Brookfield Infrastructure Partners said that it will "own and operate one of the largest global hyperscale data center platforms" in the world once its purchase of Data4 and Compass closes.
The two deals will increase the company's overall data center capacity to more than 485MW, Brookfield's global data center group CEO Udhay Mathialagan said in an earnings call.
"Following the closing of both transactions... [there is] an additional 775 megawatts capacity already contracted and reserved that will be built out over the next several years," Mathialagan said. "Combined, we expect to have over 1.25 gigawatts of capacity over the next few years that is highly contracted to provide stable cash flow and is underpinned by major hyperscale customers."
Brookfield Infrastructure Partners CEO Sam Pollock added: "We plan on developing almost one gigawatt of capacity over the next three years, which we anticipate will increase last year's EBITDA by over 5x... Additionally, to further support our customer's growth ambitions, we have an existing land bank in prime markets that has the potential to increase our total capacity over two gigawatts."
Pollock said that the company will "create a self-funded structure monetizing operating and contracted data centers to fund capital backlog. These investments are expected to generate high to mid-teen returns, which could be even higher depending on the success of our capital recycling."
The rumored $5.5 billion Compass deal was made in partnership with the Ontario Teachers’ Pension Plan, so Brookfield does not own all of the data centers outright.
It did fully acquire Data4, with the acquisition now fully closed. "Since announcing the transaction, the business converted a 130MW memorandum of understanding with a leading hyperscale client into firm contracted capacity," Pollock said.
"This results in over 50 percent of our business plan growth profile of 400MW being successfully contracted. For these recent data center investments, we expect to initially earn single-digit going in yields that we expect will grow materially as we develop our highly visible and large-scale growth pipeline."
Pollock and Mathialagan both said that the acquisitions give the company a greater footprint in North America (Compass) and Data4 (Europe), with its previous acquisitions primarily focusing on the South American and Asia-Pacific regions. Brookfield Asset Management jointly owns data center ventures in India (BAM Digital Realty) and Latin America (Ascenty) with Digital Realty, and also owns DCI Data Centers in Australia/New Zealand. Brookfield Infrastructure Partners also owns US-based Evoque, which we profiled in the latest magazine.
They also said that there was an opportunity for synergies across acquired businesses, but noted that it would be less so with co-owned businesses.
Last week, rival Blackstone was revealed to be planning an $8bn investment in new data centers, as it prepares for a “once in a generation” AI boom.
"We're definitely noticing a bit of an uptick with hyperscalers in particular and others looking at applications like AI and seeking to secure supply," Mathialagan said. "So I think a lot of the focus will be just building out on the land banks we've got and perhaps some smart sort of extensions into new locations from each of the platform companies that serve some very natural geographies, which could be expanded into. So that probably will be the main focus for the next little while."
