Brookfield Infrastructure Partners LP

Good day and thank you for standing by. Welcome to the Brookfield Infrastructure Partners fourth quarter 2024 results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to David Krantz, 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 Krantz, and I'm the Chief Financial Officer of Brookfield Infrastructure. I'm joined today by our Chief Executive Officer, Sam Pawlik. And joining us for the Q&A portion of the call is our Chief Operating Officer, Ben Vaughn. 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 an outlook for the business. At this time, I would like to remind you that in our remarks today, we may make forward-looking statements. These statements are subject to known and unknown risks, 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 20X, 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 markets. I'm pleased to report that we ended the year with funds from operations or FFO of $3.12 per unit, representing a 6% increase compared to 2023. When normalizing for the impact of foreign exchange, FFO per unit was up 10% versus the prior year. This would be in line with our target and better reflects the current operational performance and strength of our business. Considering our conservative payout ratio ended the year at 67% and a favorable outlook for 2025, which Sam will speak to soon, the Board of Directors have approved a quarterly distribution increase of 6% to $1.72 per unit or share on an annualized basis. This marks the 16th consecutive year of distribution increases within or above our target range. I'll now go through our annual results and discuss our business segments in more detail. FFO in 2024 totaled $2.5 billion, an increase of 8% compared to 2023. Organic growth for the year was 7%, driven by elevated levels of inflation in the countries where we operate, stronger volumes across our critical infrastructure networks, and the commissioning of over $1 billion of new capital projects from our backlog. In addition, we deployed over $2 billion into new investments during the second half of 2023 and completed three accretive token acquisitions this year, which are all fully contributing to earnings. Taking a closer look at our results by segment, starting with utilities, we generated FFO of $760 million, which is up 7% year-over-year on a comparable basis. after taking into account asset sales and currency in comparison to $879 million in the prior year. The reduction was primarily attributable to capital recycling activity, which included the sale of our Australian utility business in 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 remaining businesses, driven by higher volumes and average tariff increases of 7% across our rail networks and 6% across our road portfolio. Our midstream segment generated FFO of $625 million, which on a comparable basis had grown 11% versus the prior year. The growth reflects higher volume increases across our midstream assets due to robust customer activity levels, particularly at our North American gas storage business. 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. Their increase is attributable to strong organic growth and the contribution of several new investments completed over the last 12 months, including three data center platforms and a power portfolio in India. Taking a closer look at our data storage numbers, we've invested over $9 billion of capital across three primary digital infrastructure verticals, namely data centers, fiber networks, and telecom towers. Data centers are one of the most significant areas of investment, with over $3.6 billion of capital invested in the last six years alone. Putting aside our investment in a U.S. 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 costs on new developments. We anticipate being able to enhance returns in the years ahead as we execute our strategy to sell fully contracted sites as they are built. This will create liquidity to fund future growth as well as crystallized significant developer profits. Before turning it over to Sam, I'd like to briefly touch on the macroeconomic backdrop and the strong positioning of our base business. 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've been proactive in managing our capital structures and mitigating risks relating to interest rates at both the corporate and portfolio company levels. We completed over $9 billion of non-recourse asset level financings during the past year. And today, our weighted average debt maturity is 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, 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, de-risk and contracted assets, which will generate meaningful liquidity at attractive returns. At a North American hyperscale data center platform, we secured the sale of a non-core site to a technology company. The sale was transacted at an attractive capitalization rate and will generate gross proceeds of over 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 of 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 to $6 billion in asset sale proceeds that we've got it 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've seen this activity firsthand in Brookville's own super core infrastructure fund, which has been experiencing an influx of capital as fundraising increased 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 a key driver of our current deal flow. with the data sector accounting for over 40% of our anticipated capital deployment. We expect growth in this sector to persist, outpacing all other areas of our business and positioning it to become our largest sector within 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 actively 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 DeepSeq. 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'd just pose a question to him that's probably on a lot of people's minds. And Rob, I guess the simple question is, you know, what happened this week? What is the news regarding DeepSeek and what they did? And how does that impact our business going forward?

