UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 5, 2022
| (Exact Name of Registrant as Specified in Its Charter) | ||||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices, Including Zip Code)
(561 ) 570-4644
Registrant’s telephone number, including area code:
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |||||||||||
Emerging growth company | |||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||||||||
Item 2.02 Results of Operations and Financial Condition.
On May 5, 2022, DigitalBridge Group, Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2022 and its financial results for the quarter ended March 31, 2022. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On May 5, 2022, the Company made available a Supplemental Financial Disclosure Presentation for the quarter ended March 31, 2022 on the Company’s website at www.digitalbridge.com. A copy of the Supplemental Financial Disclosure Presentation is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
In connection with the earnings call to be held on May 5, 2022 as referenced in the press release, the Company has prepared a presentation, dated May 5, 2022 (the "Earnings Presentation"), a copy of which is attached as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein by reference.
The information included in this Current Report on Form 8-K (including Exhibits 99.1, 99.2 and 99.3 hereto) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Use of Website to Distribute Material Company Information
The Company’s website address is www.digitalbridge.com. The Company uses its website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding the Company, is routinely posted on and accessible on the Shareholders subpage of its website, which is accessible by clicking on the tab labeled “Shareholders” on the website home page. The Company also uses its website to expedite public access to time-critical information regarding the Company in advance of or in lieu of distributing a press release or a filing with the U.S. Securities and Exchange Commission disclosing the same information. Therefore, investors should look to the Shareholders subpage of the Company’s website for important and time-critical information. Visitors to the Company’s website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Shareholders subpage of the website.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished herewith to this Current Report on Form 8-K.
| Exhibit No. | Description | |||||||
| Press Release dated May 5, 2022 | ||||||||
| Supplemental Financial Disclosure Presentation for the quarter ended March 31, 2022 | ||||||||
| Earnings Presentation dated May 5, 2022 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: | May 5, 2022 | DIGITALBRIDGE GROUP, INC. | |||||||||
| By: | /s/ Jacky Wu | ||||||||||
| Jacky Wu | |||||||||||
| Executive Vice President, Chief Financial Officer and Treasurer | |||||||||||
 | ||||||||
Exhibit 99.1
DIGITALBRIDGE ANNOUNCES FIRST QUARTER 2022 FINANCIAL RESULTS
Regular quarterly common dividend expected to begin in third quarter 2022
Boca Raton, May 5, 2022 - DigitalBridge Group, Inc. (NYSE: DBRG) and subsidiaries (collectively, “DigitalBridge,” or the “Company”) today announced financial results for the first quarter ended March 31, 2022.
A First Quarter 2022 Earnings Presentation and a Supplemental Financial Report are available in the Events & Presentations and Financial Information sections, respectively, of the Shareholders tab on the Company’s website at www.digitalbridge.com. This information has also been furnished to the U.S. Securities and Exchange Commission in a Current Report on Form 8-K.
“We’re off to a great start to the year, already delivering on many of our key 2022 objectives,” said Marc Ganzi, CEO of DigitalBridge. "We’ve announced two important strategic transactions that accelerate and scale our high-performance investment management platform, putting us in a strong position to outperform our financial targets. We also made great progress with new core, credit, and ventures investments that advance our progress towards building a full-stack digital infrastructure investor."
The Company reported first quarter 2022 total revenues of $257 million, GAAP net loss attributable to common stockholders of $(262) million, or $(0.46) per share, and Distributable Earnings ("DE") and AFFO of $1.6 million.
Preferred Dividends
On February 16, 2022, the Company’s Board declared cash dividends with respect to each series of the Company’s cumulative redeemable perpetual preferred stock in accordance with the terms of such series, as follows: Series H preferred stock: $0.4453125 per share; Series I preferred stock: $0.446875 per share; and Series J preferred stock: $0.4453125 per share. Such dividends were paid on April 15, 2022 to the respective stockholders of record on April 12, 2022.
On May 4, 2022, the Company’s Board declared cash dividends with respect to each series of the Company’s cumulative redeemable perpetual preferred stock in accordance with the terms of such series, as follows: Series H preferred stock: $0.4453125 per share; Series I preferred stock: $0.446875 per share; and Series J preferred stock: $0.4453125 per share. Such dividends will be paid on July 15, 2022 to the respective stockholders of record on July 11, 2022.
First Quarter 2022 Conference Call
The Company will conduct an earnings presentation and conference call to discuss the financial results on Thursday, May 5, 2022 at 10:00 a.m. ET. The earnings presentation will be broadcast live over the Internet and can be accessed on the Shareholders section of the Company’s website at ir.digitalbridge.com/events. A webcast of the presentation and conference call will be available on the Company’s website. To participate in the event by telephone, please dial (877) 407-4018 ten minutes prior to the start time (to allow time for registration). International callers should dial (201) 689-8471.
For those unable to participate during the live call, a replay will be available starting May 5, 2022, at 1:00 p.m. ET. To access the replay, dial (844) 512-2921 (U.S.), and use passcode 13728587. International callers should dial (412) 317-6671 and enter the same conference ID number.
About DigitalBridge Group, Inc.
DigitalBridge (NYSE: DBRG) is a leading global digital infrastructure firm. With a heritage of over 25 years investing in and operating businesses across the digital ecosystem including cell towers, data centers, fiber, small cells, and edge infrastructure, the DigitalBridge team manages a $47 billion portfolio of digital infrastructure assets on behalf of its limited partners and shareholders. Headquartered in Boca Raton, DigitalBridge has key offices in New York, Los Angeles, London, and Singapore. For more information, visit: www.digitalbridge.com.
1
| ||||||||
Cautionary Statement Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, and may cause the Company’s actual results to differ significantly from those expressed in any forward-looking statement. Factors that might cause such a difference include, without limitation, the duration and severity of the current novel coronavirus (COVID-19) pandemic, driven by, among other factors, the treatment developments and public adoption rates and effectiveness of COVID-19 vaccines against emerging variants of COVID-19 such as the Delta and Omicron variants; the impact of the COVID-19 pandemic on the global market, economic and environmental conditions generally and in the digital and communications technology and investment management sectors; the effect of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments, as well as the increased risk of claims, litigation and regulatory proceedings and uncertainty that may adversely affect the Company; our status as an owner, operator and investment manager of digital infrastructure and real estate and our ability to manage any related conflicts of interest; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the impact of initiatives related to our digital transformation, including the strategic investment by Wafra and the formation of certain other investment management platforms, on our growth and earnings profile; whether the transactions with Wafra and AMP Capital will be completed within the time frame and on the terms anticipated or at all, and whether we will realize any of the anticipated benefits from the transactions; whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital IM and Digital Operating segments; our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively; the impact to our business operations and financial condition of realized or anticipated compensation and administrative savings through cost reduction programs; our ability to redeploy the proceeds received from the sale of our non-digital legacy assets within the timeframe and manner contemplated or at all; our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as BRSP) to execute their business strategies; BRSP's trading price and its impact on the carrying value of the Company's investment in BRSP, including whether the Company will recognize further other-than-temporary impairment on its investment in BRSP; performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution; our ability to grow our business by raising capital for the companies that we manage; our ability to deploy capital into new investments consistent with our digital business strategies, including the earnings profile of such new investments; the availability of, and competition for, attractive investment opportunities; our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products; our ability to satisfy and manage our capital requirements; our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets; the general volatility of the securities markets in which we participate; changes in interest rates and the market value of our assets; interest rate mismatches between our assets and any borrowings used to fund such assets; effects of hedging instruments on our assets; the impact of economic conditions on third parties on which we rely; any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims; our levels of leverage; adverse domestic or international economic conditions, including those resulting from the COVID-19 pandemic, supply chain difficulties and possible inflation; the impact of legislative, regulatory and competitive changes; the risks of the transition from a REIT to a C-corporation for tax purposes, and the related liability for corporate and other taxes; whether we will be able to utilize existing tax attributes to offset taxable income to the extent contemplated; our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); changes in our board of directors or management team, and availability of qualified personnel; our ability to make or maintain distributions to our stockholders; and our understanding of our competition; and other risks and uncertainties, including those detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, each under the heading “Risk Factors,” as such factors may be updated from time to time in the Company’s subsequent periodic filings with the U.S. Securities and Exchange Commission (“SEC”). All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Additional information about these and other factors can be found in the Company’s reports filed from time to time with the SEC.
The Company cautions investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this press release. The Company is under no duty to update any of these forward-looking statements after the date of this press release, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do so.
Source: DigitalBridge Group, Inc.
Investor Contacts:
Severin White
Managing Director, Head of Public Investor Relations
severin.white@digitalbridge.com
212-547-2777
(FINANCIAL TABLES FOLLOW)
2
| ||||||||
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
| March 31, 2022 | December 31, 2021 | |||||||||||||
| (unaudited) | ||||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | 1,117,688 | $ | 1,602,102 | ||||||||||
Restricted cash | 106,332 | 99,121 | ||||||||||||
Real estate, net | 5,628,072 | 4,972,284 | ||||||||||||
| Loans receivable | 504,739 | 173,921 | ||||||||||||
| Equity and debt investments | 940,601 | 935,153 | ||||||||||||
Goodwill | 761,368 | 761,368 | ||||||||||||
Deferred leasing costs and intangible assets, net | 1,225,487 | 1,187,627 | ||||||||||||
| Assets held for disposition | 151,307 | 3,676,615 | ||||||||||||
| Other assets | 746,176 | 740,395 | ||||||||||||
Due from affiliates | 50,387 | 49,230 | ||||||||||||
Total assets | $ | 11,232,157 | $ | 14,197,816 | ||||||||||
Liabilities | ||||||||||||||
| Debt, net | $ | 5,123,246 | $ | 4,860,402 | ||||||||||
| Accrued and other liabilities | 896,253 | 928,042 | ||||||||||||
Intangible liabilities, net | 34,459 | 33,301 | ||||||||||||
| Liabilities related to assets held for disposition | 758 | 3,088,699 | ||||||||||||
Dividends and distributions payable | 15,759 | 15,759 | ||||||||||||
Total liabilities | 6,070,475 | 8,926,203 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
Redeemable noncontrolling interests | 1,038,739 | 359,223 | ||||||||||||
Equity | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
| Preferred stock, $0.01 par value per share; $883,500 liquidation preference; 250,000 shares authorized; 35,340 shares issued and outstanding | 854,232 | 854,232 | ||||||||||||
| Common stock, $0.01 par value per share | ||||||||||||||
| Class A, 949,000 shares authorized; 597,480 and 568,577 shares issued and outstanding | 5,974 | 5,685 | ||||||||||||
| Class B, 1,000 shares authorized; 666 shares issued and outstanding | 7 | 7 | ||||||||||||
Additional paid-in capital | 7,356,363 | 7,820,807 | ||||||||||||
Accumulated deficit | (6,838,497) | (6,576,180) | ||||||||||||
Accumulated other comprehensive income | 12,753 | 42,383 | ||||||||||||
| Total stockholders’ equity | 1,390,832 | 2,146,934 | ||||||||||||
Noncontrolling interests in investment entities | 2,688,907 | 2,653,173 | ||||||||||||
Noncontrolling interests in Operating Company | 43,204 | 112,283 | ||||||||||||
Total equity | 4,122,943 | 4,912,390 | ||||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 11,232,157 | $ | 14,197,816 | ||||||||||
3
| ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data, unaudited)
| Three Months Ended March 31, | |||||||||||||||||
| 2022 | 2021 | ||||||||||||||||
| Revenues | |||||||||||||||||
| Property operating income | $ | 202,511 | $ | 189,002 | |||||||||||||
| Interest income | 5,166 | 854 | |||||||||||||||
| Fee income | 42,837 | 29,443 | |||||||||||||||
| Other income | 6,945 | 1,282 | |||||||||||||||
| Total revenues | 257,459 | 220,581 | |||||||||||||||
| Expenses | |||||||||||||||||
| Property operating expense | 84,003 | 79,862 | |||||||||||||||
| Interest expense | 44,030 | 39,780 | |||||||||||||||
| Investment expense | 9,565 | 6,893 | |||||||||||||||
| Transaction-related costs | 165 | 1,618 | |||||||||||||||
| Depreciation and amortization | 128,567 | 139,425 | |||||||||||||||
| Compensation expense | |||||||||||||||||
| Cash and equity-based compensation | 65,542 | 78,786 | |||||||||||||||
| Carried interest and incentive fee compensation | (20,352) | (33) | |||||||||||||||
| Administrative expenses | 27,885 | 17,796 | |||||||||||||||
| Total expenses | 339,405 | 364,127 | |||||||||||||||
| Other income (loss) | |||||||||||||||||
| Other gain (loss), net | (149,881) | (9,350) | |||||||||||||||
| Equity method earnings (losses) | 19,207 | (16,417) | |||||||||||||||
| Equity method earnings (losses) - carried interest | (31,079) | (222) | |||||||||||||||
| Income (loss) before income taxes | (243,699) | (169,535) | |||||||||||||||
| Income tax benefit (expense) | 7,413 | 23,196 | |||||||||||||||
| Income (loss) from continuing operations | (236,286) | (146,339) | |||||||||||||||
| Income (loss) from discontinued operations | (107,398) | (481,260) | |||||||||||||||
| Net income (loss) | (343,684) | (627,599) | |||||||||||||||
| Net income (loss) attributable to noncontrolling interests: | |||||||||||||||||
| Redeemable noncontrolling interests | (11,220) | 2,449 | |||||||||||||||
| Investment entities | (63,045) | (355,862) | |||||||||||||||
| Operating Company | (22,862) | (27,896) | |||||||||||||||
| Net income (loss) attributable to DigitalBridge Group, Inc. | (246,557) | (246,290) | |||||||||||||||
| Preferred stock redemption | — | — | |||||||||||||||
