Brookfield funds from operations double in Q2

The New York- and Toronto- listed fund Brookfield Infrastructure Partners has also secured three of six agreements for the expansion of their Australian rail business, which executives say will increase EBITDA by $150m per year.

Brookfield Infrastructure Partners (BIP), a listed fund that trades on both the New York and Toronto stock exchanges, reported second quarter funds from operations of $102 million, nearly doubling the $52 million reported in the second quarter of 2010.

In a conference call with investors, BIP chief executive Sam Pollock attributed the increase to the completion of the takeover of former Babcock & Brown vehicle Prime Infrastructure, which occurred in the fourth quarter of 2010.

Pollock also said BIP had signed the largest of six agreements underpinning expansion projects at WestNet Rail, a 5,000-kilometre rail network in Western Australia which BIP acquired as part of the Prime merger. Pollock said the expansion projects could increase earnings before interest, taxes, depreciation and amortisation (EBITDA) by $150 million annually.

Pollock said BIP has now signed three of the six contracts for the expansion, and expects to sign the remaining three definitive agreements in either the third or fourth quarter of this year.

Severe weather has affected WestNet, but BIP chief financial officer John Stinebaugh said “the impact of the drought in Western Australia on our railroad is largely behind us”. Floods also affected production at mines in eastern Australia, where BIP operates a coal export terminal, but BIP was protected by take-or-pay provisions in its contracts, according to Stinebaugh.

Stinebaugh said strong results in the timber and utilities business had offset some weakness in the energy and transport sectors. Pollock said he expects a “modest decline” in third quarter results due to a weaker demand for timber.

BIP has previously announced that it will consider selling “non-core” assets in order to fund growth in existing businesses, but Pollock declined to give any specifics on those potential sales.

“Suffice it to say, we are always looking and considering those options,” Pollock said.

BIP is part of Brookfield Asset Management (BAM), which focuses on property and renewable energy as well as infrastructure. BAM manages assets of $150 billion, according to the firm’s website.