Brookfield Infrastructure: Coronavirus Update

Brookfield has been closely monitoring developments related to coronavirus (COVID-19). As an investor in our infrastructure fund(s), we want take this opportunity to provide you with an update on the measures we have in place to protect the health and safety of our employees, and minimize the impact on our infrastructure businesses.

Our business is well diversified and resilient, and while we expect some near-term softness in volumes mostly from our container terminals and minor delays in our Chinese solar development business, we do not expect the overall impact to be material. We are monitoring closely as the situation continues to evolve.

Utilizing our global network of sector and regional heads, we have ensured that our portfolio companies are prepared with essential materials, including business continuity/action plans that address potential coronavirus situations. Below summarizes some of the themes we are monitoring across our operations:

• In our port operations in North America, U.K. and Australia (BIF I, II, III investments), we have implemented quarantine periods for all vessel crews coming from Asia and have procedures at the dock level to ensure minimal direct interaction between ship and shore crews. We have noted a slowdown in container volumes but expect that these impacts will recover through March and April.

• While our utility and energy businesses are unaffected, we are seeing some minor supply chain disruptions in our Data infrastructure assets relating to sourcing cabling and electronic equipment. This may result in some minor delays on the buildouts we have underway of fibre to the home networks (BIF II) and data centres (BIF IV). As an example, one of our South American data centres at Ascenty (BIF IV investment), will have its commercial operation date pushed back by about two months due to delays in receipt of certain battery components.

• In our renewable power portfolio, the ultimate impact of the virus is expected to be marginal and short term:

• Power demand at our investments in China (BIF IV) throughout February was naturally lower given reduced business activity following the Chinese New Year holiday. However, we have seen demand recovering steadily as industries return to operation. Renewable power is dispatched in priority and, with power demand largely driven by industrial activity, our assets are relatively more defensive and expected to be at the forefront of the economic recovery.
• For our Chinese joint venture solar roof-top development business (BIF IV), we expect a one to four-month delay in development, but expect a catch up once travel restrictions start to recede.
• Our solar development projects in Europe and Brazil (BIF III and IV investments) source and receive modules and spare parts from China. We haven’t experienced delays to date, but could see some impact to our operations and maintenance program over time in the event of an extended disruption to supply chains. Fortunately, most of our construction sites already have key plant equipment and strategic parts. We anticipate any impact to be a short-term reduction in efficiency and yield and not material to results.

We continue to closely watch developments and are confident that we have the right measures in place to manage through any disruption.

Additionally, as a precaution, we have restricted employee travel to and from areas of heightened risk, limited non-essential travel, and encouraged employees not to come into the office if they, or someone in their household, are ill.

Lastly, we are also doing our part to contribute to the community. Brookfield Cares, our philanthropic effort, has donated to causes in China that support the needs of healthcare workers and the local Red Cross. We are also dollar-matching employee donations to charities supporting the cause.

As always, please do not hesitate to reach out to me or any member of our team if you have questions.

Sincerely,
Sam Pollock
Managing Partner
CEO, Infrastructure