BIP's Data Surge: 50% FFO Jump Fuels Growth Hopes

Date of Call: Jan 29, 2026

Guidance:

• Expect to return to a target of 10% or higher per unit growth in 2026 and beyond.
• Anticipate elevated pace of capital recycling to continue into 2026, with two transactions already secured.
• Expect inflation indexation in OECD markets to average 2-3% and in emerging markets around 4%.
• Forecast roughly $1.5B-$2B of backlog to be commissioned annually excluding the Intel facility.

Business Commentary:

FFO Growth and Distribution Increase:

• Brookfield Infrastructure Partners reported FFO of $2.6 billion for 2025, with a 10% increase compared to 2024 after normalizing for asset sales and foreign exchange.
• The growth in FFO was driven by operational performance and strength in the business, leading to a 6% quarterly distribution increase to $1.82 per unit.

Data Segment Performance:

• FFO from the data segment increased by over 50% to $502 million, attributed to new investments such as the U.S. bulk fiber network and organic growth from hyperscale data centers.
• The expansion of data center capacity and strong leasing activity supported the significant growth in this segment.

Capital Recycling and Liquidity:

• The company achieved record capital recycling of $3.1 billion in 2025, enhancing its liquidity position to $6 billion, with $3 billion at the corporate level.
• The elevated pace of capital recycling is expected to continue, with two secured transactions anticipated to generate attractive returns.

AI Infrastructure Investment Strategy:

• Brookfield's approach to AI infrastructure investing focuses on long-term contracts, investment-grade counterparties, and top-tier locations to mitigate technology risk.
• The strategy aims to capitalize on the substantial capital flowing into AI-related infrastructure while safeguarding capital through strict guardrails.

Transport and Midstream Segments:

• The transport segment reported FFO of $1.1 billion, with volumes and rates growing by 2% and 3%, respectively.
• The midstream segment saw a 7% year-over-year increase in FFO to $668 million, driven by higher volumes and activity levels in Canadian natural gas and U.S. refined products pipeline operations.

Sentiment Analysis:

Overall Tone: Positive

• The company reported a 17th consecutive year of distribution increases, exceeding capital recycling targets, and generating record FFO per unit. Management highlighted a 'record year of capital recycling', 'record liquidity', and 'record growth' in data center bookings. The outlook is described as 'highly constructive' with a 'multiyear runway of organic growth' and positioning to return to a 10%+ growth target.

Q&A:

• Question from Maurice Choy (RBC Capital Markets): Can you elaborate on how your contract approach aims to mitigate technology risk in data centers, and what risk is underappreciated by the market? Also, can you quantify the premium returns above the 12%-15% target range?
  Response: Returns are developed at 9%-10% yield to cost and monetized at 5.5%-6% cap rates, yielding equity returns in the high teens or 20s. Contracts (e.g., 15-year) mitigate technology risk by locking in tenant-specific infrastructure changes without cost to the landlord.

• Question from Devin Dodge (BMO Capital Markets): Can you provide color on the transaction where KKR acquired a stake in a data center portfolio from Compass, including asset count, timing, and proceeds?
  Response: Cannot disclose private transaction specifics, but mentioned JV arrangements with KKR and others totaling ~850 MW, retaining operational control and significant ownership to recycle capital and fund future growth.

• Question from Devin Dodge (BMO Capital Markets): What types of investments from the $10B AI infrastructure fund are suitable or not suitable for BIP?
  Response: Suitable investments align with BIP's flagship fund profile, targeting 12%+ returns in sectors like data centers, gas, and utilities, excluding renewables and excessively long development cycles.

• Question from Cherilyn Radbourne (TD Cowen): How do you think about sovereigns versus hyperscalers as data center counterparties, and what will the mix be?
  Response: Prefers both for diversification; sovereigns offer differentiated strategy but slower time-to-market, while hyperscalers are few and AI-exposed. Mix is too early to predict but aims for a broad base.

• Question from Cherilyn Radbourne (TD Cowen): What can we expect from inflation indexation across your geographies in 2026?
  Response: In OECD markets, inflation pass-through averages 2%-3%; in emerging markets (e.g., India, Brazil), it is around 4%, above historical averages but more manageable than in 2022.

• Question from Robert Hope (Scotiabank): Can you dive deeper into the data operations capital backlog increase in Q4 and the outlook?
  Response: Increase driven by data center leasing momentum (800 MW signed globally) and onboarding of bulk fiber backlog; backlog additions occur upon contract signing, with projects typically commencing over a 3-year period.

• Question from Robert Hope (Scotiabank): Can you update on timing, cash flow, and returns for the $3.9B Intel backlog?
  Response: One Intel fab is already producing wafers; the second fab is progressing well, with in-service expected in the back half of 2026.

• Question from Robert Catellier (CIBC Capital Markets): What is the expected rate of commissioning capital from the backlog in 2026 relative to 2025's $1.5B?
  Response: Excluding the Intel facility, annual commissioning is expected to be in the range of $1.5B-$2B, with roughly $1.75B from the $5.3B backlog over a typical 3-year cycle.

• Question from Robert Catellier (CIBC Capital Markets): How does the Alberta energy MOU impact your midstream investment management and potential asset sales?
  Response: Too early to assess material impact; businesses operate in a strong growth environment. Monetization plans exist, but market conditions would accelerate sales; the growth push makes assets more attractive long-term.