| Preferred stock dividends | 15,759 | 18,516 | |||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (262,316) | $ | (264,806) | |||||||||||||
| Loss per share—basic | |||||||||||||||||
| Loss from continuing operations per share—basic | $ | (0.30) | $ | (0.22) | |||||||||||||
| Net loss attributable to common stockholders per share—basic | $ | (0.46) | $ | (0.56) | |||||||||||||
| Loss per share—diluted | |||||||||||||||||
| Loss from continuing operations per share—diluted | $ | (0.30) | $ | (0.22) | |||||||||||||
| Net loss attributable to common stockholders per share—diluted | $ | (0.46) | $ | (0.56) | |||||||||||||
| Weighted average number of shares | |||||||||||||||||
| Basic | 569,940 | 474,899 | |||||||||||||||
| Diluted | 569,940 | 474,899 | |||||||||||||||
4
| ||||||||
FUNDS FROM OPERATIONS, CORE FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(In thousands, except per share data, unaudited)
| Three Months Ended | ||||||||||||||
| March 31, 2022 | March 31, 2021 | |||||||||||||
| Net loss attributable to common stockholders | $ | (262,316) | $ | (264,806) | ||||||||||
| Adjustments for FFO attributable to common interests in Operating Company and common stockholders: | ||||||||||||||
| Net loss attributable to noncontrolling common interests in Operating Company | (22,862) | (27,896) | ||||||||||||
| Real estate depreciation and amortization | 121,744 | 184,762 | ||||||||||||
| Impairment of real estate | 23,799 | 106,077 | ||||||||||||
| Loss (gain) from sales of real estate | 3 | (38,102) | ||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | (113,537) | (188,496) | ||||||||||||
| FFO attributable to common interests in Operating Company and common stockholders | (253,169) | (228,461) | ||||||||||||
| Additional adjustments for Core FFO attributable to common interests in Operating Company and common stockholders: | ||||||||||||||
| Adjustment to BRSP cash dividend | (9,089) | 55,648 | ||||||||||||
| Equity-based compensation expense | 18,720 | 19,299 | ||||||||||||
| Straight-line rent revenue and expense | (2,548) | 17,225 | ||||||||||||
| Amortization of acquired above- and below-market lease values, net | (248) | 6,005 | ||||||||||||
| Debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts | 98,465 | 45,627 | ||||||||||||
| Non-real estate fixed asset depreciation, amortization and impairment | 11,132 | 20,563 | ||||||||||||
Restructuring and transaction-related charges(1) | 24,668 | 34,482 | ||||||||||||
| Non-real estate (gains) losses, excluding realized gains or losses of digital assets within the Corporate and Other segment | 130,224 | 267,812 | ||||||||||||
| Net unrealized carried interest | 13,078 | 189 | ||||||||||||
| Deferred taxes and tax effect on certain of the foregoing adjustments | (589) | (17,657) | ||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | (18,700) | (218,328) | ||||||||||||
| Less: Core FFO from discontinued operations | (9,003) | (12,391) | ||||||||||||
| Core FFO attributable to common interests in Operating Company and common stockholders | $ | 2,941 | $ | (9,987) | ||||||||||
| Additional adjustments for AFFO attributable to common interests in Operating Company and common stockholders: | ||||||||||||||
| Less: recurring capital expenditures | (1,372) | (226) | ||||||||||||
| AFFO and DE attributable to common interests in Operating Company and common stockholders | $ | 1,569 | $ | (10,213) | ||||||||||
Core FFO per common share / common OP unit(2) | $ | — | $ | (0.02) | ||||||||||
Core FFO per common share / common OP unit—diluted(2)(3) | $ | — | $ | (0.02) | ||||||||||
AFFO and DE per common share / common OP unit(2) | $ | — | $ | (0.02) | ||||||||||
AFFO and DE per common share / common OP unit—diluted(2)(3) | $ | — | $ | (0.02) | ||||||||||
Weighted average number of common OP units outstanding used for Core FFO, AFFO and DE per common share and OP unit(2) | 628,991 | 537,033 | ||||||||||||
Weighted average number of common OP units outstanding used for Core FFO, AFFO and DE per common share and OP unit—diluted (2)(3) | 649,399 | 537,033 | ||||||||||||
__________
(1) Transaction-related costs primarily represent costs and charges incurred as a result of corporate restructuring and reorganization to implement the digital evolution. These costs and charges include severance, retention, relocation, transition, shareholder settlement and other related restructuring costs, which are not reflective of the Company’s core operating performance.
(2) Calculated based on weighted average shares outstanding including participating securities and assuming the exchange of all common OP units outstanding for common shares.
(3) For the three months ended March 31, 2022, included in the calculations of diluted Core FFO, AFFO and DE per share are Class A common stock or OP units issuable in connection with performance stock units, performance based restricted stock units and Wafra’s warrants, of which the issuance and/or vesting are subject to the performance of the Company's stock price or the achievement of certain Company specific metrics. For the three months ended March 31, 2022, excluded from the calculations of diluted Core FFO, AFFO and DE per share are the effects of adding back interest expense associated with convertible senior notes and weighted average dilutive common share equivalents for the assumed conversion of the convertible senior notes as the effect of including such interest expense and common share equivalents would be antidilutive. For the three months ended March 31, 2021, excluded from the calculations of diluted Core FFO, AFFO and DE per share are Class A common stock or OP units issuable in connection with performance stock units, performance based restricted stock units and Wafra’s warrants, of which the issuance and/or vesting are subject to the performance of the Company's stock price or the achievement of certain Company specific metrics, and the effect of adding back interest expense associated with convertible senior notes and weighted average dilutive common share equivalents for the assumed conversion of the convertible senior notes as the effect of including such interest expense and common share equivalents would be antidilutive.
5
| ||||||||
Funds From Operations (FFO), Core Funds From Operations (Core FFO), Adjusted Funds From Operations (AFFO) and Distributable Earnings (DE)
The Company calculates funds from operations (FFO) in accordance with standards established by the National Association of Real Estate Investment Trusts, which defines FFO as net income or loss calculated in accordance with GAAP, excluding (i) real estate-related depreciation and amortization; (ii) impairment of depreciable real estate and impairment of investments in unconsolidated ventures directly attributable to decrease in value of depreciable real estate held by the venture; (iii) gain from sale of depreciable real estate; (iv) gain or loss from a change in control in connection with interests in depreciable real estate or in-substance real estate; and (v) adjustments to reflect the Company's share of FFO from investments in unconsolidated ventures. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity investments, and debt securities, as applicable.
The Company computes core funds from operations (Core FFO) by adjusting FFO for the following items, including the Company’s share of these items recognized by its unconsolidated partnerships and joint ventures: (i) equity-based compensation expense; (ii) effects of straight-line rent revenue and expense; (iii) amortization of acquired above- and below-market lease values; (iv) debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts; (v) non-real estate depreciation, amortization and impairment; (vi) restructuring and transaction-related charges; (vii) non-real estate loss (gain), fair value loss (gain) on interest rate and foreign currency hedges, and foreign currency remeasurements except realized gain and loss from digital assets within the Corporate and Other segment; (viii) net unrealized carried interest; and (ix) tax effect on certain of the foregoing adjustments. The Company’s Core FFO from its interest in BrightSpire Capital, Inc. (NYSE: BRSP) represented the cash dividends declared in the reported period. The Company excluded results from discontinued operations in its calculation of Core FFO and applied this exclusion to prior periods.
The Company computes adjusted funds from operations (AFFO) by adjusting Core FFO for recurring capital expenditures necessary to maintain the operating performance of its properties. The Company's calculation of AFFO is equivalent to Distributable Earnings (DE), the alternative asset manager industry standard metric, which the Company is adopting following its conversion from a REIT to a C-Corp.
The Company uses FFO, Core FFO and AFFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs, and such a measure is useful to investors as it excludes periodic gains and losses from sales of investments that are not representative of its ongoing operations and assesses the Company's ability to meet distribution requirements. The Company also believes that, as widely recognized measures of the performance of REITs, FFO, Core FFO and AFFO will be used by investors as a basis to compare its operating performance and ability to meet distribution requirements with that of other REITs. However, because FFO, Core FFO and AFFO exclude depreciation and amortization and do not capture changes in the value of the Company’s properties that resulted from use or market conditions, which have real economic effect and could materially impact the Company’s results from operations, the utility of FFO, Core FFO and AFFO as measures of the Company’s performance is limited.
FFO, Core FFO and AFFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO, Core FFO and AFFO should be considered only as supplements to GAAP net income as measures of the Company’s performance and to cash flows from operating activities computed in accordance with GAAP. Additionally, Core FFO and AFFO exclude the impact of certain fair value fluctuations, which, if they were to be realized, could have a material impact on the Company’s operating performance.
6
| Cautionary Statement Regarding Forward-Looking Statements | ||
This presentation may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, and may cause the Company’s actual results to differ significantly from those expressed in any forward-looking statement. Factors that might cause such a difference include, without limitation, the duration and severity of the current novel coronavirus (COVID-19) pandemic, driven by, among other factors, the treatment developments and public adoption rates and effectiveness of COVID-19 vaccines against emerging variants of COVID-19 such as the Delta and Omicron variants; the impact of the COVID-19 pandemic on the global market, economic and environmental conditions generally and in the digital and communications technology and investment management sectors; the effect of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments, as well as the increased risk of claims, litigation and regulatory proceedings and uncertainty that may adversely affect the Company; our status as an owner, operator and investment manager of digital infrastructure and real estate and our ability to manage any related conflicts of interest; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the impact of initiatives related to our digital transformation, including the strategic investment by Wafra and the formation of certain other investment management platforms, on our growth and earnings profile; whether the transactions with Wafra and AMP Capital will be completed within the time frame and on the terms anticipated or at all, and whether we will realize any of the anticipated benefits from the transactions; whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital IM and Digital Operating segments; our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively; the impact to our business operations and financial condition of realized or anticipated compensation and administrative savings through cost reduction programs; our ability to redeploy the proceeds received from the sale of our non-digital legacy assets within the timeframe and manner contemplated or at all; our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as BRSP) to execute their business strategies; BRSP's trading price and its impact on the carrying value of the Company's investment in BRSP, including whether the Company will recognize further other-than-temporary impairment on its investment in BRSP; performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution; our ability to grow our business by raising capital for the companies that we manage; our ability to deploy capital into new investments consistent with our digital business strategies, including the earnings profile of such new investments; the availability of, and competition for, attractive investment opportunities; our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products; our ability to satisfy and manage our capital requirements; our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets; the general volatility of the securities markets in which we participate; changes in interest rates and the market value of our assets; interest rate mismatches between our assets and any borrowings used to fund such assets; effects of hedging instruments on our assets; the impact of economic conditions on third parties on which we rely; any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims; our levels of leverage; adverse domestic or international economic conditions, including those resulting from the COVID-19 pandemic, supply chain difficulties and possible inflation; the impact of legislative, regulatory and competitive changes; the risks of the transition from a REIT to a C-corporation for tax purposes, and the related liability for corporate and other taxes; whether we will be able to utilize existing tax attributes to offset taxable income to the extent contemplated; our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); changes in our board of directors or management team, and availability of qualified personnel; our ability to make or maintain distributions to our stockholders; and our understanding of our competition; and other risks and uncertainties, including those detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, each under the heading “Risk Factors,” as such factors may be updated from time to time in the Company’s subsequent periodic filings with the U.S. Securities and Exchange Commission (“SEC”). All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Additional information about these and other factors can be found in the Company’s reports filed from time to time with the SEC.
The Company cautions investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this presentation. The Company is under no duty to update any of these forward-looking statements after the date of this presentation, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do so.
This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company. This information is not intended to be indicative of future results. Actual performance of the Company may vary materially.
The appendices herein contain important information that is material to an understanding of this presentation and you should read this presentation only with and in context of the
appendices.
DigitalBridge | Supplemental Financial Report | ||||||||
| Important Note Regarding Non-GAAP Financial Measures | ||
This supplemental package includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles, or GAAP, including the financial metrics defined below, of which the calculations may differ from methodologies utilized by other REITs for similar performance measurements, and accordingly, may not be comparable to those of other REITs.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): The Company calculates Adjusted EBITDA by adjusting Core FFO to exclude cash interest expense, preferred dividends, tax expense or benefit, earnings from equity method investments, placement fees, realized carried interest and incentive fees and revenues and corresponding costs related to installation services. The Company uses Adjusted EBITDA as a supplemental measure of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. However, because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited.
