Brookfield's Q3 2025: Contradictions Emerge on Data Center Strategy, U.S. Investment Focus, and Market Approach

Guidance:

• FFO per unit expected to inflect higher.
• Deploy up to $500M/year into AI-related infrastructure (AI factories and behind-the-meter power).
• Each new investment this year expected to deliver returns above the 12%–15% target range, with potential upside >20%.
• New Zealand gas transaction expected to close Q2 2026; South Korean industrial gas deal expected to close later this quarter.
• Capital recycling: >$3B realized YTD and targeting a further ~$3B over the next 12–18 months.
• Strong liquidity: $5.5B on hand; <1% of nonrecourse debt maturing in next 12 months; weighted average maturity ~7 years.

Business Commentary:

• Strong Financial Performance and FFO Growth:
• Brookfield Infrastructure Partners reported Q3 2025 funds from operations (FFO) of $654 million or $0.83 per unit, marking a 9% increase from the previous year.

• The growth was primarily driven by strong organic growth and strategic initiatives, despite FFO contributions forgone following record asset sales.

  

• Data Segment Growth and Strategic Acquisitions:

• FFO from the Data segment was $138 million, representing over 60% year-on-year growth, primarily due to a full quarter contribution from a tuck-in acquisition in India and strong organic growth in data storage businesses.

• This growth was supported by the commissioning of 80 megawatts of capacity at hyperscale data centers and new billings initiated at U.S. retail colocation data center operations.

• Capital Deployment and Investment Activity:

• The company met its deployment objective for the year, securing 6 new investments totaling over $1.5 billion, with strategic acquisitions in New Zealand, South Korea, and AI-related projects.

• The ongoing capital recycling program has generated over $3 billion in proceeds for the year, with a significant asset sale of their North American gas storage platform through an IPO.

• Data Infrastructure Opportunities and AI Expansion:

• The company highlighted an emerging growth vertical in AI infrastructure, planning to deploy up to $500 million annually into AI-related infrastructure, with AI factories and behind-the-meter power solutions being key areas of focus.

• This expansion is driven by long-term megatrends such as digitalization, deglobalization, and decarbonization, as well as a macroeconomic backdrop that is favorable for growth.

• Balance Sheet Strength and Financing Activity:

• Brookfield Infrastructure maintained a strong balance sheet with liquidity totaling $5.5 billion at the end of Q3, including $2.5 billion at the corporate level and over $1.4 billion in cash across operating businesses.
• This was supported by proactive refinancing, with less than 1% of nonrecourse debt maturing over the next 12 months, and a well-laddered maturity profile with an average maturity of approximately 7 years.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management: "Brookfield Infrastructure had another solid quarter..." FFO $654M, up 9% YOY. CEO: "Each of our new investments this year is expected to deliver returns above our 12% to 15% target range" and "We expect to deploy up to $500 million annually into AI-related infrastructure." Strong liquidity and limited near-term maturities cited.

Q&A:

• Question from Maurice Choy (RBC Capital Markets): If I could just start off with the capital deployment opportunities, it is clear that data infrastructure and energy had been quite thematic of late, and that's consistent with your Brookfield Day messaging. Just your thoughts on the rising competition for these types of assets. And if you could break it down, whether that be types of subsectors within a new vertical or even geographically, what does that mean to your ability to source these opportunities?
  Response: BIP sees more competition but retains a sourcing advantage via its global franchise and scale of capital; will avoid cost-of-capital bidding wars and target geographies/subsectors where long-term, trusted partners are sought.

• Question from Maurice Choy (RBC Capital Markets): That's great color. If I could just finish off with a question about the LP unit repurchases and the establishment of the ATM program for the BIPC shares. I wanted to get your view about the timing of any action, and also, what does success for both these 2 actions and programs look like in your view? How do you measure that? Over what time period would you measure that? And conversely, what would be an unsuccessful outcome?
  Response: Program is under consideration and requires filings; objective is to increase BIPC liquidity while avoiding dilution by pairing ATM issuance with an NCIB given they don't need incremental capital due to strong recycling.

• Question from Maurice Choy (RBC Capital Markets): And maybe just a quick follow-up. And maybe this is also somewhat related to the float of the BIPC shares. Is the secondary target also to perhaps tighten up the spread between the 2 securities?
  Response: Management called that speculative and reiterated the primary objective is increasing liquidity as previously described.

• Question from Devin Dodge (BMO Capital Markets): I wanted to start with Rockpoint. With the IPO now obviously completed, should we expect it to pursue more exits via the public markets going forward, either for the midstream assets or across the broader portfolio? Or was Rockpoint more of a one-off?
  Response: Public markets/IPOs are a monetization tool in the toolbox; Brookfield will pursue them when market conditions allow value-maximizing execution.

• Question from Devin Dodge (BMO Capital Markets): Okay. Second question, I wanted to ask about Centersquare. Look, lots of progress after combining Evoque and Cyxtera, and there were some more sites added more recently. Just wondering what's the investment thesis from here. Is this a platform that you're going to continue to add scale? Is there more proven opportunities? Or has a lot of the heavy lifting already been done?
  Response: Platform is early in its expansion with substantial under‑roof capacity; management expects meaningful organic growth and ~$300–400M of CapEx over the next couple years to drive further EBITDA expansion.

• Question from Patrick Sullivan (TD Cowen): Can you just talk about the level of market interest you saw in the stabilized data center portfolio that you monetized during the quarter? I guess, how are you making decisions on the size of the portfolios you're bringing to market right now?
  Response: Data4 was the first of multiple recycling programs; they targeted ~200MW of operating/near‑operating sites (~$1.4B equity) as an appropriate market-sized offering and will replicate programmatically in other regions.

