Brookfield Infrastructure Corp (BIPC) 2024 Q4 法說會逐字稿

Good day and thank you for standing by.

Welcome to the Brookfield Infrastructure Partners fourth-quarter 2024 results conference call and webcast. (Operator Instructions)

Please be advised that today's conference is being recorded.

I would now like to hand the conference over to David Krant, Chief Financial Officer. Please go ahead.

Thank you, Liz and good morning, everyone. Welcome to Brookfield Infrastructure Partners fourth-quarter 2024 earnings conference call.

As introduced, my name is David Krant and I'm the Chief Financial Officer of Brookfield Infrastructure.

I'm joined today by our Chief Executive Officer, Sam Pollock and joining us for the Q&A portion of the call is our Chief Operating Officer, Ben Vaughan.

I'll begin the call today by highlighting our financial and operating results for the past year followed by some brief remarks on our base business and its solid foundation. I'll then turn the call over to Sam who will provide an update on our capital recycling initiatives before concluding with the outlook for the business.

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

2024 was another excellent year for Brookfield Infrastructure. Some of our key accomplishments include delivering on our capital recycling target, deploying over $1.1 billion of equity into growth initiatives, adding approximately $1.8 billion of new projects to our capital backlog and completing approximately $10 billion of financing which makes it our most active year in the capital market.

I'm pleased to report that we ended the year with funds from operations or FFO of $3.12 per unit representing a 6% increase compared to 2023 when normalizing for the impact of foreign exchange fo preit was up 10% versus the prior year. This would be in line with our target and better reflect the current operational performance and strength of our business considering our conservative payout ratio ended the year at 67% and a favorable outlook for 2025 which Sam will speak too soon. The Board of Directors have approved a quarterly distribution increase of 6% to $1.72 per unit or share on an annualized basis.

This marks the 16th consecutive year of distribution increases within or above our target range.

I'll now go through our annual results and discuss our business segments in more detail.

FFO in 2024 total $2.5 billion, an increase of 8% compared to 2023 organic growth for the year was 7% driven by elevated levels of inflation in the countries where we operate stronger volumes across our critical infrastructure networks and the commissioning of over $1 billion of new capital projects from our backlog.

In addition, we deployed over $2 billion into new investments during the second half of 2023 and completed three accretive tuck in acquisitions this year which are all fully contributing to earnings, taking a closer look at the results by segment starting with utilities. We generated FFO of $760 million which is up 7% year over year on a comparable basis.

After taking into account asset sales and currency and compares to $879 million in the prior year. The reduction was primarily attributable to the capital recycling activity which included the sale of our Australian utility business in the third quarter of 2023 and a recapitalization of our Brazilian gas transmission business. In the first quarter, the base business continued to perform well during the year driven by inflation indexation and the contribution from nearly $470 million of capital commissioned into rate base.

Moving on to our transport segment. FFO was $1.2 billion representing a step change increase of nearly 40% from the prior year. This was primarily attributable to the acquisition of our global intermodal logistics company in the third quarter of 2023 and an incremental 10% stake in our brazilian integrated rail and logistics operation. In the first quarter of this year, we generated strong results across the remaining businesses driven by higher volume and average tariff increases of 7% across our rail networks and 6% across our road portfolio.

Our midstream segment generated FFO of $625 million which on a comparable basis had grown 11% versus the prior year. The growth reflects higher volume increases across our midstream assets due to robust customer activity levels particularly at our North American gas storage business. When considering the impact of asset sales and foreign exchange, the total FFO decreased from $684 million in the prior year, primarily related to capital recycling activities at our US gas pipeline.

Lastly, FFO from our data segment was $333 million representing a 21% increase over the prior year, the increase is attributable to strong organic growth at the and the contribution of several new investments completed over the last 12 months including three data center platforms and a power portfolio in India.

Taking a closer look at our data storage numbers. We've invested over $9 billion of capital across three primary three primary digital infrastructure verticals, namely data centers, fiber networks and telecom towers. Data centers are one of the most significant areas of investment with over $3.6 billion of capital invested in the last six years alone.

Putting aside our investment in a US retail co location business, we have approximately $2.8 billion invested in high growth, global hyperscale data center platforms. The organic growth backlog in these businesses is approximately $1.4 billion at our share and is anchored by long term availability based contracts with highly creditworthy counterparties.