FFO, Core FFO, AFFO and Distributable Earnings:
The Company calculates funds from operations (FFO) in accordance with standards established by the National Association of Real Estate Investment Trusts, which defines FFO as net income or loss calculated in accordance with GAAP, excluding (i) real estate-related depreciation and amortization; (ii) impairment of depreciable real estate and impairment of investments in unconsolidated ventures directly attributable to decrease in value of depreciable real estate held by the venture; (iii) gain from sale of depreciable real estate; (iv) gain or loss from a change in control in connection with interests in depreciable real estate or in-substance real estate; and (v) adjustments to reflect the Company's share of FFO from investments in unconsolidated ventures. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity investments, and debt securities, as applicable.
The Company computes core funds from operations (Core FFO) by adjusting FFO for the following items, including the Company’s share of these items recognized by its unconsolidated partnerships and joint ventures: (i) equity-based compensation expense; (ii) effects of straight-line rent revenue and expense; (iii) amortization of acquired above- and below-market lease values; (iv) debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts; (v) non-real estate depreciation, amortization and impairment; (vi) restructuring and transaction-related charges; (vii) non-real estate loss (gain), fair value loss (gain) on interest rate and foreign currency hedges, and foreign currency remeasurements except realized gain and loss from digital assets within the Corporate and Other segment; (viii) net unrealized carried interest; and (ix) tax effect on certain of the foregoing adjustments. The Company’s Core FFO from its interest in BrightSpire Capital, Inc. (NYSE: BRSP) represented the cash dividends declared in the reported period. The Company excluded results from discontinued operations in its calculation of Core FFO and applied this exclusion to prior periods.
The Company computes adjusted funds from operations (AFFO) by adjusting Core FFO for recurring capital expenditures necessary to maintain the operating performance of its properties. The Company's calculation of AFFO is equivalent to Distributable Earnings (DE), the alternative asset manager industry standard metric, which the Company is adopting following its conversion from a REIT to a C-Corp.
The Company uses FFO, Core FFO and AFFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs, and such a measure is useful to investors as it excludes periodic gains and losses from sales of investments that are not representative of its ongoing operations and assesses the Company's ability to meet distribution requirements. The Company also believes that, as widely recognized measures of the performance of REITs, FFO, Core FFO and AFFO will be used by investors as a basis to compare its operating performance and ability to meet distribution requirements with that of other REITs. However, because FFO, Core FFO and AFFO exclude depreciation and amortization and do not capture changes in the value of the Company’s properties that resulted from use or market conditions, which have real economic effect and could materially impact the Company’s results from operations, the utility of FFO, Core FFO and AFFO as measures of the Company’s performance is limited.
FFO, Core FFO and AFFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO, Core FFO and AFFO should be considered only as supplements to GAAP net income as measures of the Company’s performance and to cash flows from operating activities computed in accordance with GAAP. Additionally, Core FFO and AFFO exclude the impact of certain fair value fluctuations, which, if they were to be realized, could have a material impact on the Company’s operating performance.
DigitalBridge | Supplemental Financial Report | ||||||||
| Important Note Regarding Non-GAAP Financial Measures | ||
Digital Operating Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDA: The Company calculates EBITDAre in accordance with the standards established by the National Association of Real Estate Investment Trusts, which defines EBITDAre as net income or loss calculated in accordance with GAAP, excluding interest, taxes, depreciation and amortization, gains or losses from the sale of depreciated property, and impairment of depreciated property. The Company calculates Adjusted EBITDA by adjusting EBITDAre for the effects of straight-line rental income/expense adjustments and amortization of acquired above- and below-market lease adjustments to rental income, revenues and corresponding costs related to the delivery of installation services, equity-based compensation expense, restructuring and transaction related costs, the impact of other impairment charges, gains or losses from sales of undepreciated land, gains or losses from foreign currency remeasurements, and gains or losses on early extinguishment of debt and hedging instruments. The Company uses EBITDAre and Adjusted EBITDA as supplemental measures of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. EBITDAre represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which we believe is particularly helpful for generalist investors in REITs. EBITDAre depicts the operating performance of a real estate business independent of its capital structure, leverage and non-cash items, which allows for comparability across real estate entities with different capital structure, tax rates and depreciation or amortization policies. Additionally, exclusion of gains on disposition and impairment of depreciated real estate, similar to FFO, also provides a reflection of ongoing operating performance and allows for period-over-period comparability. However, because EBITDAre and Adjusted EBITDA are calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited.
Digital Investment Management Fee Related Earnings (FRE): The Company calculates FRE for its investment management business within the digital segment as base management fees, other service fee income, and other income inclusive of cost reimbursements, less compensation expense excluding equity-based compensation, carried interest and incentive compensation, administrative expenses (excluding fund raising placement agent fee expenses), and other operating expenses related to the investment management business. The Company's calculation of FRE excludes expenses related to new strategies which have 1) not yet held a first close raising FEEUM or 2) for products which may be terminated solely at the Company’s discretion and have never achieved break-even FRE, in which case related revenues are also excluded (both collectively the “Start-up Net G&A”). The Company uses FRE as a supplemental performance measure as it may provide additional insight into the profitability of the overall digital investment management business.
In evaluating the information presented throughout this financial supplemental report see the appendices to this presentation for definitions and reconciliations of non-GAAP financial measures to GAAP measures. For purposes of comparability, historical data in this presentation may include certain adjustments from prior reported data at the historical period.
DigitalBridge | Supplemental Financial Report | ||||||||
| Note Regarding DBRG Reportable Segments / Consolidated and OP Share of Consolidated Amounts | ||
This presentation includes supplemental financial information for the following segments:
Digital Investment Management (Digital IM)
This business encompasses the investment and stewardship of third party capital in digital infrastructure and real estate. The Company's flagship opportunistic strategy is conducted through DBP I, DBP II and separately capitalized vehicles while other strategies, including digital credit and public equities, will be or are conducted through other investment vehicles. The Company earns management fees, generally based on the amount of assets or capital managed in investment vehicles, and has the potential to earn carried interest and incentive fees based on the performance of such investment vehicles subject to achievement of minimum return hurdles.
Digital Operating
This business is composed of balance sheet equity interests in digital infrastructure and real estate operating companies, which generally earns rental income from providing use of space and/or capacity in or on digital assets through leases, services and other agreements. The Company currently owns interests in two companies, DataBank's enterprise data centers, including zColo, and Vantage stabilized hyperscale data centers, which are also portfolio companies under Digital IM for the equity interests owned by third party capital.
Corporate and Other
This segment is composed of the Company's remaining non-core activities and corporate level activities.
Non-core activities are composed of the Company's equity interests in: (i) digital investment vehicles, the largest of which is the Company’s investments and commitments to DBP flagship funds, and seed investments in various strategies such as digital liquid and digital credit; and (ii) remaining non-digital investments, primarily the Company’s interest in BrightSpire Capital, Inc. (BRSP), that are expected to be monetized over an extended period beyond the near term. These non-core activities generate largely equity method earnings or losses and to a lesser extent, revenues in the form of interest income or dividend income from warehoused investments and consolidated investment vehicles. Effective the third quarter of 2021, non-core activities are no longer presented separately as the Digital Other and Other segments, which is consistent with and reflects management's focus on its core digital operations and overall simplification of the Company's business.
Corporate level activities include corporate level cash and corresponding interest income, corporate level financing and related interest expense and preferred dividends, corporate level transaction costs, costs in connection with unconsummated investments, costs incurred as manager of the Company's investment vehicles and income for reimbursement of these costs, fixed assets for administrative use, compensation expense not directly attributable to reportable segments, corporate level administrative and overhead costs, and adjustments to eliminate intercompany fees. Costs which are directly attributable, or otherwise can be subjected to a reasonable and systematic allocation, have been allocated to each of the reportable segments. Elimination adjustment pertains to fee income earned by the Digital Investment Management segment from third party capital in investment vehicles managed by the Company and consolidated within the Digital Operating segment and in Corporate and Other.
Throughout this presentation, consolidated figures represent the interest of both the Company (and its subsidiary DigitalBridge Operating Company, LLC or the “DBRG OP”) and noncontrolling interests. Figures labeled as DBRG OP share represent the Company’s pro-rata share.
DigitalBridge | Supplemental Financial Report | ||||||||
| Table of Contents | ||
Page | |||||||||||
| I. | Financial Overview | ||||||||||
a. | 6 | ||||||||||
| II. | Financial Results | ||||||||||
a. | Balance Sheet Consolidated & Noncontrolling Interests’ Share | 7 | |||||||||
b. | 8 | ||||||||||
c. | 9 | ||||||||||
d. | Segment Reconciliation of Net Income to FFO, Core FFO, AFFO, DE and Adjusted EBITDA | 10-11 | |||||||||
| III. | Capitalization | ||||||||||
a. | Debt Summary | 12 | |||||||||
b. | Secured Fund Fee Revenue Notes and Variable Funding Notes | 13 | |||||||||
c. | Convertible/Exchangeable Notes & Perpetual Preferred Stock | 14 | |||||||||
d. | Organization Structure | 15 | |||||||||
| IV. | Assets Under Management | 16 | |||||||||
| V. | Digital Investment Management | 17 | |||||||||
| VI. | Digital Operating | 18-20 | |||||||||
| VII. | Other | 21 | |||||||||
| Appendices | |||||||||||
| Reconciliations of Digital IM Adjusted EBITDA/FRE and Digital Operating Adjusted EBITDA to Net Income (Loss) | 23 | ||||||||||
| Reconciliations of Core FFO, AFFO, DE and Adjusted EBITDA to Net Income (Loss) | 24-25 | ||||||||||
| Definitions | 26 | ||||||||||
DigitalBridge | Supplemental Financial Report | 5 | ||||||||||
| Ia. Summary Financial Metrics | ||
| ($ and shares in thousands, except per share data and as noted) (Unaudited) | ||||||||||||||||||||||||||
| 3/31/2022 - 1Q22 | 12/31/2021 - 4Q21 | 9/30/2021 - 3Q21 | 6/30/2021 - 2Q21 | 3/31/2021 - 1Q21 | 12/31/2020 - 4Q20 | 9/30/2020- 3Q20 | 6/30/2020 - 2Q20 | |||||||||||||||||||
| Financial Data | ||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (262,316) | $ | (20,686) | $ | 41,036 | $ | (141,260) | $ | (264,806) | $ | (140,575) | $ | (205,784) | $ | (2,042,790) | ||||||||||
| Net income (loss) attributable to common stockholders per basic share | (0.46) | (0.04) | 0.08 | (0.29) | (0.56) | (0.30) | (0.44) | (4.33) | ||||||||||||||||||
| Core FFO | 2,941 | (4,255) | 2,049 | (4,814) | (9,987) | (25,140) | (30,710) | (29,250) | ||||||||||||||||||
| Core FFO per basic share | — | (0.01) | — | (0.01) | (0.02) | (0.05) | (0.06) | (0.05) | ||||||||||||||||||
| AFFO and Distributable Earnings ("DE") | 1,569 | (5,352) | 700 | (5,578) | (10,213) | (25,373) | (31,010) | (29,470) | ||||||||||||||||||
| AFFO and DE per basic share | — | (0.01) | — | (0.01) | (0.02) | (0.05) | (0.06) | (0.05) | ||||||||||||||||||
| Adjusted EBITDA | 20,494 | 20,957 | 17,622 | 15,377 | 12,538 | (2,444) | (5,519) | (5,236) | ||||||||||||||||||
| Balance Sheet, Capitalization and Trading Statistics | ||||||||||||||||||||||||||
| Total consolidated assets | $ | 11,232,157 | $ | 14,197,816 | $ | 15,442,981 | $ | 15,921,346 | $ | 16,625,250 | $ | 20,200,560 | $ | 19,043,050 | $ | 16,183,534 | ||||||||||
| DBRG OP share of consolidated assets | 3,561,501 | 6,233,158 | 6,086,259 | 6,929,390 | 7,324,784 | 10,119,834 | 10,087,808 | 10,622,322 | ||||||||||||||||||
Total consolidated debt(1) | 5,187,597 | 4,922,722 | 4,621,240 | 3,919,255 | 7,023,226 | 7,931,458 | 7,165,859 | 9,612,525 | ||||||||||||||||||
DBRG OP share of consolidated debt(1) | 1,458,886 | 1,366,528 | 1,391,943 | 1,073,609 | 3,392,620 | 3,853,642 | 3,683,660 | 7,147,356 | ||||||||||||||||||
Basic shares and OP units outstanding(2) | 649,845 | 620,553 | 547,162 | 545,815 | 538,908 | 535,217 | 535,473 | 535,201 | ||||||||||||||||||
| Liquidation preference of perpetual preferred equity | 883,500 | 883,500 | 947,500 | 1,033,750 | 1,033,750 | 1,033,750 | 1,033,750 | 1,033,750 | ||||||||||||||||||
| Insider ownership of shares and OP units | 3.6% | 3.5% | 4.0% | 4.0% | 9.4% | 9.4% | 10.0% | 9.9% | ||||||||||||||||||
| Digital Assets Under Management ("AUM") (in billions) | $ | 46.6 | $ | 45.3 | $ | 37.8 | $ | 34.9 | $ | 32.0 | $ | 30.0 | $ | 23.3 | $ | 21.6 | ||||||||||
| Digital Fee Earning Equity Under Management ("FEEUM") (in billions) | $ | 18.8 | $ | 18.3 | $ | 16.5 | $ | 14.5 | $ | 12.9 | $ | 12.8 | $ | 8.6 | $ | 7.7 | ||||||||||
| Digital Key Metrics | ||||||||||||||||||||||||||
| Digital IM FRE | 24,604 | 34,790 | 33,659 | 27,680 | 20,138 | 6,415 | 10,731 | 10,530 | ||||||||||||||||||
| Digital IM FRE - DBRG OP share | 16,989 | 23,757 | 22,922 | 19,470 | 13,583 | 3,893 | 8,148 | 10,531 | ||||||||||||||||||
| Digital Operating Adjusted EBITDA | 88,659 | 84,529 | 80,886 | 81,995 | 82,287 | 59,716 | 45,177 | 16,453 | ||||||||||||||||||
| Digital Operating Adjusted EBITDA - DBRG OP share | 15,497 | 14,200 | 13,636 | 13,776 | 13,948 | 9,620 | 6,914 | 3,294 | ||||||||||||||||||
| Digital and Corporate Debt | 5,187,597 | 4,856,222 | 4,617,240 | 3,919,255 | 3,869,338 | 3,758,345 | 3,077,861 | 1,517,507 | ||||||||||||||||||
| Digital and Corporate Debt - DBRG OP share | 1,458,886 | 1,300,028 | 1,387,943 | 1,073,609 | 1,027,520 | 1,059,881 | 886,765 | 1,105,605 | ||||||||||||||||||
| Other digital net carrying value | 672,130 | 532,969 | 503,106 | 424,345 | 353,776 | 353,194 | 256,451 | 161,287 | ||||||||||||||||||
| Other digital net carrying value - DBRG OP share | 495,825 | 358,178 | 339,634 | 269,488 | 243,726 | 254,718 | 210,396 | 144,388 | ||||||||||||||||||
| Number of BRSP shares owned by DigitalBridge | 34,991 | 34,991 | 34,991 | 44,478 | 44,474 | 44,474 | 44,473 | 44,473 | ||||||||||||||||||
| Digital and Corporate net assets & other non-digital assets net carrying value - DBRG OP share | 1,053,640 | 1,085,397 | 654,576 | 439,747 | 283,133 | 493,388 | 330,965 | 876,926 | ||||||||||||||||||
Notes:
(1) Represents principal balance and excludes debt issuance costs, discounts and premiums.
