With the Q1/23 FFO being in line with our forecast and consensus, we do not expect the results to materially impact BIP's unit price.
Details
• Q1/23 FFO was in line with our forecast and consensus. BIP's FFO/unit in Q1/23 was $0.72, which compares to our forecast of $0.72 and consensus of $0.73 (eight estimates; range of $0.72-0.74). From a segment perspective, FFO was as follows:
Utilities FFO was $208 million compared to our forecast of $202 million and $167 million in Q1/22;
Transport FFO came in at $192 million versus our estimate of $205 million and Q1/22 FFO of $185 million;
Midstream FFO was $198 million compared to our forecast of $193 million and FFO in Q1/22 of $196 million; Data FFO came in at $70 million versus our estimate of $75 million and $58 million in Q1/22; and
Corporate FFO was ($114) million compared to our forecast of ($116) million and Q1/22 FFO of ($113) million.
• Annual capital deployment target already achieved. Between the acquisition of Data4, a European data center platform, and Triton (please click here), BIP expects its share of capital deployment to be approximately $1.6 billion. For Data4, BIP highlighted that 80% of the revenue is underpinned by contracts with an average remaining life of eight years with investment-grade hyperscalers. Growth wise, BIP expects Data4's capacity to increase to 500 MW (up from 100 MW currently in place) with "a significant proportion" of that growth having been contracted or reserved, and all of the required land already being owned and power having been secured to support the expansion plans.
• Capital recycling continues to play a key role this year. On the asset monetization front, BIP highlighted the sale of two U.S. natural gas storage assets for roughly $100 million (net to BIP), which included its stakes in Tres Palacios in Texas and Salt Plains in Oklahoma, with BIP noting valuations on the sales of 21x and 15x EBITDA, respectively. The gas storage sales and the previously- announced sale of Geelong Port both closed in April 2023. In aggregate, BIP expects to generate about $2 billion from asset monetizations in 2023.
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