Great. Yep. Thank you, Sam. And good morning, everyone. So as Sam said earlier this week, DeepSeq, 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 and of 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 DeepSeq was able to drive significant optimization and train its model for only $6 million in less than two months while using approximately 2,000 older generation NVIDIA chips. 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 forward and reach artificial general intelligence and ultimately beyond. Faced with that uncertainty, obviously the stock market reacted quite quickly. and effectively erased hundreds of billions of dollars of market cap value from companies in a number of different sectors that benefited from the enthusiasm related to AI. 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 in a number of other technologies, is that we'd always see a level of continuous improvement whether it's at the server or hardware level or software, 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 lead more compute to actually have those robots run. So the DeepSeq 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 innings of this technology cycle. So over the long term, I would say our positive outlook hasn't changed for data center demand growth, and we're actually very excited by the prospect of having a more cost-effective AI tool, which should accelerate innovation, increase overall demand for AI 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 Leesa across our existing land bank. Our platform benefits from significant contracted growth, which is underpinned by some of the most credit worthy counter parties in the world. on their long-term availability-based contractual frameworks. And the next point I think is actually very important. We took a very purposeful approach, and today over 90% of our development are centered on building capacity in tier 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 center 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 Sam.

Okay. Well, thanks, Rob. And hopefully 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 as a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced to withdraw your question please press star 1 1 again please stand by while we compile the Q&A roster our first question comes from a line of Sherilyn Radborn from

Thanks very much and good morning. Maybe sticking with the data theme for a second, and thank you for those comments on DeepSeq. We've been hearing anecdotally that development premiums for hyperscale centers have started to compress to some degree, which I guess is not totally surprising given the level of activity in this sector. 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 as David alluded to in some of his remarks, Sherilyn, at the moment we've been quite successful in holding our yield to cost on our projects. There's two elements to it. One is what we can contract at. Over the last year and a bit, we've seen rates, in fact, increase. It's been a good market from that perspective. The second component is the ability to control costs. I'd say for the most part, obviously there's always in a large portfolio, there'll be some they don't go entirely according to plan, but I'd say on our large projects, you know, 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, you know, 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 we're not losing our premiums. That's not to say down the road the competition won't tighten things a little bit, but today that's not the case.

Anything to add, Rob? No, I would agree. I think it goes back to our Tier 1 focus where I think a lot of the power bottlenecks have occurred, and so there's a premium for that scarcity.

Sherilyn, you have two questions. Do you have another one?

Yes, much more sort of macro. With respect to a stronger U.S. 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.

I guess as far as an initial or direct impact on where we would invest, I wouldn't say the FX plays directly, but it is a sign of capital flows. Obviously, I think a lot of strength in the US dollar is the result of just the 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 than historically we may have just because of that dynamic so it isn't so much an FX thing but it you know the things are obviously all inter interrelated and as it relates to sales 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.

That's all from me. Thank you.

Thank you.

Our next question comes from Devin Dodge with BMO Capital Markets.

Yeah, thanks. Good morning. I wanted to start with a question on Triton. I'm just wondering if you could provide a bit more color on the sale of the minority interest in 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 this includes. Is this like a perpetual investment or does 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?

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

Yeah, hey, good morning, Gavin. Just with respect to the transaction itself, I guess my comment on this is what we have done is we have taken a pool of leased-up containers And we've sold out a minority interest in that pool itself, which has standalone financing. And the strategy behind all of this is that, you know, Triton is a business that has tremendous unit economics on the deployment of capital. But, you know, the real magic comes into leasing these out, putting them on long-term, you know, leases for people. And I think what we've found is that there is a pool of buyers that have interest in buying into a yield-oriented vehicle that runs off over time, over the life of the containers, which, as you might know, is on average about 15 years. And then in terms of your question around valuation, I guess all I'm probably at liberty to say here is that given the nature of what we sold, which is a de-risked, long-term cash-flowing portfolio, this is done at a lower cost of capital than we would have in the market.

And David makes up about 10% of the portfolio, would you say?

Yeah, on a net-to-the-business basis, it's about 6%.

Okay, thanks, Fred. Good call there. And this second question, just maybe sticking with capital recycling, again, you guys were talking about the sale of one non-core data center being sold, but can you just provide a 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, hi, Devin. Yeah, I'd expect there will be a lot more news in the next couple of quarters regarding our capital recycling program for the data centers. It is an ongoing exercise as new facilities come on stream. You know, we do have a program of setting up stabilized pools 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 our shareholders in the coming quarters on our success in that regard.

Okay, excellent. Thank you. I'll turn it over.

Okay, thanks, Evan.

Our next question comes from Maurice Choi with RBC Capital Markets.

Thank you, and good morning. 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 your largest sector, being about three or four times larger than data. You've already mentioned that you've got good growth for new capital, but there's also obviously a self-funding or recycling program for data. So should we think about transport as 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?