(2) Includes common shares and OP units outstanding, vested and unvested restricted stock and vested director share units. Based on the performance of the Company's class A common stock price during the three months ended March 31, 2022 and the results of certain Company-specific metrics as of March 31, 2022, excluded are class A common shares that are contingently issuable in relation to performance stock units and unvested shares related to LTIP units of 8.7 million and net settlement for the exercise of warrants held by Wafra of 11.8 million. Also excluded are class A shares issuable in relation to an assumed exchange of the Company's remaining 5.75% senior notes of 34.1 million.
DigitalBridge | Supplemental Financial Report | 6 | ||||||||||
| IIa. Financial Results - Balance Sheet | ||
| ($ in thousands, except per share data) (unaudited) | As of March 31, 2022 | |||||||||||||
| Consolidated | Non Controlling Interests' Share | |||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 1,117,688 | $ | 253,766 | ||||||||||
| Restricted cash | 106,332 | 84,351 | ||||||||||||
| Real estate, net | 5,628,072 | 4,673,487 | ||||||||||||
| Loans receivable | 504,739 | 6,643 | ||||||||||||
| Equity and debt investments | 940,601 | 346,796 | ||||||||||||
| Goodwill | 761,368 | 739,303 | ||||||||||||
| Deferred leasing costs and intangible assets, net | 1,225,487 | 975,113 | ||||||||||||
| Assets held for disposition | 151,307 | — | ||||||||||||
| Other assets | 746,176 | 615,929 | ||||||||||||
| Due from affiliates | 50,387 | (24,732) | ||||||||||||
| Total assets | $ | 11,232,157 | $ | 7,670,656 | ||||||||||
| Liabilities | ||||||||||||||
| Debt, net | $ | 5,123,246 | $ | 3,686,080 | ||||||||||
| Accrued and other liabilities | 896,253 | 227,974 | ||||||||||||
| Intangible liabilities, net | 34,459 | 28,956 | ||||||||||||
| Liabilities related to assets held for disposition | 758 | — | ||||||||||||
| Dividends and distributions payable | 15,759 | — | ||||||||||||
| Total liabilities | 6,070,475 | 3,943,010 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Redeemable noncontrolling interests | 1,038,739 | 1,038,739 | ||||||||||||
| Equity | ||||||||||||||
| Stockholders’ equity: | ||||||||||||||
| Preferred stock, $0.01 par value per share; $883,500 liquidation preference; 250,000 shares authorized; 35,340 shares issued and outstanding | 854,232 | — | ||||||||||||
| Common stock, $0.01 par value per share | ||||||||||||||
| Class A, 949,000 shares authorized; 597,480 shares issued and outstanding | 5,974 | — | ||||||||||||
| Class B, 1,000 shares authorized; 666 shares issued and outstanding | 7 | — | ||||||||||||
| Additional paid-in capital | 7,356,363 | — | ||||||||||||
| Accumulated deficit | (6,838,497) | — | ||||||||||||
| Accumulated other comprehensive income | 12,753 | — | ||||||||||||
| Total stockholders’ equity | 1,390,832 | — | ||||||||||||
| Noncontrolling interests in investment entities | 2,688,907 | 2,688,907 | ||||||||||||
| Noncontrolling interests in Operating Company | 43,204 | — | ||||||||||||
| Total equity | 4,122,943 | 2,688,907 | ||||||||||||
| Total liabilities, redeemable noncontrolling interests and equity | $ | 11,232,157 | $ | 7,670,656 | ||||||||||
DigitalBridge | Supplemental Financial Report | 7 | ||||||||||
| IIb. Financial Results - Consolidated Segment Operating Results | ||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
| ($ in thousands) (unaudited) | Digital Investment Management | Digital Operating | Corporate and Other | Discontinued Operations | Total | ||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Property operating income | $ | — | $ | 202,511 | $ | — | $ | — | $ | 202,511 | |||||||||||||||||||
| Interest income | 2 | 2 | 5,162 | — | 5,166 | ||||||||||||||||||||||||
| Fee income | 43,637 | — | (800) | — | 42,837 | ||||||||||||||||||||||||
| Other income | 1,254 | 9 | 5,682 | — | 6,945 | ||||||||||||||||||||||||
| Total revenues | 44,893 | 202,522 | 10,044 | — | 257,459 | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Property operating expense | — | 84,003 | — | — | 84,003 | ||||||||||||||||||||||||
| Interest expense | 2,502 | 36,184 | 5,344 | — | 44,030 | ||||||||||||||||||||||||
| Investment expense | 1,140 | 8,016 | 409 | — | 9,565 | ||||||||||||||||||||||||
| Transaction-related costs | — | — | 165 | — | 165 | ||||||||||||||||||||||||
| Depreciation and amortization | 5,276 | 122,891 | 400 | — | 128,567 | ||||||||||||||||||||||||
| Compensation expense | |||||||||||||||||||||||||||||
| Cash and equity-based compensation | 24,808 | 19,956 | 20,778 | — | 65,542 | ||||||||||||||||||||||||
| Carried interest and incentive fee compensation | (20,352) | — | — | — | (20,352) | ||||||||||||||||||||||||
| Administrative expenses | 4,171 | 6,899 | 16,815 | — | 27,885 | ||||||||||||||||||||||||
| Total expenses | 17,545 | 277,949 | 43,911 | — | 339,405 | ||||||||||||||||||||||||
| Other income (loss) | |||||||||||||||||||||||||||||
| Gain on sale of real estate assets | — | — | — | — | — | ||||||||||||||||||||||||
| Other gain (loss), net | (3,055) | 956 | (147,782) | — | (149,881) | ||||||||||||||||||||||||
| Equity method earnings (loss) | 17 | — | 19,190 | — | 19,207 | ||||||||||||||||||||||||
| Equity method earnings (loss) - carried interest | (31,079) | — | — | — | (31,079) | ||||||||||||||||||||||||
| Income (loss) before income taxes | (6,769) | (74,471) | (162,459) | — | (243,699) | ||||||||||||||||||||||||
| Income tax benefit (expense) | (2,374) | 330 | 9,457 | — | 7,413 | ||||||||||||||||||||||||
| Income (loss) from continuing operations | (9,143) | (74,141) | (153,002) | — | (236,286) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations | — | — | — | (107,398) | (107,398) | ||||||||||||||||||||||||
| Net income (loss) | (9,143) | (74,141) | (153,002) | (107,398) | (343,684) | ||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests: | |||||||||||||||||||||||||||||
| Redeemable noncontrolling interests | (3,266) | — | (7,954) | — | (11,220) | ||||||||||||||||||||||||
| Investment entities | 2,349 | (60,196) | 977 | (6,175) | (63,045) | ||||||||||||||||||||||||
| Operating Company | (624) | (1,121) | (12,982) | (8,135) | (22,862) | ||||||||||||||||||||||||
| Net income (loss) attributable to DigitalBridge Group, Inc. | (7,602) | (12,824) | (133,043) | (93,088) | (246,557) | ||||||||||||||||||||||||
| Preferred stock redemption | — | — | — | — | — | ||||||||||||||||||||||||
| Preferred stock dividends | — | — | 15,759 | — | 15,759 | ||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (7,602) | $ | (12,824) | $ | (148,802) | $ | (93,088) | $ | (262,316) | |||||||||||||||||||
DigitalBridge | Supplemental Financial Report | 8 | ||||||||||
| IIc. Financial Results - Noncontrolling Interests’ Share Segment Operating Results | ||
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||
| ($ in thousands) (unaudited) | Digital Investment Management | Digital Operating | Corporate and Other | Discontinued Operations | Total | ||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Property operating income | $ | — | $ | 166,128 | $ | — | $ | — | $ | 166,128 | |||||||||||||||||||
| Interest income | 1 | 1 | 18 | — | 20 | ||||||||||||||||||||||||
| Fee income | 13,717 | — | — | — | 13,717 | ||||||||||||||||||||||||
| Other income | 558 | 7 | 280 | — | 845 | ||||||||||||||||||||||||
| Total revenues | 14,276 | 166,136 | 298 | — | 180,710 | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Property operating expense | — | 68,797 | — | — | 68,797 | ||||||||||||||||||||||||
| Interest expense | — | 29,150 | 47 | — | 29,197 | ||||||||||||||||||||||||
| Investment expense | 359 | 6,852 | 6 | — | 7,217 | ||||||||||||||||||||||||
| Depreciation and amortization | 1,655 | 101,584 | — | — | 103,239 | ||||||||||||||||||||||||
| Compensation expense | |||||||||||||||||||||||||||||
| Cash and equity-based compensation | 5,732 | 15,055 | — | — | 20,787 | ||||||||||||||||||||||||
| Carried interest and incentive fee compensation | 4,007 | — | — | — | 4,007 | ||||||||||||||||||||||||
| Administrative expenses | 1,299 | 5,324 | 302 | — | 6,925 | ||||||||||||||||||||||||
| Total expenses | 13,052 | 226,762 | 355 | — | 240,169 | ||||||||||||||||||||||||
| Other income (loss) | |||||||||||||||||||||||||||||
| Other gain (loss), net | (569) | 830 | (8,774) | — | (8,513) | ||||||||||||||||||||||||
| Equity method earnings (loss) | 7 | — | 1,853 | — | 1,860 | ||||||||||||||||||||||||
| Equity method earnings (loss) - carried interest | 7,863 | — | — | — | 7,863 | ||||||||||||||||||||||||
| Income (loss) before income taxes | 8,525 | (59,796) | (6,978) | — | (58,249) | ||||||||||||||||||||||||
| Income tax benefit (expense) | (25) | 266 | — | — | 241 | ||||||||||||||||||||||||
| Net income (loss) | 8,500 | (59,530) | (6,978) | — | (58,008) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations | — | — | (6,174) | — | (6,174) | ||||||||||||||||||||||||
| Non-pro rata allocation of income (loss) to NCI | (9,417) | (666) | — | — | (10,083) | ||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | $ | (917) | $ | (60,196) | $ | (13,152) | $ | — | $ | (74,265) | |||||||||||||||||||
DigitalBridge | Supplemental Financial Report | 9 | ||||||||||
IId. Financial Results - Segment Reconciliation of Net Income to FFO, Core FFO, AFFO, DE and Adjusted EBITDA | ||
| OP pro rata share by segment | Amounts attributable to noncontrolling interests | DBRG consolidated as reported | |||||||||||||||||||||||||||||||||||||||
| ($ in thousands; for the three months ended March 31, 2022; and unaudited) | Digital IM | Digital Operating | Corporate and Other | Discontinued Operations | Total OP pro rata share | ||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (7,602) | $ | (12,824) | $ | (148,802) | $ | (93,088) | $ | (262,316) | $ | — | $ | (262,316) | |||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling common interests in Operating Company | (624) | (1,121) | (12,982) | (8,135) | (22,862) | — | (22,862) | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to common interests in Operating Company and common stockholders | (8,226) | (13,945) | (161,784) | (101,223) | (285,178) | — | (285,178) | ||||||||||||||||||||||||||||||||||
| Adjustments for FFO: | |||||||||||||||||||||||||||||||||||||||||
| Real estate depreciation and amortization | — | 20,343 | 2,279 | 804 | 23,426 | 98,318 | 121,744 | ||||||||||||||||||||||||||||||||||
| Impairment of real estate | — | — | — | 8,577 | 8,577 | 15,222 | 23,799 | ||||||||||||||||||||||||||||||||||
