actual underlying operations that underpin our JV and the construction activities progressing very well for Intel .
Robert Hope: Thank you.
Operator: Next question comes from Robert Catellier with CIBC Capital Markets.
Robert Catellier: Hey, good morning, everyone. You seem to have a pretty high level of conviction in the capital recycling, having just come off a record year, and you're also continuing to make new investments. But I'm curious about the rate of commissioning capital from the backlog in 2026, given this is an important part of the capital allocation process.
Speaker #7: Thank you .
Speaker #4: Next question comes from Robert Catellier with CIBC Capital Markets .
Speaker #9: Hey , good morning everyone . You seem to have a pretty high level of conviction in the capital recycling . Having just come off a record year .
Speaker #9: And you're also continuing to make new investments . But I'm curious about the rate of commission capital from the backlog in 26 . Given this .
Operator: I was wondering if you could maybe quantify and characterize what you see coming in the next couple of years there relative to 1.5 commissioned in 2025. Hey, Rob. Yeah, it's David here. I can give you some color on the shape of that commissioning. I think I'd split our backlog into two various components. As you heard from the previous question, there's an Intel component, which is about $3.9 billion in the number. We'd expect that to commission from our earnings profile in the back half of 2026. The balance of our backlog would be diversified across our utilities, transport, midstream, and data businesses. And typically, as you've heard, it's a three-year outlook. So those projects tend to be smaller, lower, shorter development cycles and build cycles.
I was wondering if you could maybe quantify and characterize what you see coming in the next couple of years there relative to 1.5 commissioned in 2025.
Speaker #9: You know , this is a important part of the capital allocation process . if you Just could wondering maybe quantify and characterize what you see coming in the next couple of years .
David Krant: Hey, Rob. Yeah, it's David here. I can give you some color on the shape of that commissioning. I think I'd split our backlog into two various components. As you heard from the previous question, there's an Intel component, which is about $3.9 billion in the number. We'd expect that to commission from our earnings profile in the back half of 2026. The balance of our backlog would be diversified across our utilities, transport, midstream, and data businesses. And typically, as you've heard, it's a three-year outlook. So those projects tend to be smaller, lower, shorter development cycles and build cycles.
Speaker #9: There . You know , relative to 1.5 commissioned in 2025 .
Speaker #6: Hey , Rob . Yeah , it's David here . I can give you some color on the the shape of that commissioning . I think I'd split our backlog into two various components .
Speaker #6: As you heard from the previous there's an question , Intel component , which is about 3.9 billion in the number . expect We'd that to commission from our earnings profile in the back half of 2026 .
Speaker #6: The the other , the balance of our backlog would be diversified across our utilities , transport , midstream and data businesses . And typically , as you've it's a heard , three year outlook .
Operator: So I'd expect roughly 1/3 of that backlog, which would be close to $1.5 billion, to come in online 2026 as well throughout the year. I wouldn't say there's a chunky element to it. It'll be pretty smooth across our utilities and our data centers, driving the bulk of that. Right. So crossing out Intel, which is obviously a unique investment, you're really looking at about $1.5 billion-ish a year then. Is that what you got to see? Yeah. Our backlog, excluding Intel, is $5.3 billion. And so assuming an average of 3 years, you're looking close to $1.75 billion, probably. But yeah, in the $1.5 to 2 billion. Okay. Excellent. And then my other question was just what are your views on the Canada-Alberta MOU as it relates to energy development? It looks like there's a momentum building towards a bolder energy strategy here.
So I'd expect roughly 1/3 of that backlog, which would be close to $1.5 billion, to come in online 2026 as well throughout the year. I wouldn't say there's a chunky element to it. It'll be pretty smooth across our utilities and our data centers, driving the bulk of that.
Speaker #6: So those projects tend to be smaller , lower , shorter development cycles and build cycles . So I'd expect roughly a third of that .
Speaker #6: You backlog , which would be close to a billion and a half to come in online well . Throughout 2026 as year . is It the I wouldn't say there's a a chunky element to it .
Robert Catellier: Right. So crossing out Intel, which is obviously a unique investment, you're really looking at about $1.5 billion-ish a year then. Is that what you got to see?
Speaker #6: It's pretty— It'll be pretty smooth across our utilities and our data centers, driving the bulk of that.