As we execute our backlog of growth, we are very focused on maintaining our project level returns. We will not pursue growth at all costs and have maintained our yield on cost on new development. We anticipate being able to enhance returns in the years ahead as we execute our strategy to sell fully contracted sites and they're built, this will create liquidity to fund future growth as well as crystallize significant developer, developer profits.

Before turning it over to Sam, I would like to briefly touch on the macroeconomic backdrop and the strong positioning of our base business. There's been focus on a change in the government in the US and the resulting shift in policy including the timing and magnitude of potential tariffs on foreign imports simultaneously. The US economy is showing strength and employment levels remain robust.

Long term interest rates have increased recently and remain at elevated levels as investors temper their expectations around future interest rate cuts and anticipate a prolonged period of higher inflation. As we've demonstrated, we are well positioned to benefit from higher inflation in our business.

Our businesses provide essential services with regulated or contracted revenue streams, many of which are indexed to inflation during the past three years. Inflation has contributed meaningfully to our FFO growth averaging more than a 5% annual compound growth rate.

Today, our business remains highly indexed to inflation which we expect will continue to drive organic growth into 2025. At the same time, we have been proactive in managing our capital structures and mitigating risks relating to interest rates at both the corporate and portfolio company levels. We completed over $9 billion of nonrecourse asset level financings during the past year and today, our weighted average debt maturity is eight years of which 90% of our debt is fixed rate.

This strong position not only mitigates the risk but allows the benefits of inflation to compound in our results with limited impact from rising interest rates. Put very simply increased revenue from inflation indexation and fixed interest costs equals greater bottom line cash flow over time.

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

Thank you, David. That was great and good morning everyone.

For my remarks today, I'm going to discuss our capital recycling initiatives and then conclude with an outlook for the year ahead. In 2024, we achieved our targeted $2 billion of capital recycling proceeds in a challenging but improving asset sale environment. As we ended the year, we were seeing greater investor interest in high quality infrastructure assets and a larger universe of buyers able to transact this momentum has accelerated into 2025. And I'm pleased to announce that we've already secured approximately $200 million in proceeds from asset sales just one month into the new year.

At our global intermodal logistics operation, we agreed to sell a minority equity interest in a portfolio of fully contracted containers in total total. We expect to receive over $120 million with closing expected in the first half of 2025.

This inaugural sale provides a structure and framework for us to further monetize derisk and contracted assets which will generate meaningful liquidity at attractive returns at a North American Hyperscale data center platform. We secured the sale of a noncore site to a technology company.

The sale was transacted at an attractive capitalization rate and will generate gross proceeds of over a billion dollars and crystallize developer profit of approximately $350 million proceeds after debt repayment and transaction costs will be about $400 million resulting in net proceeds to bip of over 60 million. With closing expected later this year, we believe the level of asset sale activity we've experienced so far in 2025 will be indicative of the year ahead.

We have several advanced transactions that should be signed in the first half of the year. And we are very confident in our ability to deliver the $5 billion to $6 billion in sale proceeds that we've guided to over the next two years.

Supporting this confidence is the return of buyers for core assets which many of our mature businesses target from a risk return perspective on exit. We have seen this activity firsthand in Brookfield's own Super Core Infrastructure Fund which has been experiencing an influx of capital as fundraising increase to the highest levels in almost three years at the end of 2024. And this has continued into 2025 with respect to the outlook for growth. We feel very positive.

As David mentioned in his remarks, much of our data segment's value is not yet reflected in our current financial results given its development focused profile. However, as projects come online, we expect them to contribute meaningfully to earnings and drive overall growth in the coming years. In terms of new development, we've entered 2025 with a pipeline of early stage capital deployment opportunities. That is the deepest it's been in years.

Activity levels continue to improve and the need for private capital to invest in critical infrastructure globally continues to rise. This creates ample opportunities for large scale well capitalized global infrastructure owners and operators like us, digitalization remains the key driver of our current deal flow with the data sector. Accounting for over 40% of our anticipated capital deployment.

We expect growth in this sector to persist outpacing all other areas of our business and positioning it to become our largest sector within five years. We are also excited by the deployment opportunities in other segments of our portfolio that are benefiting from digitalization such as our midstream and utility sectors, both of which we expect to be active deploying capital in the years ahead.