| Gain from sales of real estate | — | — | — | 6 | 6 | (3) | 3 | ||||||||||||||||||||||||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | — | — | — | — | — | (113,537) | (113,537) | ||||||||||||||||||||||||||||||||||
| FFO | $ | (8,226) | $ | 6,398 | $ | (159,505) | $ | (91,836) | $ | (253,169) | $ | — | $ | (253,169) | |||||||||||||||||||||||||||
| Additional adjustments for Core FFO: | |||||||||||||||||||||||||||||||||||||||||
| Adjustment to BRSP cash dividend | — | — | (8,399) | (690) | (9,089) | — | (9,089) | ||||||||||||||||||||||||||||||||||
| Equity-based compensation expense | 2,652 | 465 | 5,878 | 6,619 | 15,614 | 3,106 | 18,720 | ||||||||||||||||||||||||||||||||||
| Straight-line rent revenue and expense | 122 | 152 | (856) | (942) | (1,524) | (1,024) | (2,548) | ||||||||||||||||||||||||||||||||||
| Amortization of acquired above- and below-market lease values, net | — | 22 | — | (338) | (316) | 68 | (248) | ||||||||||||||||||||||||||||||||||
| Debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts | 309 | 817 | 423 | 87,819 | 89,368 | 9,097 | 98,465 | ||||||||||||||||||||||||||||||||||
| Non-real estate fixed asset depreciation, amortization and impairment | 69 | 964 | 400 | 781 | 2,214 | 8,918 | 11,132 | ||||||||||||||||||||||||||||||||||
Restructuring and transaction-related charges(1) | 3,432 | — | 14,520 | 6,205 | 24,157 | 511 | 24,668 | ||||||||||||||||||||||||||||||||||
| Non-real estate (gains) losses, excluding realized gains or losses of digital assets within the Corporate and Other segment | (185) | (125) | 133,293 | 1,385 | 134,368 | (4,144) | 130,224 | ||||||||||||||||||||||||||||||||||
| Net unrealized carried interest | 10,643 | — | — | — | 10,643 | 2,435 | 13,078 | ||||||||||||||||||||||||||||||||||
| Deferred taxes and tax effect on certain of the foregoing adjustments | (259) | (63) | — | — | (322) | (267) | (589) | ||||||||||||||||||||||||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | — | — | — | — | — | (18,700) | (18,700) | ||||||||||||||||||||||||||||||||||
| Less: Core FFO from discontinued operations | — | — | — | (9,003) | (9,003) | — | (9,003) | ||||||||||||||||||||||||||||||||||
| Core FFO | $ | 8,557 | $ | 8,630 | $ | (14,246) | $ | — | $ | 2,941 | $ | — | $ | 2,941 | |||||||||||||||||||||||||||
| Additional adjustments for AFFO: | |||||||||||||||||||||||||||||||||||||||||
| Recurring capital expenditures | — | (1,372) | — | — | (1,372) | — | (1,372) | ||||||||||||||||||||||||||||||||||
| AFFO and DE | $ | 8,557 | $ | 7,258 | $ | (14,246) | $ | — | $ | 1,569 | $ | — | $ | 1,569 | |||||||||||||||||||||||||||
Notes:
(1) Restructuring and non-recurring items primarily represent costs and charges incurred as a result of corporate restructuring and reorganization to implement the digital evolution. These costs and charges include severance, retention, relocation, transition, shareholder settlement and other related restructuring costs, which are not reflective of the Company’s core operating performance.
DigitalBridge | Supplemental Financial Report | 10 | ||||||||||
IId. Financial Results - Segment Reconciliation of Net Income to FFO, Core FFO, AFFO, DE and Adjusted EBITDA | ||
| OP pro rata share by segment | ||||||||||||||||||||||||||||||||
| ($ in thousands; for the three months ended March 31, 2022; and unaudited) | Digital IM | Digital Operating | Corporate and Other | Discontinued Operations | Total OP pro rata share | |||||||||||||||||||||||||||
| Core FFO | $ | 8,557 | $ | 8,630 | $ | (14,246) | $ | — | $ | 2,941 | ||||||||||||||||||||||
| Less: Earnings of equity method investments | (9) | — | (6,682) | — | (6,691) | |||||||||||||||||||||||||||
| Plus: Preferred dividends | — | — | 15,759 | — | 15,759 | |||||||||||||||||||||||||||
Plus: Core interest expense(1) | 2,193 | 6,216 | 4,871 | — | 13,280 | |||||||||||||||||||||||||||
Plus: Core tax expense(1) | 2,608 | — | (9,457) | — | (6,849) | |||||||||||||||||||||||||||
| Plus: Non pro-rata allocation of income (loss) to NCI | 231 | — | — | — | 231 | |||||||||||||||||||||||||||
| Less: Net realized carried interest, incentive fees, and other adjustments | 1,172 | — | — | — | 1,172 | |||||||||||||||||||||||||||
| Plus: Digital Operating installation services, transaction, investment and servicing costs | — | 651 | — | — | 651 | |||||||||||||||||||||||||||
| Adjusted EBITDA (DBRG OP Share) | $ | 14,752 | $ | 15,497 | $ | (9,755) | $ | — | $ | 20,494 | ||||||||||||||||||||||
Notes:
(1) Excludes components that are included in adjustments for Core FFO.
DigitalBridge | Supplemental Financial Report | 11 | ||||||||||
| IIIa. Capitalization - Debt Summary | ||
| ($ in thousands; as of March 31, 2022) | ||||||||||||||||||||||||||||||||||||||||||||
| Consolidated debt | Payments due by period(1) | |||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2023 | 2024 | 2025 | 2026 and after | Total | |||||||||||||||||||||||||||||||||||||||
| Investment-level debt: | ||||||||||||||||||||||||||||||||||||||||||||
| Digital Operating - Fixed | $ | 4,673 | $ | 219,792 | $ | 600,753 | $ | 700,000 | $ | 2,119,690 | $ | 3,644,908 | ||||||||||||||||||||||||||||||||
| Digital Operating - Variable | — | 271,500 | 15,750 | 446,517 | 100,000 | $ | 833,767 | |||||||||||||||||||||||||||||||||||||
| Total Digital Operating | 4,673 | 491,292 | 616,503 | 1,146,517 | 2,219,690 | 4,478,675 | ||||||||||||||||||||||||||||||||||||||
| Corporate and Other debt: | ||||||||||||||||||||||||||||||||||||||||||||
| 2021-1, A-1 Variable Funding Notes | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| 2021-1, Class A-2 Term Notes | — | — | — | — | 300,000 | 300,000 | ||||||||||||||||||||||||||||||||||||||
Other (2) | — | 119,000 | 11,500 | — | — | 130,500 | ||||||||||||||||||||||||||||||||||||||
| Convertible/exchangeable senior notes | — | 200,000 | — | 78,422 | — | 278,422 | ||||||||||||||||||||||||||||||||||||||
Total consolidated debt (3) | $ | 4,673 | $ | 810,292 | $ | 628,003 | $ | 1,224,939 | $ | 2,519,690 | $ | 5,187,597 | ||||||||||||||||||||||||||||||||
| Fixed/Variable | WA Interest Rate | WA Remaining Term | ||||||||||||||||||||||||||||||||||||||||||
| DBRG OP share of debt | Payments due by period(1) | |||||||||||||||||||||||||||||||||||||||||||
| 2022 | 2023 | 2024 | 2025 | 2026 and after | Total | |||||||||||||||||||||||||||||||||||||||
| Investment-level debt: | ||||||||||||||||||||||||||||||||||||||||||||
| Digital Operating - Fixed | $ | 614 | $ | 28,859 | $ | 78,879 | $ | 91,910 | $ | 379,462 | $ | 579,724 | Fixed | 2.4% | 3.9 | |||||||||||||||||||||||||||||
| Digital Operating - Variable | — | 57,843 | 3,148 | 89,259 | 19,990 | $ | 170,240 | Variable | 5.0% | 2.8 | ||||||||||||||||||||||||||||||||||
| Total Digital Operating | 614 | 86,702 | 82,027 | 181,169 | 399,452 | 749,964 | 3.0% | 3.7 | ||||||||||||||||||||||||||||||||||||
| Corporate and Other debt: | ||||||||||||||||||||||||||||||||||||||||||||
| 2021-1, A-1 Variable Funding Notes | — | — | — | — | — | — | Variable | N/A | 4.5 | |||||||||||||||||||||||||||||||||||
| 2021-1, Class A-2 Term Notes | — | — | — | — | 300,000 | 300,000 | Fixed | 3.9% | 4.5 | |||||||||||||||||||||||||||||||||||
Other (2) | — | 119,000 | 11,500 | — | — | 130,500 | Variable | 2.1% | 1.4 | |||||||||||||||||||||||||||||||||||
| Convertible/exchangeable senior notes | — | 200,000 | — | 78,422 | — | 278,422 | Fixed | 5.2% | 1.7 | |||||||||||||||||||||||||||||||||||
Total DBRG share of debt (3) | $ | 614 | $ | 405,702 | $ | 93,527 | $ | 259,591 | $ | 699,452 | $ | 1,458,886 | ||||||||||||||||||||||||||||||||
| Digital and Corporate Net Assets | Consolidated amount | DBRG OP share of consolidated amount | ||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents, restricted cash and other assets | $ | 1,967,303 | $ | 1,099,320 | ||||||||||||||||||||||||||||||||||||||||
| Accrued and other liabilities and dividends payable | 903,419 | 286,083 | ||||||||||||||||||||||||||||||||||||||||||
| Net assets | $ | 1,063,884 | $ | 813,237 | ||||||||||||||||||||||||||||||||||||||||
Notes:
(1) Maturity dates are based on initial maturity dates or extended maturity dates, where applicable, the extension option is at the Company’s discretion and if the criteria to extend have been met as of the reporting date.
(2) In the third quarter of 2021, the Company entered into a credit facility to fund the acquisition of loans that are warehoused for a future securitization vehicle.
(3) Excluded from above presentation is debt of assets which are presented under discontinued operations.
DigitalBridge | Supplemental Financial Report | 12 | ||||||||||
| IIIb. Capitalization - DBRG Series 2021-1 | ||
| ($ in thousands, as of March 31, 2022) | |||||||||||
| Class A-2 Term Notes | |||||||||||
| Amount outstanding | $ | 300,000 | |||||||||
| Interest rate | 3.933 | % | |||||||||
| Anticipated Repayment Date (ARD) | September 25, 2026 | ||||||||||
| Kroll Rating | BBB | ||||||||||
| Class A-1 Variable Funding Notes | |||||||||||
| Maximum Available | $ | 300,000 | (1) | ||||||||
| Amount outstanding | $ | — | |||||||||
| Interest Rate | 1M Term SOFR + 3.00% | (1) | |||||||||
Fully extended Anticipated Repayment Date (ARD)(2) | September 25, 2026 | ||||||||||
| Financial covenants: | Covenant level | ||||||||||
Debt Service Coverage Ratio(3) | Minimum 1.75x | ||||||||||
Loan to Value Ratio(4) | Less than 35.0% | ||||||||||
Investment Management Expense Ratio(5) | Less than 60.0% | ||||||||||
| Company status: As of May 4, 2022, DBRG is meeting all required covenant threshold levels. | |||||||||||
Notes:
(1) Effective April 1, 2022, the maximum principal amount of the Series 2021-1 Class A-1 Variable Funding Notes increased to $300 million and Term SOFR replaced LIBOR as the benchmark for accruing interest on the Series 2021-1 Class A-1 Variable Funding Notes.
(2) Anticipated Repayment Date is September 25, 2026 including two 1-year extension options subject to 1) either rating agency confirmation and consent of VFN noteholders are obtained or DSCR exceeding 1.75x, 2) term notes rating not less than BBB- 3) the payment of a 0.05% extension fee and 4) other customary conditions.
(3) Debt service coverage ratio covenant thresholds: minimum of 1.75x for ability to borrow from the VFN; below 1.75x to 1.50x = 50% cash trap; below 1.50x to 1.20x = 100% cash trap; and below 1.20x = cash sweep.
(4) 100% cash sweep until LTV is less than 35%.
(5) 50% cash sweep until ratio is less than 60%.