Speaker #9: Right . So , you know , exiting out Intel , which is obviously a unique investment . You're really looking at about 1.5 billion ish a year , then .
David Krant: Yeah. Our backlog, excluding Intel, is $5.3 billion. And so assuming an average of 3 years, you're looking close to $1.75 billion, probably. But yeah, in the $1.5 to 2 billion.
Speaker #9: Is that what .
Speaker #6: Our backlog, excluding Intel, is $5.3 billion. And so, assuming an average of three years, you're looking close to $1.75 billion per year, probably.
Robert Catellier: Okay. Excellent. And then my other question was just what are your views on the Canada-Alberta MOU as it relates to energy development? It looks like there's a momentum building towards a bolder energy strategy here.
Speaker #6: Yeah . And the one and a half to two okay .
Speaker #9: Excellent . And then my other question was just what are your views on the Canada Alberta mou as it relates to energy development ?
Operator: So I'm curious how it impacts how you manage your midstream investments in Canada. So do you hang on for more growth, or does this de-risk the assets to a point where you might consider more asset sales? Yeah. Hi, Robert. Look, I think it's too early to say whether or not the MOU is going to have any material impact on the growth trajectory of our businesses. Irregardless of that, though, we already have plenty of growth in the business. There's been significant producer expansions underway, which has led to some additional tie-ins, particularly in our IPL network. And we've recently undertaken a number of growth initiatives with NorthRiver. In terms of our plans to monetize the businesses, I think we have business plans in place for each of the businesses that we're looking to continue to develop.
So I'm curious how it impacts how you manage your midstream investments in Canada. So do you hang on for more growth, or does this de-risk the assets to a point where you might consider more asset sales?
Speaker #9: You know , it looks like there's a , you know , a momentum building towards a bolder energy strategy here . So I'm curious how it impacts how you manage your midstream investments in Canada .
Speaker #9: So do you more on for growth hang or does this de-risk the assets where you might to a point consider a more asset sales ?
Sam Pollock: Yeah. Hi, Robert. Look, I think it's too early to say whether or not the MOU is going to have any material impact on the growth trajectory of our businesses. Irregardless of that, though, we already have plenty of growth in the business. There's been significant producer expansions underway, which has led to some additional tie-ins, particularly in our IPL network. And we've recently undertaken a number of growth initiatives with NorthRiver. In terms of our plans to monetize the businesses, I think we have business plans in place for each of the businesses that we're looking to continue to develop.
Speaker #2: Hi Robert . Look , I think it's it's too early to say whether or not the MOU is going to have any material impact on the growth trajectory of our businesses , irregardless of that , though , we've already have plenty of growth in the business .
Speaker #2: You know , there's there's been significant , you know , producer expansions underway , which has led to some additional tie ins and particularly in our IPL facility in IPL network .
Speaker #2: And , you know , we've recently undertaken a number of growth initiatives with North River . You know , in terms of , you know , our , you our plans to , you know , monetize the businesses .
Speaker #2: I think , you know , we have , you know , business plans in place for each of the businesses that we're looking to , you know , to to continue to develop and , you know , I guess the only thing that would accelerate Monetizations would be market conditions to extent that they are receptive to us bringing some or all of these businesses to to the market .
Operator: I guess the only thing that would accelerate monetizations would be market conditions to the extent that they are receptive to us bringing some or part of these businesses to the market. We might look at that. So I appreciate some of that. It's very loose. But I think the takeaway is that the businesses today operate in a very strong environment. And with the added push by the federal government, along with the provincial government, to encourage further growth in the sector, we think that's only helpful to our businesses and makes them more attractive to potential buyers down the road. Yeah, I totally agree with you. I think it's too early, and I, too, would want to see a couple more cards flipped on how the MOU plays out and if they achieve the milestones as intended. So thanks for your answers. Thank you.
I guess the only thing that would accelerate monetizations would be market conditions to the extent that they are receptive to us bringing some or part of these businesses to the market. We might look at that. So I appreciate some of that. It's very loose. But I think the takeaway is that the businesses today operate in a very strong environment. And with the added push by the federal government, along with the provincial government, to encourage further growth in the sector, we think that's only helpful to our businesses and makes them more attractive to potential buyers down the road.