• Question from Frederic Bastien (Raymond James): Can you provide an update on the 7 AI factory partnerships totaling 6 GW of compute capacity and potential new announcements?
  Response: Discussions are ongoing globally (Europe, North America, Middle East, Oceania) with at least 5 partnerships; hopeful for 1-2 to progress in 2026, though they are smaller than hyperscaler mega-sites.

• Question from Frederic Bastien (Raymond James): Are you comfortable seeing through the Bloom Energy agreement to its 1 GW target for behind-the-meter power generation?
  Response: Optimistic that demand and developments will allow reaching or exceeding the 1 GW target given strong current momentum for Bloom.

Contradiction Point 1

Data Center Development Yield Targets

Conflicting statements on targeted returns for new data center developments, which are critical for investment decisions and financial planning.

How does your contract approach mitigate technology risk, what market risks are underappreciated, and how do returns compare to the 12% to 15% target range? - Maurice Choy (RBC Capital Markets)

2025Q4: Returns from developing new data centers are targeted at a yield to cost of **9%–10%**, with monetization at cap rates of **5.5%–6%**, yielding a development profit of **300–400 basis points**. - [Samuel J. B. Pollock](CEO)

What is the investment thesis for Centersquare post-merger, and are there plans to scale further and pursue additional opportunities? - Devin Dodge (BMO Capital Markets)

2025Q3: The capital deployment opportunity is in the order of **$300-400 million** over the next couple of years, with potential for more. - [Samuel J. B. Pollock](CEO)

Contradiction Point 2

Capital Recycling and Exit Strategy for Data Centers

Inconsistent messaging on the primary strategy for monetizing stabilized data center portfolios, affecting capital deployment strategy and investor expectations.

Can you provide details on KKR's acquisition of a data center portfolio from Compass and the suitability of the $10 billion AI infrastructure fund's investments for BIP? - Devin Dodge (BMO Capital Markets)

2025Q4: Details of the specific Compass transaction are not disclosed. Brookfield has entered into JV arrangements with institutional investors like KKR, totaling **~850 MW**, primarily in North America and Europe. - [Samuel J. B. Pollock](CEO)

What was the market interest in the stabilized data center portfolio this quarter, and what criteria determine the size of portfolios brought to market? - Patrick Sullivan (TD Cowen)

2025Q3: The sale of ~200 MW of Data4's stabilized European portfolio was the first of several planned capital recycling programs... Brookfield plans to replicate this approach in other markets, likely selling down equity programmatically as facilities are completed. - [David Krant](CFO)

Contradiction Point 3

Intel JV Returns Timing

Conflicting timelines for when the Intel JV will generate returns, impacting financial projections and investor confidence in the project's viability.

What drove the Q4 increase in data operations capital backlog and its outlook, and what is the update on timing, cash flow, and returns for the $3.9 billion Intel backlog? - Robert Hope (Scotiabank)

2025Q4: For the Intel facility, one fab is already producing wafers, and the second fab is making good progress toward completion. The JV's operational and construction activities are progressing well. - [Benjamin Vaughan](COO)

What protections does Brookfield have in the Intel JV, and when is it expected to generate returns? What is the potential impact of Class 1 railroad mergers (e.g., NS and UP) on Genesee & Wyoming? - Devin Dodge (BMO Capital Markets)

2025Q2: Returns are expected to appear in results as early as the end of 2026 or early 2027. - [Samuel J. B. Pollock](CEO)

Contradiction Point 4

U.S. Investment Attractiveness

Shift in emphasis from the U.S. being uniquely attractive to a broader, more competitive landscape, influencing geographic investment priorities and market strategy.

How does your contract approach mitigate technology risk, what market risks are underappreciated, and how do current returns compare to the 12% to 15% target range? - Maurice Choy (RBC Capital Markets)

2025Q4: The contract approach mitigates technology risk by designing data centers for long-term use... This keeps Brookfield out of tenants' technology changes... - [Udhay Mathialagan](Managing Director of Infrastructure)

Why is the U.S. the most attractive investment geography now, and has this view evolved over time? Also, why have recent asset sales involved partial stake sell-downs instead of full exits? - Maurice Choy (RBC Capital Markets)

2025Q2: The U.S. is attractive due to its central role in the AI infrastructure boom, driving demand for power and midstream investments. Other countries are also investing in AI, particularly in Europe. - [Samuel J. B. Pollock](CEO)

Contradiction Point 5

Backlog Commissioning Outlook

Inconsistent guidance on the expected rate of capital commissioning from the backlog, affecting expectations for future cash flows and capital deployment.

What is the projected capital commissioning rate for backlog projects in 2026, and how does the Alberta MOU affect midstream investments in Canada? - Robert Catellier (CIBC Capital Markets)

2025Q4: Excluding the Intel component (~$3.9 billion), the remaining $5.3 billion backlog is expected to yield ~$1.5–2 billion in annual commissioning over a 3-year outlook... - [David Krant](CFO)

Is the investment pipeline comparable to H1, suggesting another $1.3 billion in H2 investments, and what is the pro forma liquidity position after new investments and sales proceeds? - Frederic Bastien (Raymond James)

2025Q2: The deal pipeline remains full, though transaction flow may slightly decrease in scale. Several transactions are expected to occur in the next one to two quarters. - [Samuel J. B. Pollock](CEO)