DigitalBridge | Supplemental Financial Report | 13 | ||||||||||
| IIIc. Capitalization - Convertible/Exchangeable Notes & Perpetual Preferred Stock | ||
| ($ in thousands; except per share data; as of March 31, 2022) | ||||||||||||||||||||||||||||||||||||||
| Convertible/exchangeable debt | ||||||||||||||||||||||||||||||||||||||
| Description | Outstanding principal | Final due date(1) | Interest rate | Conversion price (per share of common stock) | Conversion ratio | Conversion shares | ||||||||||||||||||||||||||||||||
| 5.75% Exchangeable senior notes | $ | 78,422 | July 15, 2025 | 5.75% fixed | $ | 2.30 | 434.7826 | 34,097 | ||||||||||||||||||||||||||||||
| 5.0% Convertible senior notes | 200,000 | April 15, 2023 | 5.00% fixed | 15.76 | 63.4700 | 12,694 | ||||||||||||||||||||||||||||||||
| Total convertible debt | $ | 278,422 | ||||||||||||||||||||||||||||||||||||
| Perpetual preferred stock | ||||||||||||||||||||
| Description | Liquidation preference | Shares outstanding (In thousands) | Callable period | |||||||||||||||||
| Series H 7.125% cumulative redeemable perpetual preferred stock | 223,500 | 8,940 | Callable | |||||||||||||||||
| Series I 7.15% cumulative redeemable perpetual preferred stock | 345,000 | 13,800 | On or after June 5, 2022 | |||||||||||||||||
| Series J 7.125% cumulative redeemable perpetual preferred stock | 315,000 | 12,600 | On or after September 22, 2022 | |||||||||||||||||
| Total preferred stock | $ | 883,500 | 35,340 | |||||||||||||||||
Notes:
(1) Callable at principal amount only if DBRG common stock has traded at least 130% of the conversion price for 20 of 30 consecutive trading days: on or after July 21, 2023, for the 5.75% exchangeable senior notes and on or after April 22, 2020, for the 5.0% convertible senior notes.
DigitalBridge | Supplemental Financial Report | 14 | ||||||||||
| IIId. Capitalization - Organization Structure | ||
DigitalBridge | Supplemental Financial Report | 15 | ||||||||||
| IV. Assets Under Management | ||
| ($ in millions) | DBRG OP Share | ||||||||||||||||||||||||||||
| Segment | 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | |||||||||||||||||||||
| Digital Investment Management | $ | 44,517 | $ | 43,619 | $ | 36,337 | $ | 33,551 | $ | 30,711 | $ | 28,577 | $ | 22,237 | $ | 21,015 | |||||||||||||
| Digital Operating | 1,460 | 1,233 | 1,157 | 1,093 | 1,073 | 1,087 | 724 | 300 | |||||||||||||||||||||
Other (1) | 1,848 | 6,427 | 11,880 | 13,790 | 14,397 | 22,300 | 23,853 | 24,392 | |||||||||||||||||||||
| Total AUM | $ | 47,825 | $ | 51,279 | $ | 49,374 | $ | 48,434 | $ | 46,181 | $ | 51,964 | $ | 46,814 | $ | 45,707 | |||||||||||||
Notes:
(1) March 31, 2022 includes $1.2 billion of non-digital assets.
DigitalBridge | Supplemental Financial Report | 16 | ||||||||||
| V. Digital Investment Management | ||
| ($ in millions) | |||||||||||||||||||||||||||||
| AUM DBRG OP Share | 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | |||||||||||||||||||||
| DigitalBridge Partners I | $ | 5,766 | $ | 6,180 | $ | 6,180 | $ | 6,003 | $ | 5,931 | $ | 6,089 | $ | 5,686 | $ | 5,665 | |||||||||||||
| DigitalBridge Partners II | 10,687 | 10,430 | 8,005 | 6,431 | 4,775 | 3,241 | — | — | |||||||||||||||||||||
| Separately Capitalized Portfolio Companies | 7,111 | 6,882 | 10,147 | 10,254 | 9,893 | 8,947 | 8,273 | 9,556 | |||||||||||||||||||||
| Co-Investment (Sidecar) Capital | 19,907 | 19,311 | 11,417 | 10,273 | 9,591 | 9,857 | 8,181 | 5,692 | |||||||||||||||||||||
| Liquid and Other Strategies | 1,046 | 816 | 588 | 590 | 521 | 443 | 97 | 102 | |||||||||||||||||||||
| Digital IM AUM | $ | 44,517 | $ | 43,619 | $ | 36,337 | $ | 33,551 | $ | 30,711 | $ | 28,577 | $ | 22,237 | $ | 21,015 | |||||||||||||
| FEEUM DBRG OP Share | 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | |||||||||||||||||||||
| DigitalBridge Partners I | $ | 3,034 | $ | 3,215 | $ | 3,040 | $ | 3,081 | $ | 3,179 | $ | 3,756 | $ | 3,756 | $ | 3,756 | |||||||||||||
| DigitalBridge Partners II | 7,996 | 8,001 | 7,146 | 5,519 | 3,964 | 3,217 | — | — | |||||||||||||||||||||
| Separately Capitalized Portfolio Companies | 2,372 | 2,148 | 2,576 | 2,576 | 2,534 | 2,777 | 2,603 | 3,019 | |||||||||||||||||||||
| Co-Investment (Sidecar) Capital | 4,370 | 4,105 | 3,184 | 2,817 | 2,744 | 2,655 | 2,042 | 841 | |||||||||||||||||||||
| Liquid and Other Strategies | 1,013 | 786 | 510 | 512 | 432 | 437 | 153 | 127 | |||||||||||||||||||||
| Digital IM FEEUM (3/31/22 Annual IM Fee Rate = 0.93%) | $ | 18,785 | $ | 18,255 | $ | 16,456 | $ | 14,505 | $ | 12,853 | $ | 12,842 | $ | 8,554 | $ | 7,743 | |||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||||||
| Digital IM FRE | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | |||||||||||||||||||||
| Fee income | $ | 43,155 | $ | 43,145 | $ | 37,751 | $ | 33,304 | $ | 28,917 | $ | 24,191 | $ | 19,172 | $ | 18,987 | |||||||||||||
Fee income, other (1) | 523 | 8,787 | 12,809 | 8,996 | 2,148 | 862 | 876 | 1,306 | |||||||||||||||||||||
| Other income | 251 | 273 | 483 | 84 | 54 | 183 | 87 | 552 | |||||||||||||||||||||
| Compensation expense—cash | (17,675) | (16,275) | (16,933) | (14,426) | (10,852) | (18,353) | (9,414) | (9,208) | |||||||||||||||||||||
| Administrative expenses | (4,012) | (3,446) | (2,675) | (2,337) | (2,067) | (2,310) | (1,832) | (2,330) | |||||||||||||||||||||
| Exclude: Start-up Net G&A of certain new strategies | 2,362 | 2,306 | 2,224 | 2,059 | 1,938 | 1,842 | 1,842 | 1,223 | |||||||||||||||||||||
Digital IM FRE (2) | $ | 24,604 | $ | 34,790 | $ | 33,659 | $ | 27,680 | $ | 20,138 | $ | 6,415 | $ | 10,731 | $ | 10,530 | |||||||||||||
DBRG OP share of Digital IM FRE(3) | $ | 16,989 | $ | 23,757 | $ | 22,922 | $ | 19,470 | $ | 13,583 | $ | 3,893 | $ | 8,148 | $ | 10,531 | |||||||||||||
Notes:
(1) Includes service fee income and one time catch-up fees earned, which are customary fees paid on newly raised 3rd party capital as if it were raised on the first closing date.
(2) For reconciliations of net income / (loss) to FRE, please refer to the Appendices section of this presentation.
(3) In July 2020, the Company closed on a strategic investment from Wafra for a 31.5% ownership stake in the Digital Investment Management business. Represents the Company interest after deducting Wafra's 31.5% interest.
DigitalBridge | Supplemental Financial Report | 17 | ||||||||||
| VI. Digital Operating | ||
| ($ in millions, unless otherwise noted) | |||||||||||||||||||||||||||||
| Portfolio Overview | 3/31/22 | 12/31/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | |||||||||||||||||||||
| Consolidated amount | |||||||||||||||||||||||||||||
Asset(1) | $ | 8,397 | $ | 7,624 | $ | 7,211 | $ | 6,736 | $ | 6,633 | $ | 6,248 | $ | 4,925 | $ | 1,496 | |||||||||||||
Debt(2)(3) | (4,479) | (4,217) | (3,817) | (3,374) | (3,369) | (3,227) | (2,546) | (515) | |||||||||||||||||||||
| Net Carrying Value - Consolidated | $ | 3,918 | $ | 3,407 | $ | 3,394 | $ | 3,362 | $ | 3,264 | $ | 3,021 | $ | 2,379 | $ | 981 | |||||||||||||
| DBRG OP share of consolidated amount | |||||||||||||||||||||||||||||
Asset(1) | $ | 1,460 | $ | 1,233 | $ | 1,157 | $ | 1,093 | $ | 1,073 | $ | 1,087 | $ | 724 | $ | 300 | |||||||||||||
Debt(2)(3) | (746) | (661) | (588) | (529) | (528) | (536) | (355) | (103) | |||||||||||||||||||||
| Net Carrying Value - DBRG OP share | $ | 714 | $ | 572 | $ | 569 | $ | 564 | $ | 545 | $ | 551 | $ | 369 | $ | 197 | |||||||||||||
| DBRG net carrying value % interest | 18 | % | 17 | % | 17 | % | 17 | % | 17 | % | 18 | % | 16 | % | 20 | % | |||||||||||||
| ($ in millions, unless otherwise noted) | |||||||||||||||||||||||||||||
Operating Metrics (4) | 3/31/2022 - 1Q22 | 12/31/2021 - 4Q21 | 9/30/2021 - 3Q21 | 6/30/2021 - 2Q21 | 3/31/2021 - 1Q21 | 12/31/2020 - 4Q20 | 9/30/2020- 3Q20 | 6/30/2020 - 2Q20 | |||||||||||||||||||||
| Number of Data Centers | 78 | 78 | 76 | 76 | 76 | 32 | 32 | 20 | |||||||||||||||||||||
| Max Critical I.T. Square Feet | 1,980,317 | 1,949,144 | 1,819,946 | 1,809,943 | 1,791,781 | 1,138,048 | 1,137,866 | 456,649 | |||||||||||||||||||||
| Leased Square Feet | 1,608,378 | 1,552,517 | 1,467,420 | 1,439,291 | 1,423,322 | 967,879 | 945,640 | 316,697 | |||||||||||||||||||||
| % Utilization Rate | 81.2% | 79.7% | 80.6% | 79.5% | 79.4% | 85.0% | 83.1% | 69.4% | |||||||||||||||||||||
| MRR (Annualized) | $ | 812.3 | $ | 790.4 | $ | 773.1 | $ | 750.2 | $ | 743.0 | $ | 442.0 | $ | 374.0 | $ | 171.4 | |||||||||||||
| Bookings (Annualized) | $ | 14.2 | $ | 15.3 | $ | 16.6 | $ | 16.4 | $ | 23.0 | $ | 6.0 | $ | 9.4 | $ | 6.6 | |||||||||||||
| Quarterly Churn (% of Prior Quarter MRR) | .9% | 1.9% | 1.3% | 1.3% | 1.3% | .8% | .8% | 1.7% | |||||||||||||||||||||
Notes:
(1) Includes all components related to real estate assets, including tangible real estate and lease-related intangibles and cash.
(2) Represents unpaid principal balance.
(3) For the first quarter 2022, in addition to debt presented, the Digital Operating segment has $141 million consolidated, or $27 million DBRG OP share, of finance lease obligations, which represents the present value of payments on leases classified as finance leases, in the Other Liabilities line item on the Company’s Balance Sheet.
(4) Operating metrics presented include assets owned entirely during the presented period. Data of assets acquired within a quarter are included in the following quarter.
