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Brookfield to develop close to 1GW of data centre capacity in next three years

Written by Wed 9 Aug 2023

Image of Compass Data Centre in Pheonix, Arizona

Brookfield Infrastructure Partners said it will plan to develop close to 1GW of data centre capacity over the next three years. After closing its purchase of Data4 and Compass, Brookfield expects to ‘own and operate one of the largest global hyperscale data centre platforms’ in the world.

Acquiring Data4 and Compass will increase Brookfield’s capacity to more than 485MW, according to Udhay Mathialagan, Brookfield’s Global Data Centre Group CEO.

“Following the closing of both transactions… an additional 775MW capacity [is] already contracted and reserved that will be built out over the next several years,”said Mathialagan during an earnings call.

Mathialagan stated his strategy for the foreseeable future, noticing the uptake in hyperscalers pursuing AI applications and a secure supply.

“I think a lot of the focus will be just building out on the land banks we have 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,” said Mathialagan.

By developing almost 1GW of capacity over the next three years, Brookfield expected to increase last year’s EBITDA by more than five times.

Sam Pollock, Brookfield Infrastructure Partners CEO, said the company will create a ‘self-funded structure’ by monetising operating and contracted data centres to ‘fund capital backlog’. These investments are expected to produce high to mid-teen returns or higher ‘depending on the success’ of Brookfield’s capital recycling.

Brookfield acquisitions could grow data centre capacity to 2GW

The rumored £4.3 billion ($5.5 billion) Compass deal is in partnership with the Ontario Teachers’ Pension Plan, meaning that Brookfield does not own all of the data centres outright.

Brookfield has fully acquired Data4, which has led to the conversion of a a 130MW memorandum of understanding with a leading hyperscale client into firm contracted capacity.

“This results in over 50% of our business plan growth profile of 400MW being successfully contracted,” said Pollock.

Brookfield expects to initially earn single-digit going in yields that will grow materially as the company develops its highly visible and large-scale growth pipeline.

The acquisitions of Data4 and Compass will give Brookfield a greater footprint in Europe and North America respectively. Brookfield Asset Management also jointly owns data centre ventures in India and Latin America with Digital Realty, as well as in Australia and New Zealand.

“We have an existing land bank in prime markets that has the potential to increase our total capacity over 2GW,” said Pollock.

Brookfield expects to have over 1.25GW of capacity ‘over the next few years’ that will ‘provide stable cash flow’.

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Written by Wed 9 Aug 2023

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