Speaker #2: We might look at that . So I appreciate some of that . You know , it's very loose , but but I think the takeaway is that the businesses today operate in a very strong environment .
Speaker #2: And with the added push by the federal government , you know , along with the provincial government to encourage , you know , further growth in the that's sector .
Robert Catellier: Yeah, I totally agree with you. I think it's too early, and I, too, would want to see a couple more cards flipped on how the MOU plays out and if they achieve the milestones as intended. So thanks for your answers.
Speaker #2: we think You know , only helpful to our businesses and and makes them more attractive to potential buyers down the road .
Speaker #9: Yeah , I totally agree with you . I think it's too early . And I too would want to see a couple more cards slipped on how the MOU plays out and they if , you know , achieve the milestones as intended .
Sam Pollock: Thank you.
Operator: As a reminder, if you'd like to ask a question at this time, please press star 11 on your touchtone phone. Our next question comes from a line of Frederic Bastien with Raymond James. Good morning. During your investor day, you noted that Brookfield had formed partnerships to build 7 AI factories totaling 6 gigawatts of compute capacity. Can you provide an update on how that's going and whether you have more developments to announce soon? Hey, Fred, maybe I'll tackle that. Uday might add some further comments, but I think the answer is relatively short. We continue to progress all those very initiatives. Today, we have discussions underway with probably 5, at least, in Europe, some in North America, as well as some of the Middle East, and one actually in Oceania. So basically, across the globe.
Operator: As a reminder, if you'd like to ask a question at this time, please press star 11 on your touchtone phone. Our next question comes from a line of Frederic Bastien with Raymond James.
Speaker #9: So thanks for your answers .
Speaker #10: Thank you .
Speaker #4: reminder , if As a you'd like to ask a question at this time , please press star one one on your touchtone phone next .
Frederic Bastien: Good morning. During your investor day, you noted that Brookfield had formed partnerships to build 7 AI factories totaling 6 gigawatts of compute capacity. Can you provide an update on how that's going and whether you have more developments to announce soon?
Speaker #4: Our question comes from the line of Frederick Bastian with Raymond James .
Speaker #11: Good morning . During your Investor Day , you noted that Brookfield had formed a partnerships to build seven AI factories totaling six gigawatts of compute capacity .
Sam Pollock: Hey, Fred, maybe I'll tackle that. Uday might add some further comments, but I think the answer is relatively short. We continue to progress all those very initiatives. Today, we have discussions underway with probably 5, at least, in Europe, some in North America, as well as some of the Middle East, and one actually in Oceania. So basically, across the globe.
Speaker #11: Can you provide an update ? Update on how that's going ? And whether you get more developments to announce soon ?
Speaker #2: Hey , Fred , maybe I'll tackle that and UDI might , might add comments , but some further I think the answer is relatively short .
Speaker #2: You know , we continue to progress all those very initiatives . And , you know , today we have discussions underway with probably , you know , five at least in Europe , you know , some in North America as well as some of the Middle East .
Speaker #2: one actually And in , in Oceania . So basically across the globe that I mentioned to I think it was Sherilyn , you know , the it does , you know , these discussions do take time and we're probably a little disappointed that they haven't gone a little faster given the that importance each of the nations puts towards these initiatives .
Operator: As I mentioned to, I think it was Cherilyn, these discussions do take time, and we're probably a little disappointed that they haven't gone a little faster given the importance that each of the nations puts towards these initiatives. Nonetheless, I think we're hopeful that during the year, we'll have one or two of these progressed. And I think the only thing that I would caution you is that they tend to be smaller than some of the mega sites that you see announced with the hyperscalers. So most of these are anywhere between as small as 50 megawatts up to as much as maybe 250 in phases. Nonetheless, those still represent meaningful dollars, and we're pretty excited to see it through. Okay. Thanks, Sam, for that. And I guess your relationship with Bloom Energy is still fairly young.
As I mentioned to, I think it was Cherilyn, these discussions do take time, and we're probably a little disappointed that they haven't gone a little faster given the importance that each of the nations puts towards these initiatives. Nonetheless, I think we're hopeful that during the year, we'll have one or two of these progressed. And I think the only thing that I would caution you is that they tend to be smaller than some of the mega sites that you see announced with the hyperscalers. So most of these are anywhere between as small as 50 megawatts up to as much as maybe 250 in phases. Nonetheless, those still represent meaningful dollars, and we're pretty excited to see it through.