DigitalBridge | Supplemental Financial Report | 18 | ||||||||||
| VI. Digital Operating | ||
| ($ in thousands) | |||||||||||||||||||||||||||||
| Digital Operating Adjusted EBITDA | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | |||||||||||||||||||||
| Consolidated amount | |||||||||||||||||||||||||||||
| Total revenues | $ | 202,522 | $ | 189,938 | $ | 194,966 | $ | 189,093 | $ | 189,202 | $ | 127,546 | $ | 98,549 | $ | 42,021 | |||||||||||||
| Property operating expenses | (84,003) | (78,950) | (80,226) | (77,140) | (79,862) | (47,224) | (37,544) | (18,055) | |||||||||||||||||||||
| Compensation and administrative expenses | (26,855) | (28,879) | (29,766) | (28,488) | (25,947) | (16,982) | (11,863) | (10,464) | |||||||||||||||||||||
| Investment, servicing and commission expenses | (8,016) | (5,153) | (4,862) | (5,255) | (6,565) | (3,329) | (2,362) | (696) | |||||||||||||||||||||
| Other gain/loss, net | 956 | (1,226) | 285 | (349) | (3) | (200) | (45) | — | |||||||||||||||||||||
| EBITDAre: | $ | 84,604 | $ | 75,730 | $ | 80,397 | $ | 77,861 | $ | 76,825 | $ | 59,811 | $ | 46,735 | $ | 12,806 | |||||||||||||
| Straight-line rent expenses and amortization of above- and below-market lease intangibles | (377) | 370 | 482 | (98) | (399) | (2,607) | (2,106) | 1,837 | |||||||||||||||||||||
| Compensation expense—equity-based | 752 | 1,918 | 308 | 308 | 308 | 728 | 148 | 296 | |||||||||||||||||||||
| Installation services | — | 2,097 | (4,058) | 576 | 880 | 429 | (65) | 493 | |||||||||||||||||||||
| Transaction, restructuring & integration costs | 4,636 | 3,188 | 4,042 | 2,999 | 4,670 | 1,155 | 420 | 1,021 | |||||||||||||||||||||
| Other gain/loss, net | (956) | 1,226 | (285) | 349 | 3 | 200 | 45 | — | |||||||||||||||||||||
Digital Operating Adjusted EBITDA - Consolidated (1) | $ | 88,659 | $ | 84,529 | $ | 80,886 | $ | 81,995 | $ | 82,287 | $ | 59,716 | $ | 45,177 | $ | 16,453 | |||||||||||||
| DBRG OP share of consolidated amount | |||||||||||||||||||||||||||||
| Total revenues | $ | 36,882 | $ | 32,464 | $ | 33,771 | $ | 32,624 | $ | 32,741 | $ | 21,013 | $ | 15,600 | $ | 8,413 | |||||||||||||
| Property operating expenses | (15,614) | (13,740) | (14,115) | (13,690) | (14,165) | (7,911) | (6,026) | (3,615) | |||||||||||||||||||||
| Compensation and administrative expenses | (5,752) | (5,457) | (5,615) | (5,350) | (4,888) | (3,276) | (2,310) | (2,095) | |||||||||||||||||||||
| Investment, servicing and commission expenses | (1,169) | (732) | (709) | (819) | (1,090) | (433) | (290) | (139) | |||||||||||||||||||||
| Other gain/loss, net | 125 | (238) | 61 | (69) | (1) | (26) | (6) | — | |||||||||||||||||||||
| EBITDAre: | $ | 14,472 | $ | 12,297 | $ | 13,393 | $ | 12,696 | $ | 12,597 | $ | 9,367 | $ | 6,968 | $ | 2,564 | |||||||||||||
| Straight-line rent expenses and amortization of above- and below-market lease intangibles | 195 | 244 | 295 | 247 | 192 | (250) | (154) | 368 | |||||||||||||||||||||
| Compensation expense—equity-based | 164 | 384 | 62 | 62 | 62 | 146 | 30 | 59 | |||||||||||||||||||||
| Installation services | — | 419 | (812) | 115 | 176 | 86 | (13) | 99 | |||||||||||||||||||||
| Transaction, restructuring & integration costs | 791 | 618 | 759 | 587 | 920 | 245 | 77 | 204 | |||||||||||||||||||||
| Other gain/loss, net | (125) | 238 | (61) | 69 | 1 | 26 | 6 | — | |||||||||||||||||||||
| Digital Operating Adjusted EBITDA - DBRG OP share | $ | 15,497 | $ | 14,200 | $ | 13,636 | $ | 13,776 | $ | 13,948 | $ | 9,620 | $ | 6,914 | $ | 3,294 | |||||||||||||
Notes:
(1) For reconciliations of net income/(loss) to Adjusted EBITDA, please refer to the Appendices section of this presentation.
DigitalBridge | Supplemental Financial Report | 19 | ||||||||||
| VI. Digital Operating | ||
| Capital Expenditures | |||||||||||||||||||||||||||||
| Consolidated amount | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | |||||||||||||||||||||
| Recurring capital expenditures | $ | 7,418 | $ | 6,410 | $ | 7,387 | $ | 4,423 | $ | 1,220 | $ | 1,416 | $ | 1,551 | $ | 1,101 | |||||||||||||
| Non-recurring capital expenditures | 84,668 | 94,018 | 42,841 | 40,460 | 34,652 | 37,534 | 20,423 | 19,738 | |||||||||||||||||||||
| Total capital expenditures | $ | 92,086 | $ | 100,428 | $ | 50,228 | $ | 44,883 | $ | 35,872 | $ | 38,950 | $ | 21,974 | $ | 20,839 | |||||||||||||
| Leasing Commissions | $ | 1,266 | $ | 1,535 | $ | 1,233 | $ | 5,024 | $ | 775 | $ | 545 | $ | 539 | $ | 1,831 | |||||||||||||
| DBRG OP share of consolidated amount | |||||||||||||||||||||||||||||
| Recurring capital expenditures | $ | 1,372 | $ | 1,097 | $ | 1,349 | $ | 764 | $ | 226 | $ | 233 | $ | 300 | $ | 220 | |||||||||||||
| Non-recurring capital expenditures | 17,578 | 18,090 | 8,315 | 7,538 | 6,532 | 6,770 | 3,702 | 3,952 | |||||||||||||||||||||
| Total capital expenditures | $ | 18,950 | $ | 19,187 | $ | 9,664 | $ | 8,302 | $ | 6,758 | $ | 7,003 | $ | 4,002 | $ | 4,172 | |||||||||||||
| Leasing Commissions | $ | 308 | $ | 307 | $ | 213 | $ | 756 | $ | 155 | $ | 109 | $ | 108 | $ | 366 | |||||||||||||
DigitalBridge | Supplemental Financial Report | 20 | ||||||||||
| VII. Other | ||
| ($ in thousands, as of March 31, 2022) | |||||||||||||||||||||||||||||
| Consolidated amount | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | |||||||||||||||||||||
| DBRG's GP Co-investment in DBP I and II Investments | $ | 248,663 | $ | 242,856 | $ | 230,972 | $ | 225,411 | $ | 173,831 | $ | 171,204 | $ | 184,829 | $ | 120,193 | |||||||||||||
| Equity interests in digital investment vehicles, seed investments and CLOs | 423,467 | 290,113 | $ | 272,134 | $ | 198,934 | $ | 179,945 | $ | 181,990 | $ | 71,622 | $ | 41,094 | |||||||||||||||
| Other - digital assets net carrying value | $ | 672,130 | $ | 532,969 | $ | 503,106 | $ | 424,345 | $ | 353,776 | $ | 353,194 | $ | 256,451 | $ | 161,287 | |||||||||||||
| DBRG OP share of consolidated amount | |||||||||||||||||||||||||||||
| DBRG's GP Co-investment in DBP I and II Investments | $ | 187,247 | $ | 183,612 | $ | 173,732 | $ | 171,012 | $ | 160,342 | $ | 157,610 | $ | 176,329 | $ | 117,213 | |||||||||||||
| Equity interests in digital investment vehicles, seed investments and CLOs | 308,578 | 174,566 | $ | 165,902 | $ | 98,476 | $ | 83,384 | $ | 97,108 | $ | 34,067 | $ | 27,175 | |||||||||||||||
| Other - digital assets net carrying value | $ | 495,825 | $ | 358,178 | $ | 339,634 | $ | 269,488 | $ | 243,726 | $ | 254,718 | $ | 210,396 | $ | 144,388 | |||||||||||||
DigitalBridge | Supplemental Financial Report | 21 | ||||||||||
Appendices
DigitalBridge | Supplemental Financial Report | 22 | ||||||||||
| Reconciliations of Digital IM Adjusted EBITDA/FRE and Digital Operating Adjusted EBITDA to Net Income (Loss) | ||
| ($ in thousands) | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | |||||||||||||||||||||
| Digital IM net income (loss) | $ | (9,143) | $ | 28,194 | $ | 39,272 | $ | 15,786 | $ | 7,663 | $ | 2,702 | $ | 3,799 | $ | 2,424 | |||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Interest expense (income) | 2,500 | 2,499 | 2,250 | — | (1) | (1) | (2) | — | |||||||||||||||||||||
| Investment and servicing expense (income) | 138 | (12) | — | — | 32 | 204 | — | — | |||||||||||||||||||||
| Depreciation and amortization | 5,276 | 5,928 | 8,242 | 6,298 | 8,912 | 6,421 | 10,259 | 6,605 | |||||||||||||||||||||
| Compensation expense—equity-based | 7,133 | 4,527 | 4,673 | 1,837 | 1,533 | 655 | 189 | 682 | |||||||||||||||||||||
| Compensation expense—carried interest and incentive | (20,352) | 25,921 | 31,736 | 8,266 | (33) | 994 | 912 | — | |||||||||||||||||||||
| Administrative expenses—straight-line rent | 159 | 75 | 74 | 50 | (2) | (1) | 14 | 16 | |||||||||||||||||||||
| Administrative expenses—placement agent fee | — | 880 | 3,069 | 6,959 | 59 | 1,202 | — | — | |||||||||||||||||||||
| Incentive/performance fee income | 40 | (5,720) | (1,313) | (4,489) | — | — | — | — | |||||||||||||||||||||
| Equity method (earnings) losses | 31,062 | (31,608) | (59,196) | (11,203) | 195 | (6,744) | (6,394) | (277) | |||||||||||||||||||||
| Other (gain) loss, net | 3,055 | (52) | (461) | (119) | (165) | (102) | (32) | 8 | |||||||||||||||||||||
| Income tax (benefit) expense | 2,374 | 1,852 | 3,089 | 2,236 | 7 | (757) | 144 | (151) | |||||||||||||||||||||
| Digital IM Adjusted EBITDA | $ | 22,242 | $ | 32,484 | $ | 31,435 | $ | 25,621 | $ | 18,200 | $ | 4,573 | $ | 8,889 | $ | 9,307 | |||||||||||||
| Exclude: Start-up Net G&A of certain new strategies | 2,362 | 2,306 | 2,224 | 2,059 | 1,938 | 1,842 | 1,842 | 1,223 | |||||||||||||||||||||
| Digital IM FRE | $ | 24,604 | $ | 34,790 | $ | 33,659 | $ | 27,680 | $ | 20,138 | $ | 6,415 | $ | 10,731 | $ | 10,530 | |||||||||||||
| 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | ||||||||||||||||||||||
| Digital Operating net income (loss) from continuing operations | (74,141) | (83,909) | (71,822) | (10,850) | (64,260) | (53,591) | (38,795) | (21,262) | |||||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||||||||
| Interest expense | 36,184 | 35,144 | 29,839 | 29,272 | 31,132 | 41,815 | 18,589 | 8,170 | |||||||||||||||||||||
| Income tax (benefit) expense | (330) | (1,941) | 1,922 | (66,788) | (12,268) | (6,967) | (6,091) | (2,673) | |||||||||||||||||||||
| Depreciation and amortization | 122,891 | 126,436 | 120,458 | 126,227 | 122,221 | 78,554 | 73,032 | 28,571 | |||||||||||||||||||||
| EBITDAre: | $ | 84,604 | $ | 75,730 | $ | 80,397 | $ | 77,861 | $ | 76,825 | $ | 59,811 | $ | 46,735 | $ | 12,806 | |||||||||||||
| Straight-line rent expenses and amortization of above- and below-market lease intangibles | (377) | 370 | 482 | (98) | (399) | (2,607) | (2,106) | 1,837 | |||||||||||||||||||||
| Compensation expense—equity-based | 752 | 1,918 | 308 | 308 | 308 | 728 | 148 | 296 | |||||||||||||||||||||
| Installation services | — | 2,097 | (4,058) | 576 | 880 | 429 | (65) | 493 | |||||||||||||||||||||
| Transaction, restructuring & integration costs | 4,636 | 3,188 | 4,042 | 2,999 | 4,670 | 1,155 | 420 | 1,021 | |||||||||||||||||||||
| Other gain/loss, net | (956) | 1,226 | (285) | 349 | 3 | 200 | 45 | — | |||||||||||||||||||||
| Digital Operating Adjusted EBITDA | $ | 88,659 | $ | 84,529 | $ | 80,886 | $ | 81,995 | $ | 82,287 | $ | 59,716 | $ | 45,177 | $ | 16,453 | |||||||||||||
DigitalBridge | Supplemental Financial Report | 23 | ||||||||||
| Reconciliations of Core FFO, AFFO, DE and Adjusted EBITDA to Net Income (Loss) | ||
| ($ in thousands) | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | |||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | (262,316) | $ | (20,686) | $ | 41,036 | $ | (141,260) | $ | (264,806) | $ | (140,575) | $ | (205,784) | $ | (2,042,790) | |||||||||||||
| Net income (loss) attributable to noncontrolling common interests in Operating Company | (22,862) | (1,946) | 4,311 | (14,980) | (27,896) | (15,411) | (22,651) | (225,057) | |||||||||||||||||||||
| Net income (loss) attributable to common interests in Operating Company and common stockholders | (285,178) | (22,632) | 45,347 | (156,240) | (292,702) | (155,986) | (228,435) | (2,267,847) | |||||||||||||||||||||
| Adjustments for FFO: | |||||||||||||||||||||||||||||
| Real estate depreciation and amortization | 121,744 | 133,813 | 126,494 | 150,458 | 184,762 | 136,245 | 162,705 | 131,722 | |||||||||||||||||||||
| Impairment of real estate | 23,799 | (40,732) | (8,210) | 242,903 | 106,077 | 31,365 | 142,767 | 1,474,262 | |||||||||||||||||||||
| Gain from sales of real estate | 3 | (197) | (514) | (2,969) | (38,102) | (26,566) | (12,332) | 4,919 | |||||||||||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | (113,537) | (89,727) | (95,512) | (162,021) | (188,496) | (79,874) | (146,905) | (329,601) | |||||||||||||||||||||
| FFO | $ | (253,169) | $ | (19,475) | $ | 67,605 | $ | 72,131 | $ | (228,461) | $ | (94,816) | $ | (82,200) | $ | (986,545) | |||||||||||||
| Additional adjustments for Core FFO: | |||||||||||||||||||||||||||||
| Adjustment to BRSP cash dividend | (9,089) | (28,243) | 9,478 | (40,165) | 55,648 | (22,999) | (18,207) | 328,222 | |||||||||||||||||||||
| Equity-based compensation expense | 18,720 | 19,416 | 9,038 | 11,642 | 19,299 | 8,288 | 7,879 | 10,152 | |||||||||||||||||||||
| Straight-line rent revenue and expense | (2,548) | (1,986) | (1,925) | (2,309) | 17,225 | (6,403) | (6,281) | (5,240) | |||||||||||||||||||||
| Amortization of acquired above- and below-market lease values, net | (248) | (333) | (172) | (1,498) | 6,005 | (1,229) | (1,440) | (531) | |||||||||||||||||||||
| Debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts | 98,465 | 36,685 | 7,651 | 10,196 | 45,627 | 25,034 | 4,296 | 10,080 | |||||||||||||||||||||
| Non-real estate fixed asset depreciation, amortization and impairment | 11,132 | 13,324 | 13,616 | 19,996 | 20,563 | 4,885 | 12,754 | 13,390 | |||||||||||||||||||||
| Restructuring and transaction-related charges | 24,668 | 29,977 | 19,501 | 5,174 | 34,482 | 21,887 | 13,044 | 8,864 | |||||||||||||||||||||
| Non-real estate (gains) losses, excluding realized gains or losses of digital assets within the Corporate and Other segment | 130,224 | (52,611) | 11,319 | (151,773) | 267,812 | 193,948 | 84,995 | 740,038 | |||||||||||||||||||||
| Net unrealized carried interest | 13,078 | (7,375) | (27,953) | (6,485) | 189 | (5,734) | (5,170) | 801 | |||||||||||||||||||||