So that concludes my remarks. But before we go into our formal Q&A we thought we'd call an audible and have someone from our team address the news that came out this week regarding DeepSeek and so in that regard, I'd like to welcome Roberto Marcogliese, who is the Head of our telecom business here in North America. And I thought I just pose a question to him that's probably on a lot of people's minds. And Rob, I guess the simple question is what happened this week? What is the news regarding DeepSeek and what what they did and how does that impact our business going forward?

Great. Yeah, thank you, Sam and good morning, everyone.

So as Sam said earlier this week, DeepSeek, which is a chinese based artificial intelligence company announced the training of a new large language model which effectively is capable of achieving the same performance of some of the current industry leading models.

If we kind of take a step back, that announcement in itself is not, I think where the focus is, people always thought there was going to be increased competition. But what was interesting about the announcement is that Deep Sea was able to drive significant organization and train its model for only $6 million in less than two months.

We'll use the approximately 2000 older generation nvidia chips and so relative to the approach that's been used historically, this was quite novel and this ultimately has raised a number of questions around whether less hardware, less servers, less power, less data centers would be required to kind of propel AI board and reach artificial General intelligence.

And hopefully beyond you know, faced with that uncertainty, the obviously the stock market reacted quite quickly and effectively erased hundreds of billions of dollars of market cap value from companies. There are a number of different sectors that benefited from the enthu enthusiasm related to AI.

And so, from our perspective, while this may be true. In the short term, we never really expected that demand for compute would scale on a straight line basis. Our expectation and as we've seen a number of other technologies is that we'd always see a level of continuous improvement, whether it's at the server or hardware level or at the software.

And then those improvements would ultimately be offset by new use cases. And in most cases, more complex use cases, whether it's things like robotics, which will ultimately more compute to to actually have those robots run. So the DeepSeek announcement from our perspective is really just a piece of that improvement puzzle and we expect more advancements to come as we're still very early in the very early innings of this technology cycle.

So over the long term, I would say our our positive outlook hasn't changed for data center demand growth. And we're actually very excited by the prospect of having a more cost effective AI tool which should accelerate innovation, increase overall demand for AI in their applications and ultimately make the technology more widely accessible to everyone.

So when we kind of dig into our business, we don't see any material impacts over the long term with respect to the two most recent data center investments that we made in the US and Europe, we have actually already surpassed our underwriting expectations in terms of the overall pace of Lisa across our existing Land Bank our platform benefits from significant contracted growth which is underpinned by some of the most credit worthy counterparties in the world on their long term availability based contractual frameworks. And the next one I think is actually very important.

We have a we took a very purposeful approach. And today, over 90% of our development are centered on building capacity in tier one data center locations which are in close proximity to GDP and population centers and therefore aFFOrd maximum flexibility as these facilities can support multiple use cases such as cloud training, inferences and content. Given that they benefit from the lowest latency.

We continue to expect strong data in our growth but upside from emerging new use cases and future use cases that are yet to be developed. The capital required to support digitalization is staggering and will continue to create demand for large scale and flexible capital from infrastructure investors like us. And with that, I'll hand the call back to him.

Okay. Well, thanks Rob and hope that that was a good warm up to the Q&A session. So operator maybe I'll turn it back over to you and we'd be pleased to open up the line now for questions.

(Operator Instructions)

Cherilyn Radbourne, TD Cowen.

Maybe sticking with the data theme for a second and thank you for those comments on DeepSeek. We've been hearing anecdotally that development premiums for hyperscale centers have started to compress to some degree which I guess is not totally surprising given the level of activity in the sector. Can you give some perspective on that comment as it relates to your own development backlog?

Well, maybe I'll start and since we have Rob here, you can always jump in. But I think is as David alluded to in some of his remarks, he and at the moment, we've been quite successful in holding our yield to cost on our projects. You know, there's two elements to it. One is you know, what we can contract that and over the last year and a bit, you know, we've seen rates in fact increase.

And it's been a good market from that perspective and that, the second component is the ability to control costs. And I'd say for the most part, obviously, there's always in a large portfolio, there will be some, where they don't go entirely according to plan, but I'd say on our large projects, we've been able to bring projects in on time on budget.

And in fact, you know, given we're doing a lot of large campus style projects, with the learnings we have and some of the initial deployments we are in fact bringing costs down over time. So all in all, a long winded way of saying that you know, we're not losing our premiums. That's not to say, down the road, the competition won't tighten things a little bit. But today, that's not the case, any madro.