Hi, Maurice.

That's a good question, I guess. There's lots of moving parts there, though, that I think maybe might be adding to some of the confusion. I think the first thing is in the data sector, it's not all data centers. On the data center component of it, we are probably managing the total capital in that component, but it will still grow. Even though we're recycling, I still expect it to grow. But we're investing in lots of other areas of the data sector complex, whether it be towers, fiber optic systems, and those will continue to grow and don't have the same capital recycling profile that the data centers do. In relation to the divestiture of our There's no real 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 values for them. There are probably a few transport assets that we'd held for a long period of time that are probably coming up for sale, but that's not indicative of any view that we have regarding transportation or our ability and desire to invest in new transportation assets. We will always have a diversified pool of investments across all our sectors, and there will be periods of time when we'll deploy more in one sector than another. I think all we want to do in our comments earlier was just to highlight that today our deal flow is more centered around the digitalization theme, and thus those sectors that are impacted by that theme, which is obviously the data sector as well as the midstream sector, is probably where you'll see most of the capital in the near term go. Hopefully that clarifies our comments.

Yep, absolutely. And just to finish off, I couldn't help but to notice a relatively favorable update at the midstream segment. North River having new GMP expansions under take-or-pay. You've got additional pipeline connections set 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 NEBC connector.

Great. Maurice, we're pleased to talk about that. In fact, I'm going to pass it over to Ben Vaughan to talk a bit about our enthusiasm for what's going on in that sector.

Maurice, thanks for the question. You mentioned the NEBC connector. That's one great opportunity that we have in the Western Canadian region with our assets, but it's only one of many. And really what we're seeing across the board in Western Canada is our fleet of assets being and becoming fully utilized, and then the market calling on us to expand our capacity And so we have about a billion dollars of backlog of projects today. We see another potential for two to three 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-sized given the size of the overall assets and relatively low risk in terms of their execution. So we just have a lot of additional projects to provide our clients with access to our either processing systems or our transportation networks. And so in general, the connector is one of many projects and we see this as part of our midstream growth wedge for the coming years as being pretty strong.

Maybe just to add to that, Ben, I guess we'd say that they're pretty much all brownfield expansions, connectors to pipelines or expanding slants, and the build multiples for these expansions are very, very attractive, and that's probably what gets us really excited, particularly 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.

That's great. Thank you very much for the commentary.

Our next question comes from Robert Hope with Scotiabank.

Good morning, everyone. I want to circle back on the data center commentary. You speak about the data sector accounting for about 40% of the anticipated capital deployment Just wanted to have some clarification there. Is that 40% of the expected deal flow that you expect to see over the next, we'll say, coming years? 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, 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 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, you know, we have highlighted previous calls that our backlog is at a record level, you know, 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 Sam alluded to, not just data centers, but also Our partnership on the foundry side, as well as the build-out of fiber and built-to-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 increasingly meaningful part of our business.

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

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

All right, thank you.

Our next question comes from Robert Cotillier with CIBC Capital Markets.

Hey, good morning, everyone. I just want to go back to the data comments again. First of all, thank you for addressing the deep seek news right at the front. But I take it from your comments that, you know, you're still rather bullish on the outlook 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, will you shift 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 deep-seek news?

Hi, Rob. Thanks for that question. I guess I would make two comments in that regard. First, when we evaluate any new opportunities, it's always on a risk-adjusted basis. To the extent that we can buy towers at a better risk-adjusted return than new investments into data centers, then we'll do that. And we always have done that, and that will continue to be our playbook going forward. As it relates to managing our development activities with our existing platforms in data centers, we don't really build anything of any particular size on spec. There's always nuances to what I just said there. We do need to buy land and we control the amount of land that we have in inventory at any one moment in time so that we're not overexposed to slowdowns in leasing activity. Obviously, we try to mitigate that by getting options on land and things like that. To the extent we think it makes sense to improve the land a little bit to speed up the delivery for clients when they can effectively commission it. Again, we manage how much capital we ever have at risk in that regard. There is a lot of analysis that goes on with that. Suffice it to say, you know, our overall thesis is building, you know, new facilities, you know, 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, anything you want to add to that? No? Okay.

Yeah, that's great. Yeah, it is, actually. Thank you, and thanks again for addressing this issue right up front 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 repurchases before making new investments in the current environment, particularly if Maybe there's some uncertainty in some things like deep seek or the change in U.S. presidential administration.