Speaker #2: think we're Nonetheless , I hopeful that during the year we'll 1 or 2 have of these progressed and , you know , I think the only thing that I would , you know , caution you is that they tend to be smaller than some of the , you know , mega sites that you see announced with the the hyperscalers .
Speaker #2: So , you know , most of these are anywhere between as small as 50MW , up to as much as maybe 250 , you know , in phases .
Frederic Bastien: Okay. Thanks, Sam, for that. And I guess your relationship with Bloom Energy is still fairly young.
Speaker #2: those Nonetheless , are still represent meaningful dollars . And we're pretty excited through to see it .
Operator: You committed to delivering just under 300 megawatts of power generation. I think your original agreement was for up to 1 gigawatt of behind-the-meter power generation. Are you comfortable that you will see through this agreement all the way to that 1 gigawatt? Obviously, I'd be speculating on the future, so it's hard to predict. But at the moment, with the level of demand that they're seeing and the amount of developments underway, I feel pretty optimistic that we'll get to that and maybe even above that level. There's no doubt there's tons of momentum for Bloom at the moment. Awesome. And your relationship, obviously, is strong and growing, obviously. Yes. Yes, it is. Okay. Yeah, that's where I was going. Thanks, Sam. Appreciate it. Okay. No, thank you, Fred. That concludes today's question and answer session. I'd like to turn the call back to Sam Pollock for closing remarks.
You committed to delivering just under 300 megawatts of power generation. I think your original agreement was for up to 1 gigawatt of behind-the-meter power generation. Are you comfortable that you will see through this agreement all the way to that 1 gigawatt?
Speaker #11: Thanks , Sam , for that . Okay . And I guess your your relationship with Bloom Energy is still You fairly young . committed to delivering just under 300MW of power generation .
Speaker #11: I think your original agreement was to was for up to one gigawatt of meter power behind the generation are you is that you comfortable will see through this this agreement all the way to that one gigawatt ?
Sam Pollock: Obviously, I'd be speculating on the future, so it's hard to predict. But at the moment, with the level of demand that they're seeing and the amount of developments underway, I feel pretty optimistic that we'll get to that and maybe even above that level. There's no doubt there's tons of momentum for Bloom at the moment. Awesome. And your relationship, obviously, is strong and growing, obviously. Yes. Yes, it is.
Speaker #2: Obviously I'd be the speculating on future . So it's hard to predict . But at the moment with the the level of demand that they're seeing and the , you know , the amount of , you know , developments underway , you know , I feel pretty optimistic that we'll get to that and maybe even above that level , there's no doubt there's tons of momentum for bloom at the moment .
Frederic Bastien: Okay. Yeah, that's where I was going. Thanks, Sam. Appreciate it.
Speaker #11: Awesome . And your relationships obviously is strong and and growing . Obviously .
Sam Pollock: Okay. No, thank you, Fred.
Operator: That concludes today's question and answer session. I'd like to turn the call back to Sam Pollock for closing remarks.
Speaker #2: is . Yes it Yes .
Speaker #11: where I was . Yeah . That's Okay Thanks . Thanks ,
Speaker #2: Appreciate
Speaker #2: it . Okay . No going .
Speaker #2: thank you Fred Sam . .
Operator: All right. Thank you, Liz. Thank you, everyone, for joining the call this morning. We hope you've all had a good start to the year, and we look forward to providing our Q1 results at the end of April. Thank you, and take care. This concludes today's conference call. Thank you for participating. You may now disconnect.
Sam Pollock: All right. Thank you, Liz. Thank you, everyone, for joining the call this morning. We hope you've all had a good start to the year, and we look forward to providing our Q1 results at the end of April. Thank you, and take care.
Speaker #4: That concludes today's question and answer session . I'd like to turn the Pollak for to Sam call back closing remarks .
Speaker #2: right . Thank you , Liz . And All thank you , everyone , joining the call for this morning . We hope all had a you good the year and we look start to forward to providing our first quarter results at the end of April .
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