No, I would agree. I get that. I think it goes back to our tier one focus where I think a lot of the power bottlenecks have occurred. And so there's a premium for that scarcity.

Cherilyn, you usually have two questions. Do you have another one?

Yes. Much more sort of macro with respect to a stronger US dollar. Just curious whether that impacts where you're seeing the best opportunities to invest for value. And likewise, does that have an impact on your capital recycling lineup for the year?

Okay. Maybe I'll tackle that one again. Look, II guess, you know, as far as a an initial or, or direct impact on where we would invest, I wouldn't say the FX plays directly, but it is a sign of capital flows. And obviously, I think a lot of strength in the US dollar is the result of just a huge capital expenditure, boom going on in the US and that drives the need for capital.

And as a result, we are probably investing more in the US. Then historically, we may have just because of that dynamic. So it isn't so much an FX thing, but, the things are obviously all inter inter related. And as it relates to sales, you know, most of our businesses are for the most part hedged to a large degree. And so, we're not sort of taking into account FX in determining whether or not a business is ready for sale. Typically, we look at where we are in the business plan. And do we think the business will attract an attractive value on a local basis? So, I guess the short answer is no, we're not taking that into account.

Devin Dodge, BMO Capital Markets.

I wanted to start with a question Triton. I just wondering if you could provide a bit more color on the sales and the minority interest in a portfolio of containers that you talked about in your opening remarks there. I'm just trying to get a sense for how much of that, how much of the fleet that includes? Is this like a perpetual investment or is it roll off as the containers are handed back and what that implied equity value translate in terms of, implied FFO yield or some other valuation metric.

And as it, as it turns out, we have Dave Joynt here who is responsible for that transaction, we haven't expected him to speak, but since it's a direct question trade and probably a good one for him to answer. So, Dave, do you want to tackle that one?

Just with respect to the transaction itself, I guess my comment on this is what, what we have done is we have taken a pool of leased up containers and we've sold out a minority interest in that pool itself which has standalone financing and the strategy behind all of this is that, you know, Triton is a a business that has tremendous unit economics on the deployment of capital. But, the real magic comes into leasing up, putting them on long term, leases for people.

And I think we found is that there is a pool of buyers and of interest in buying into a yield oriented vehicle, that runs off over time, over the life of the containers which, as you might know, is sort of on average about sort of 15 years. And then in terms of your question around, evaluation, I guess all I'm probably at liberty to say here is that, given the nature of what we sold, which is a de risk, long term cash flowing, portfolio, this is done at a, at a lower cost of capital than, than we would have in the market.

And they make up about 10% of the portfolio, would you say on a net to the business basis is about 6%.

And this second question, just maybe sticking with capital recycling again. You guys were talking about the sale of one nonco data center being sold, but can you just provide a, a bit of a broader update on the self funding model for your data center platform and what forms that's likely to take?

Yeah, I expect, there will be a lot more news in the next couple quarters regarding, our capital recycling program for the data centers. You know, it is a ongoing exercise as new facilities come on stream. You know, we do have a, a program of setting up stabilized pools of of data centers and bringing in institutional investors to invest in those stabilized assets.

And so we have, I think we're pretty advanced in both the North American and the European pool of assets and we hope to have news for you and, and our share shareholders in the coming quarters on our success in that regard.

Maurice Choy, RBC Capital Markets.

Maybe sticking with the capital recycling theme. I think you mentioned that data center is positioned to be your largest sector within five years. By FFO Transport is currently a largest sector being about three or four times larger than data. You've already mentioned that you got good growth for new capital, but there's also a self funding or recycling program for data. So should we think about transport as being making up a large part of your medium term asset sales? And if so what about transport trends? Are you seeing that motivates the strategy?

That a good question, I guess. There's lots of moving parts there though that I think maybe that might be adding to some of the confusion. I think the first thing is you know, in the data sector, it's not all data centers. So in the data center component of it, we are probably managing the total capital in that component but it will still grow it even though we're recycling, I still expect it to grow.