Yeah, sure. It's Dave here. Thanks, Rob. I think where you're getting at, 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 I think, as you would have seen in our letter and heard on this call, we feel pretty Pretty good about the investment environment. It's quite balanced. We're excited about the pace of our asset sale program, but also believe that those proceeds, we can find really attractive investment opportunities to compound returns over long periods of time. So as we've said in the past, we're going to assess the relative risk adjusted returns on buying units back, depending on our unit price and the investment pipeline we have in front of us at any given time. So today, I think we're in a good position, as you would have seen in our letter.

okay thanks everyone thank you as a reminder if you'd like to ask a question at this time please press star 1 1 on your touch-tone phone our next question comes from Frederick bastion with Raymond James good morning guys so what 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 of color here.

Hey, Fred.

I guess you probably answered your own question there. For the most part, our larger utilities have significant growth ahead of them. And so we're not looking to monetize them at this point in time. There is, though, a number of businesses that either we have in that sector, which we have sold, like Las Ramones, which is more recent. And then I think we've telegraphed that we'll be looking to monetize a portion of our Brazilian electricity transmission business in the coming year as well. And so there always is, and maybe it's not as meaningful as some of the other sectors, and maybe we don't talk about them enough. You know, they've been great investments for us. Our returns on Los Ramones are over 20%. Our returns in U.S. dollars for the Brazilian transmission business will be well in the 20s and in local currencies well in the 30s. You're right to point out that we probably should mention those assets more and the success we have. We are looking for new opportunities in utilities and we will be monetizing some of the existing assets as they mature.

Thanks. That's helpful. I'm wondering also, maybe it hasn't been asked directly, but is this new U.S. administration positive for your business?

Without taking any views one way or another from a political perspective, look, I think We view as positive any steps that reduce regulatory burden and encourage growth. 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. We can't comment on all the other things Things that might go on, tariffs or whatnot, that's more complicated. I don't think tariffs will affect us in a direct way negatively. Obviously, it does have impacts that we need to manage from a CapEx perspective. It might impact some of our clients, which could have a longer-term impact. Obviously, inflation, if it has an uptick on inflation, that's good for us as well. look I'll kind of leave it at that you know any reduction in regulatory burden and increase in growth is good for us and at the moment that seems to be the direction that the new administration is taking that's very good color thanks so much our next question comes from Ryan Levine with city hi everybody

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

Sure.

Obviously, it's all very new, and the good news is, you know, you know, we are in discussions with all the different stakeholders related to Stargate on many different levels. So we're close to what those people are doing, and I think, you know, we'll have a role to play in any major developments in the U.S. in that regard. But, you know, that's kind of at the macro level. On the micro level of, you know, 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 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 what we have today. Obviously, there's lots of land development being pursued across the country, and again, I think from our perspective, we have targeted the Tier 1 data center markets, and we're seeing great demand, where again, we see a lot of scarcity of power. And if we decide to look at other markets, we will be focused on ensuring we get the right contractual protections.

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

So 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 slowdown in terms of our own build-out. And then I think as Sam alluded to earlier in the call, we've obviously been very selective in terms of our land banking approach, and we've taken a call like a laddered approach where We're buying land at different stages of development that we think will tie to when that capacity will be required. But ultimately speaking, I mean, we don't have a ton of excess land bank today. And so we can throttle up and down how much land we want to buy and develop. And so in the short term, we don't see any impacts to our business in the long term. As I said in my remarks earlier, I think we're very bullish on bringing the cost of AI applications down, and I think that'll just drive more demand for the product, which will ultimately take training or inferencing to actually be able to deliver to the end customer. And so we think there may be bumps along the way in the short to medium term, but long term, we're bullish in terms of the compute requirement.

Yeah, and look, I would say, as Rob mentioned, growth isn't going to be linear for data centers, but we expect growth to remain robust. What we have is the leading developers in pretty much every market in the world. In the U.S., we have Compass, which is one of the best, and we think if not the best developer. Datafor in Europe, Ascenti 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 you know, 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, you know, 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, you know, the Brookfield complex has obviously the best ingredients of any group, you know, to play a big role in digitalization. So, you know, I'm going to get that advertisement out there, but, you know, nothing has really changed as far as our views and the opportunity ahead.

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

We do. Yeah. We do have just 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, the biggest risk some, uh, developers might have is they might agree to some of those terms. We do not agree to those terms.

Thank you.

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 deep seek conversation. And we just, you know, again, reiterate that we've had a great start to the year and look forward to providing our first quarter results at the end of April. Goodbye.

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