00:00Tell us about the AI and the data center investment and opportunities.
00:03There's a lot going on, as you see.
00:05It's an interesting market because there's a hell of a lot of enthusiasm there that always brings with it a
00:10lot of capital and higher prices.
00:12So it's all about, for us, picking those opportunities where you feel quite confident in the cash flows for the
00:18next 10 and 20 years,
00:20which is not always easy in an environment where the ground is moving so quickly.
00:25So very focused on building contracted data centers at the moment.
00:29That makes me think that you are very mindful, obviously, of financing costs and what's going on at the moment
00:34in the U.S.
00:35That compounded with, of course, some of the circular financing deals that we've been looking at.
00:40Does that give you an indication that at least some parts of this market might be headed for a downturn?
00:45I certainly like the fact that financing costs are higher.
00:49It makes capital a little more scarce.
00:51It means returns to equity are also commensurately higher.
00:54So I'm not worried about higher interest rates, per se.
00:57I do look pretty strongly, though, at the current valuations in the market.
01:03And so when you look at P.E. multiples, for example, on what you might call average earnings over time,
01:09we're back at dot-com type error.
01:11And when you go back to that dot-com error and you look at the performance of the stock market
01:15subsequently,
01:16like you had negative returns over a 10-year period from that point.
01:19So very, very cognizant about that.
01:21So I think the careful investor just needs to be aware that it's a very exuberant time at the moment.
01:27So you've got to pick your spots, I think, rather carefully.
01:31It's hard when it's sort of such a momentum play, right?
01:33And there's obviously a lot of FOMO with the technology.
01:37I always go back to, you know, someone made the comment that AI may be productive.
01:42It may be very much real and it may be very much changing our world, but it may not be
01:47a financial return.
01:49Do you see the value in kind of looking at that?
01:51I really think that's the key question.
01:53You read a lot about the margins for the AI labs, for example, and it's difficult somewhat to get a
02:00really great view into the detail of that.
02:02But it certainly seems that perhaps these AI labs are operating at negative margins at the moment, whereas you've got
02:09a lot of money being made in the infrastructure side.
02:11You've got a lot of money being made on the cloud side.
02:13But the underlying nub of all this, the driver of all this AI enthusiasm and volume, et cetera, the economics
02:21of that, I think, are to be determined.
02:23And I agree with you.
02:25I think it's an unbelievable technology.
02:27It's changing the world.
02:28It will continue to change the world.
02:30I think these things tend to change the world slower than you expect, but then maybe in greater impact over
02:37time.
02:38So I think that maybe is the case here, similar to what we saw with the internet.
02:41But without doubt, the jury is very much out as to how the economics are going to stack up for
02:47the AI labs.
02:48So how do the economics stack up when it comes to how you choose to put down money?
02:52Where are you putting down commitments in terms of the best opportunities?
02:57It's pretty simple.
02:58So we look for things that we have great confidence in the cash flows for a long period of time.
03:04So in the AI world, what you want is you want a very, very strong customer.
03:08So one of the big, high investment grade hyperscalers.
03:11And you want a long-term contractual commitment.
03:14So sitting here today, the typical contract term for a lease with the hyperscalers is 15 years.
03:20So if you can have Microsoft or Meta or Google or one of those parties on a 15-year term
03:25contract, you really have a pretty good idea what your minimum returns are going to be.
03:31So we're very, very focused on that at the moment.
03:33I mean, obviously, as part of your role, you're talking to these hyperscalers and AI giants all the time, right?
03:38What's the sentiment that you're hearing at this point in the cycle?
03:41Are they concerned about China at all?
03:43What do you think about the opportunities in China given the disruption?
03:47So, look, China is obviously an incredible market.
03:50It's a difficult market, I think, for US investors to do a lot in at the moment because the political
03:56heat there is just one that, you know, we're not in such a position to judge.
04:02I would imagine that if you're a hyperscaler, you're incredibly focused on the amount of AI tokens coming out of
04:09China.
04:10I saw a stat recently that the amount of tokens being consumed, or in other words, the amount of AI
04:14content being consumed is now greater for those companies coming out of China than it is in the US.
04:21And my feeling of it is, is the Chinese AI companies are a little bit behind the US from a
04:28technology standpoint, but the cost to use Chinese AI is so much lower than the frontier US AI that that,
04:36I think, is the concern, I would imagine, for the US tech companies is their product here.
04:41It's a very similar product coming out of China, and it's, you know, a tenth or five percent of the
04:46cost of the US equivalent.
04:47When we spoke last, you had a pretty wide array of investments in Australia from, you know, oil and gas
04:54sector to retirement villages, right?
04:56We did talk a little bit about data centres.
04:58Is that a renewed focus here, given how much the government is now looking at this?
05:02We've, it is.
05:04We've done a lot of data centres around Asia.
05:06We'd be one of the biggest builders of data centres in Asia of anyone currently.
05:11We spend a lot of time looking at the Australian market as well.
05:14I saw a pronouncement recently that the Australian government is really trying to link renewable development with data centre development,
05:23which I think is a very, very clever idea.
05:25I'm very supportive of that.
05:27And that would play into one of our key strengths.
05:29We're a big builder of renewable power in Asia and around the world, big builder of data centres.
05:35So bringing those two skill sets together is something we're super focused on here in Australia.
05:39And I will say this, very mindful of community sentiment, not only here, but all around.
05:44I mean, the US, you're seeing strong pushback from communities.
05:47Australia, I hear you're seeing similar things in Australia.
05:50I think it's incumbent upon players like ourselves and particularly the big tech companies to come up with methods for
05:57doing this that win over community support, bringing power prices down, for example, that sort of thing.
06:02So that's how we're approaching it.
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