But we're investing in lots of other areas of the data sector complex. You know, whether it be towers, you know, fiber optic systems. And, and those you know, will continue to grow and, and don't have the same capital recycling profile that the data centers do. You know, in relation to the you know, the divestiture of our transport assets, there's no real you know, the pace of divestiture that's different than any other sector. It's all driven by where they are in their life cycle.

And whether or not we think we can get, the appropriate value for them. And, there are probably a few transfer assets that we've held for a long period of time that, are probably coming up for sale. But that's not indicative of any view that we have regarding transportation or our ability and desire to invest in new transportation assets.

We will always have a diversified pool of investments across all our sectors. And there will be periods of time when, you know, we'll deploy more in one sector than another. I think all we want to do in our comments in earlier was just to highlight that today, our deal flow is more centered around the digitalization theme. And thus, those sectors that are impacted by that theme, which is obviously the data sector as well as the midstream sector, is probably where you'll see most of the capital in the near term goal.

Hopefully that clarifies our comments.

Yeah, absolutely. It does. And just to finish off, I couldn't help but to notice a relatively favorable update at the midstream segment, North River having new GM P expansions under take or pay, you got additional pipeline connections into pipeline. So can I just get your take on how you think your thesis for these two businesses are playing out? What are some of the initiatives we should be watching out for this year such as the NBC connector?

We're pleased to talk about that and in fact, I'm going to pass it over to Ben Brown to talk a bit about the, our enthusiasm for what's going on in that sector.

Yeah, Maurice, thanks for the question. You mentioned the NEBC connector. That's one great opportunity that we have in the Western, you know, Canadian region with our assets, but it's only one of many and really what we're, what we're seeing across the board in Western Canada is our fleet of assets being and becoming fully utilized and then the market calling on us to expand our capacity. And so, we have about a billion dollars of backlog of projects.

Today, we see another potential for $2 billion to $3 billion of very attractive growth projects. And with, the current sentiment of needing more of that energy, we're pretty excited about the projects they're generally very straightforward in nature.

I would describe them as relatively bite size, given the size of the overall assets and relatively low risk in terms of their execution. So we just have a lot of additional projects to provide our clients with access to our either processing systems or our transportation networks. And so in general, the connector is one of many projects and we see, you know this as part of our midstream growth wedge for the coming years as being pretty strong.

And maybe just to add to that then I guess we'd say that they're, they're pretty much all brownfield expansions, connectors to pipelines or expanding plants and the build multiples for these expansions are very, very attractive and, and that's probably what gets us really excited. You know, particularly you know, given that many of them are contracted out of the gate, so maybe we'll leave it there. But hopefully that gives you a sense of why we're very enthusiastic about the midstream sector at the moment.

Robert Hope, Scotiabank.

I want to circle back on the data center commentary. You know, you speak about the data sector, accounting for about 40% of the anticipated capital deployment. Just wanted some clarification. There is that 40% of the expected deal flow that you expect to see over the next, we'll say coming years and then when you take a look at your organic backlog, would that be kind of secondary to that? Just given the fact that you do have, quite a lot of wood to chop there as well.

Yeah, look I can, it's Dave here. Hi, Rob. So on the first point, I think what we were referring to on the 40% was our pipeline today is, is highly comprised of investment opportunities in the digital space. So yeah, that's currently what we see ahead of us for the near term.

You're right. In addition, the other thing worth highlighting is, we have highlighted in previous calls that our backlog is at a record level, nearly $8 billion over the next three years. And if you were to look at what sector that's primarily driven by, it's going to be over 70% in the data side as well.

And that's as I alluded to not just data centers, but also our partnership on the foundry side as well as the build out fiber and and built two towers in Germany and France. So I'd say it's broad based and that will continue to drive our positive outlook for the organic growth profile rather than the new deployment. So those two together are what give us the belief that data will continue to be an increasing increasingly meaningful part of our business.

And then maybe just going back to kind of Marisa's comments or questions regarding data, data being the largest sector in five years. You know, transport does have a what a $900 million FFO head start here. So back of the envelope math does imply significant amount of capital that's kind of not in the backlog to get there. Can you maybe just help us frame the road map of how data gets the largest contributor to cash flow?

I think the short answer is there's new investments and investors. So you'll, it, it's kind of a a general directional comment from our part. But how you get there is, some assets will be sold that will reduce that and then, you'll have just more investments on the data side and obviously, we may be wrong and where it ends up it was, but it was just to give a sense of, direction where we think things are going.