• Question from Patrick Sullivan (TD Cowen): Okay. Great. And then, I guess more on data center stuff. So, like in a recent Brookfield podcast on the Data4 deal, you discussed that Europe has one of the largest infrastructure gaps relative to the other regions and essentially no sovereign compute. And you've made some announcements related to these sovereign compute opportunities. But can you just talk about some of the differences between that sovereign compute opportunity set versus the more hyperscale AI lab-driven opportunity set that we see in the United States? Is there anything there to contrast and compare between the 2?
  Response: Sovereign compute is a distinct, government-driven niche requiring bilateral, often slower transactions for smaller dedicated facilities; it complements US hyperscale AI work rather than replacing it.

• Question from Frederic Bastien (Raymond James): Appreciate it. Guys, are you able to quantify the organic growth rates your various data businesses are enjoying? And how would these be tracking versus your underwriting assumptions?
  Response: Towers/transmission are slightly ahead of underwriting and predictable; hyperscale platforms are seeing dramatic organic growth (175MW commissioned last year) with a shadow backlog up to ~1GW not originally underwritten.

• Question from Frederic Bastien (Raymond James): That's great color. Just building on that, you flagged some promising AI factory opportunities shaping up for BIP during your Investor Day. And I was wondering if these are along the lines of the partnership you signed with Bloom Energy to install BtM solutions? Or do they vary depending on the partnership you're pursuing?
  Response: AI opportunities vary: some will mirror the Bloom Energy BtM financing arrangements, but the majority are expected to be AI factory builds with different commercial structures.

Contradiction Point 1

Data Center Growth Strategy

It involves differing strategies and expectations for the growth of the data center business, which is a key focus area for the company.

Can you quantify your data businesses’ organic growth rates and how they compare to underwriting assumptions? - Frederic Bastien (Raymond James)

2025Q3: On the towers and transmission side, execution is predictable and ahead of underwriting. Data centers have a shadow backlog up to a gigawatt globally, with significant growth expected. Commissioning of 175 megawatts in the last year demonstrates strong execution. - David Krant(CFO)

How will data become the largest contributor to cash flow in five years? - Robert Hope (Scotiabank)

2024Q4: It's a combination of new investments and divestitures. We expect organic growth and acquisitions to contribute to data's growth. - Samuel J. B. Pollock(CEO)

Contradiction Point 2

U.S. Investment Focus

It highlights a change in the company's strategic focus on the U.S. as the most attractive investment geography.

How does rising competition for data and energy assets impact your ability to source opportunities? - Maurice Choy (RBC Capital Markets)

2025Q3: The U.S. is attractive due to significant AI infrastructure deployment, impacting power transmission and midstream investments. Other countries are also focusing on AI, which will drive future capital deployment. There's interest in AI factories globally. - Samuel J. B. Pollock(CEO)

Why is the U.S. currently the most attractive investment geography, and has this view expanded recently? - Maurice Choy (RBC Capital Markets)

2025Q2: The U.S. is attractive due to significant AI infrastructure deployment, impacting power transmission and midstream investments. Other countries are also focusing on AI, which will drive future capital deployment. There's interest in AI factories globally. - Samuel J. B. Pollock(CEO)

Contradiction Point 3

Data Center Portfolio Sale Approach

It involves the approach and market interest in selling the stabilized data center portfolio, which impacts the company's financial strategy.

How strong was market interest in the stabilized data center portfolio sold this quarter? - Patrick Sullivan (TD Cowen)

2025Q3: The data center portfolio was the first of several programs expected in the coming years. The size of the program, over $1.4 billion, was targeted at financial investors and partners. There is significant demand for this type of return profile in the market. - David Krant(CFO)

Are current investment opportunities comparable to deal velocity? - Frederic Bastien (Raymond James)

2025Q2: We've now executed over 30 transactions since the start of the year and have another half-dozen that are in the final stages of negotiation. We have a couple of dozen more that are in the early stages of negotiation. - Samuel J. B. Pollock(CEO)

Contradiction Point 4

Data Center Demand and Leasing Trends

It highlights differing perspectives on the demand and leasing trends in the data center sector, which could impact investment decisions and market expectations.

Will Rockpoint consider more public market exits for midstream assets? - Devin Dodge (BMO Capital Markets)

2025Q3: Leasing demand for data centers remains consistent, with strong bookings in retail colocation and a significant development pipeline. There's been a pullback by one hyperscaler, but overall, the trend towards new capacity continues. - Sam Pollock(CEO)

Have you observed any meaningful changes in demand for your data center platforms in 2025, either in your operating business or development pipelines? - Sam Pollock

2025Q1: Commissioning of 175 megawatts in the last year demonstrates strong execution. We are building data center capacity at a pace -- which we believe is sustainable -- to meet that increasing demand. - David Krant(CFO)

Contradiction Point 5

Involvement in Market Opportunities

It involves inconsistencies in the company's stated approach to investing in market opportunities, particularly during times of market volatility.

Did you capitalize on the fire sales in the market earlier this month from Liberation Day, as you did during the COVID market panic? - Frederic Bastien (Raymond James)

2025Q3: We have not made significant investments in the market recently. We do not comment on our market activities. - Sam Pollock(CEO)

Will the interest rate environment in 2025 impact the leverage ratio? - Robert Hope (Scotiabank)

2025Q1: We were very opportunistic in the first half and then, as we got into the second half, we probably were more conservative with the concerns about market liquidity. But there was still opportunities, and certainly, I think the team was focused on those and executing on those. - Sam Pollock(CEO)