Robert Catellier, CIBC Capital Markets.

I just want to go back to the data comments again. First of all, thank you for addressing the Deep Sea news right at the front. But I take it from your comments that you know, you're still rather bullish on the on the outlook for, for data in general data centers as well. I was just wondering though how this week's news may influence your approach to making new investments in data. For example, you know, will you shift your, your investment a bit to some of the other verticals that you mentioned like the towers? And then if not, how are you going to manage your commercial approach to data centers to mitigate any emerging risk that you might see from the DeepSeek News?

Yeah. Yeah. Hi, Rob. Thanks for that for that question. And I guess I would make two comments in that regard first. You know, we when we evaluate, any new opportunities, you know, it's always on a risk adjusted basis. And so, to the extent that, you know, we can buy towers at a better risk adjuster return than, than new investments in data centers and we'll do that and we always have done that and, and that will continue to be our playbook going forward.

You know, as it relates to, managing, our, you know, development activities with our existing platforms in data centers. You know, we look, we don't really build anything. You know, anything of any particular size on spec there, there's always nuances to what I just said there.

You know, we do need to buy land and we control the amount of land that we have in inventory at any one moment in time so that we're not overexposed to slow down in leasing activity. And obviously we try to mitigate that, by getting options on land and things like that.

And then, you know, the you know, to the extent, we think it makes sense to, to improve the land a little bit to, speed up the delivery for clients when they can effectively commission it. Again, we manage how much capital we ever have at risk in that regard.

So, you know, there is a lot of analysis that goes on with that, but suffice it to say, our overall thesis is, is building you know, new facilities, with contracts in hand and with certainty around you know, commercial applications and we don't really do things on spec with all those nuances that I mentioned there, Rob one of that.

Yeah, it is actually thank you and thanks again for addressing this issue right upfront in an open manner. So my next question is you had a comment in the unit holder letter about interest rates and investor sentiment impacting the unit price towards the end of last year. And at the same time, you have a very strong organic backlog. So it makes me wonder with that background, what your current view might be on unit price for purchase before making new investments in the current environment, particularly if maybe there's some uncertainty in some things like Deep Sea or the change in the US Presidential administration.

Yeah, sure. It's Dave here. Thanks Rob. I think where you're getting it and I'm happy to is around just our capital allocation approach and whether we see it more attractive to be buying units rather than deploying capital. And, and I think as you would have seen in our letter in her on this call, we feel pretty, pretty good about the investment environment. It's it's quite balanced.

We're excited about the pace of our asset sale program, but also believe that those proceeds, we can find really attractive investment opportunities to compound returns over long periods of time. So as we said, in the past, we're going to assess the relative risk adjusted returns on buying units back depending on our unit price and the investment pipeline we have in front of us at any given time. So today, I think we're, we're in a good position as you would have seen in our letter.

(Operator Instructions)

Frederic Bastien, Raymond James.

So one platform we haven't talked much about is utilities and it's a conspicuously absent from your recycling eFFOrts so far this year. So I'm sure it's simply a function of timing but hoping that you can provide a bit color here.

Hey, Fred. Yeah, I guess, you probably answered your own question there. You know, we, you know, for the most part, our larger utilities, you know, have significant growth ahead of them and so we're not looking to monetize them at this point in time. There, there is though, you know, a number of businesses that either we have, in that sector, which we have sold like Las Ramonas, which is more recent and then, I think we've telegraphed that we'd be looking to monetize a portion of our brazilian electricity transmission business in the coming year as well.

And so there, there always is and maybe it's not as meaningful as some of the other sectors and maybe, maybe we don't talk about them enough. You know, they've been great investments for us. Our returns on Los Ramos are over 20% our returns in us dollars for the brazilian transmission business will be well in the 20s and in local currencies, well in the 30s.

And so, you know, you're right to point out that we probably should mention those assets more and, and the success we have. So we are looking for new opportunities and utilities and we will be monetizing some of the existing assets as they mature.

Wondering also, maybe it hasn't been asked directly, but do you, is this New Us administration positive for your business?

So, without, you know, taking any, any views one way or another from a political perspective, look, I think, we view as positive any steps that, reduce, you know, repertory burden and encourage growth. And I think we've seen a lot of positive steps being taken in that regard. And I think, as an infrastructure owner, those can only be helpful to our business.

You know, we can't comment on all the other, you know, things that might go on tariffs or whatnot, that's, that's more complicated. I don't think tariffs, you know, will affect us in a direct way and negatively.

Obviously, it does have impact that we need to manage from a CapEx perspective. It might impact some of our clients, which could have a longer term impact, but obviously inflation, if it has a uptick on inflation, that's good for us as well. So, look, I'll kind of leave it at that, any reduction in repertory burden and an increase in growth is good for us. And at the moment that seems to be the direction that the new administration is taking.

Ryan Levine, Citi.

In terms of the recent announcement around Stargate in Abilene, Texas. Given your strategic position in that region. Can you speak to the impact to both data and data center development that it may have for, for Brookfield?

Sure. Obviously, it, it's it's all very new and and the, and the good news is, you know, we are in discussions with all the different stakeholders related to, to stargate on many different levels. So we're close to what those people are doing. And then I think, we'll have a role to play in any major developments in the US in that, in that regard. But you know, that that's kind of at the macro level on the micro level of, what it means to any of our existing investments today, Rob, I don't know, maybe you can address that, but yeah, sure.

I think the impact is, is limited for us in the Texas market. We have one large campus about 360 megawatts, it's fully leased and under construction and so it's going to be leased on a 15 year basis. So we don't think that that necessarily has implications to what we have today.

Obviously, there's lots of land development being being pursued across the country. And and again, I think from our perspective, we have targeted, the tier one data center markets and we're seeing great demand where again, we see a lot of scarcity of power. And you know, if we decide to look at other markets, I know we will be focused on ensuring we get the right contractual protection.

Thanks. And then in terms of the uncertainty surrounding DeepSeek and demand for infrastructure, I does that give you a pause around developing new assets? And you mentioned a large portion of your pipeline is tied to that opportunity. We are you expecting to see a slow down in that deal flow or, or, or pace of those transactions.

At a high level across all of our data center platforms, we're largely sold out from a development capacity perspective over the next three or four years. So we don't see a slow down in terms of our own build out. And I think I said a little too early in the call. We've obviously been very selective in terms of our land banking approach and we've taken a I call it like a latter approach where we're buying land at different stages of development that we think we will you know t to when that capacity will be required. But ultimately speaking, I mean, we don't have a ton of access land bank today and so we can throttle up and down how much land we want to buy and develop.

And so in the short term, we don't see any impacts to our business in long term. As I said in my remarks earlier, I think we're very bullish on bringing the cost of AI applications down. And I think that will just drive more demand for the product which will ultimately take, training or, or inferencing to actually be able to deliver to the end customer. And so we think this, there may be bumps along the way in the short term, but long term, we're bullish in terms of the compute requirement.

Yeah, and look, I would say to, to, as Rob mentioned, growth isn't going to be linear for, for data centers, but we expect, growth to remain robust. What we have is the leading developers in pretty much every market in the world in the US, we have compass, which is one of the best and we think if not the best developer data for in Europe, sent you down in South America and then we've got, smaller but growing businesses in Asia.

And so, to the extent that there's going to be, data, data center development, we are going to get our market share because the large technology companies are going to want to use the best developers and added on top of that is, our relationship with our Renewable Power group, which is helping source you know, new renewable sites in a market that's quite constrained.

And so, the Brookville Complex has obviously the best ingredients of, of any group, to play a big role in digitalization. So, I may get that advertisement out there but you know, nothing has really changed as far as our views and the opportunity ahead.

And then just last question, just to clarify in terms of the contractual protections that were just highlighted. Are there, do you feel comfortable that if demand for a load is material, less than what the industry is forecasting? You have legal protections to, to derisk the opportunity for investors and other stakeholders.

We do. Yeah, we do have. Take or pay. Contracts.

Yeah, the big thing is we don't have terms in our contract where people can cancel for convenience. That that is probably the biggest risk some developers might have is they might agree to some of those terms. We do not agree to those terms.

That concludes today's question and answer session. I'd like to turn the call back to Sam Pollock for closing remarks.

All right. Well, Liz, thank you very much for helping us with the call and we'd like to thank everyone who joined us this morning. We hope it's been useful for everyone, particularly on the DeepSeek conversation. And and we just, again, reiterate that we've had a great start to the year and I look forward to providing our first quarter results at the end of April. Goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.y