| Preferred share redemption (gain) loss | — | 2,127 | 2,865 | — | — | — | — | — | |||||||||||||||||||||
| Deferred taxes and tax effect on certain of the foregoing adjustments | (589) | 8,195 | 1,663 | (42,536) | (17,657) | (8,764) | (7,917) | (3,092) | |||||||||||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | (18,700) | (15,423) | 12,438 | 146,687 | (218,328) | (143,262) | (38,042) | (182,607) | |||||||||||||||||||||
| Less: Core FFO from discontinued operations | (9,003) | 11,467 | (123,075) | (25,874) | (12,391) | 4,025 | 5,579 | 37,218 | |||||||||||||||||||||
| Core FFO | $ | 2,941 | $ | (4,255) | $ | 2,049 | $ | (4,814) | $ | (9,987) | $ | (25,140) | $ | (30,710) | $ | (29,250) | |||||||||||||
| Recurring capital expenditures | $ | (1,372) | $ | (1,097) | $ | (1,349) | $ | (764) | $ | (226) | $ | (233) | $ | (300) | $ | (220) | |||||||||||||
| AFFO and DE | $ | 1,569 | $ | (5,352) | $ | 700 | $ | (5,578) | $ | (10,213) | $ | (25,373) | $ | (31,010) | $ | (29,470) | |||||||||||||
DigitalBridge | Supplemental Financial Report | 24 | ||||||||||
| Reconciliations of Core FFO, AFFO, DE and Adjusted EBITDA to Net Income (Loss) | ||
| ($ in thousands) | 1Q22 | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | |||||||||||||||||||||
| Core FFO | $ | 2,941 | $ | (4,255) | $ | 2,049 | $ | (4,814) | $ | (9,987) | $ | (25,140) | $ | (30,710) | $ | (29,250) | |||||||||||||
| Less: Earnings of equity method investments | (6,691) | (6,441) | (5,784) | (6,216) | (4,440) | — | — | — | |||||||||||||||||||||
| Plus: Preferred dividends | 15,759 | 16,139 | 17,456 | 18,516 | 18,516 | 18,516 | 18,516 | 18,516 | |||||||||||||||||||||
Plus: Core interest expense(1) | 13,280 | 13,775 | 14,160 | 11,834 | 12,387 | 11,972 | 12,234 | 12,625 | |||||||||||||||||||||
Plus: Core tax expense(1) | (6,849) | 631 | (12,638) | (8,224) | (5,613) | (9,974) | (5,310) | (6,536) | |||||||||||||||||||||
| Plus: Non pro-rata allocation of income (loss) to NCI | 231 | 231 | 231 | 223 | 201 | 201 | (751) | — | |||||||||||||||||||||
| Plus: Placement fees | — | 603 | 2,102 | 4,767 | 40 | 823 | — | — | |||||||||||||||||||||
| Less: Net realized carried interest, incentive fees, and other adjustments | 1,172 | (1,092) | (7) | (1,565) | 11 | 140 | 248 | (549) | |||||||||||||||||||||
| Plus: Digital Operating installation services, transaction, investment and servicing costs | 651 | 1,366 | 53 | 856 | 1,423 | 1,018 | 254 | (42) | |||||||||||||||||||||
| Adjusted EBITDA (DBRG OP Share) | $ | 20,494 | $ | 20,957 | $ | 17,622 | $ | 15,377 | $ | 12,538 | $ | (2,444) | $ | (5,519) | $ | (5,236) | |||||||||||||
Notes:
(1) Excludes components that are included in adjustments for Core FFO.
DigitalBridge | Supplemental Financial Report | 25 | ||||||||||
| Definitions | ||
Assets Under Management (“AUM”)
Assets owned by the Company’s balance sheet and assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. Balance sheet AUM is based on the undepreciated carrying value of digital investments and the impaired carrying value of non digital investments as of the report date. Investment management AUM is based on the cost basis of managed investments as reported by each underlying vehicle as of the report date. AUM further includes uncalled capital commitments, but excludes DBRG OP’s share of non wholly-owned real estate investment management platform’s AUM. The Company's calculations of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers.
Contracted Revenue Growth (“Bookings”)
The Company defines Bookings as either (1) a new data center customer contract for new or additional services over and above any services already being provided as well as (2) an increase in contracted rates on the same services when a contract renews. In both instances a booking is considered to be generated when a new contract is signed with the recognition of new revenue to occur when the new contract begins billing.
Churn
The Company calculates Churn as the percentage of MRR lost during the period divided by the prior period’s MRR. Churn is intended to represent data center customer contracts which are terminated during the period and not renewed.
DigitalBridge Operating Company, LLC (“DBRG OP”)
The operating partnership through which the Company conducts all of its activities and holds substantially all of its assets and liabilities. DBRG OP share excludes noncontrolling interests in investment entities.
Fee-Earning Equity Under Management (“FEEUM”)
Equity for which the Company and its affiliates provides investment management services and derives management fees and/or performance allocations. FEEUM generally represents the basis used to derive fees, which may be based on invested equity, stockholders’ equity, or fair value pursuant to the terms of each underlying investment management agreement. The Company's calculations of FEEUM may differ materially from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers.
Recurring Capital Expenditures
Represents capitalized expenditures including recurring maintenance repairs and improvements necessary to preserve the value of and maintain the functionality of the property, which are not expected to generate incremental revenue.
Non-recurring Capital Expenditures
Represents capitalized expenditures including major capital improvements for expansions, transformations and incremental improvements to the operating portfolio intended to result in increased revenues and Adjusted EBITDA at the property.
Max Critical I.T. Square Feet
Amount of total rentable square footage.
Monthly Recurring Revenue (“MRR”)
The Company defines MRR as revenue from ongoing services that is generally fixed in price and contracted for longer than 30 days.
UPB: Unpaid Principal Balance
% Utilization Rate: Amount of leased square feet divided by max critical I.T. square feet.
DigitalBridge | Supplemental Financial Report | 26 | ||||||||||
1 EARNINGS PRESENTATION 1Q 2022 M a y 5 , 2 0 2 2
2 Some of the statements contained in this Quarterly Report on Form 10-Q (this "Quarterly Report") constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend such statements to be covered by the safe harbor provisions contained therein. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. The forward-looking statements contained in this Quarterly Report reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: the duration and severity of the current novel coronavirus (COVID-19) pandemic, driven by, among other factors, the treatment developments and public adoption rates and effectiveness of COVID-19 vaccines against emerging variants of COVID-19 such as the Delta and Omicron variants; the impact of the COVID-19 pandemic on the global market, economic and environmental conditions generally and in the digital and communications technology and investment management sectors; the effect of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments, as well as the increased risk of claims, litigation and regulatory proceedings and uncertainty that may adversely affect the Company; our status as an owner, operator and investment manager of digital infrastructure and real estate and our ability to manage any related conflicts of interest; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the impact of initiatives related to our digital transformation, including the strategic investment by Wafra and the formation of certain other investment management platforms, on our growth and earnings profile; whether the transactions with Wafra and AMP Capital will be completed within the time frame and on the terms anticipated or at all, and whether we will realize any of the anticipated benefits from the transactions; whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital IM and Digital Operating segments; our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively; the impact to our business operations and financial condition of realized or anticipated compensation and administrative savings through cost reduction programs; our ability to redeploy the proceeds received from the sale of our non-digital legacy assets within the timeframe and manner contemplated or at all; our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as BRSP) to execute their business strategies; BRSP's trading price and its impact on the carrying value of the Company's investment in BRSP, including whether the Company will recognize further other-than-temporary impairment on its investment in BRSP; performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution; our ability to grow our business by raising capital for the companies that we manage; our ability to deploy capital into new investments consistent with our digital business strategies, including the earnings profile of such new investments; the availability of, and competition for, attractive investment opportunities; our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products; our ability to satisfy and manage our capital requirements; our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets; the general volatility of the securities markets in which we participate; changes in interest rates and the market value of our assets; interest rate mismatches between our assets and any borrowings used to fund such assets; effects of hedging instruments on our assets; the impact of economic conditions on third parties on which we rely; any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims; our levels of leverage; adverse domestic or international economic conditions, including those resulting from the COVID-19 pandemic, supply chain difficulties and possible inflation; the impact of legislative, regulatory and competitive changes; the risks of the transition from a REIT to a C-corporation for tax purposes, and the related liability for corporate and other taxes; whether we will deliver and exceed 2022 financial guidance; whether the DigitalBridge strategies will achieve their Target Returns; whether we will achieve the Future Capital to Allocate; whether we will achieve anticipated growth in AUM for 2022 and the expected further fundraising encompassed in such growth; whether our EBITDA Growth CAGR trajectory will mirror established players’ two-to-three decade head start; whether we will be able to utilize existing tax attributes to offset taxable income to the extent contemplated; our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); changes in our board of directors or management team, and availability of qualified personnel; our ability to make or maintain distributions to our stockholders; and our understanding of our competition. While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Moreover, because we operate in a very competitive and rapidly changing environment, new risk factors are likely to emerge from time to time. We caution investors not to place undue reliance on these forward-looking statements and urge you to carefully review the disclosures we make concerning risks in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report. Readers of this Quarterly Report should also read our other periodic filings made with the Securities and Exchange Commission (the "SEC") and other publicly filed documents for further discussion regarding such factors This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company. This information is not intended to be indicative of future results. Actual performance of the Company may vary materially. The appendices herein contain important information that is material to an understanding of this presentation and you should read this presentation only with and in context of the appendices. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
3 AGENDA 1. 1Q Highlights 2. Financial Results 3. Executing the Digital Playbook 4. Q&A 5. Appendix
4 1 1Q HIGHLIGHTS
5 1Q 2022 – ALREADY DELIVERING ON KEY 2022 OBJECTIVES In the first four months of 2022, DigitalBridge has announced a series of transactions that position the firm to deliver and exceed 2022 financial guidance while also advancing key strategic objectives that enhance the firm’s ability to pair capital with the best opportunities across digital infrastructure and increase investor exposure to increasingly attractive build economics. Build a Full-Stack Digital Infra Investor Invest in High-Quality Digital Businesses Accelerate & Scale High Performance Platform Note: There can be no assurance that DBRG meets or exceeds guidance amounts, or that the transactions with Wafra and AMP Capital will close on the timing anticipated or at all. Readers should refer to the discussion in the Cautionary Statement Regarding Forward-Looking Statements section at the beginning of this presentation.
6 ACCRETIVE WAFRA TRANSACTION BOOSTS DIGITAL IM EARNINGS Attractive Valuation Metrics Transaction Consideration (assumes Earnout achieved in 2023) $800M $925M $925M Incremental IM FRE (31.5% of mid-point) +$38M +$46M +$60M Transaction Multiple 21.1x 20.1x 15.4x $82 $99 $130 2022 2023 2025 $120 $145 $190 Increased Ownership Agreement to purchase Wafra’s ownership stake in Digital IM will increase DBRG share of FRE from 68.5% to 100% Higher Earnings $38M incremental run-rate FRE to DBRG at-share based on midpoint ‘22 guidance of $120M, +46% increase. It gets better…projected incremental FRE of $46M in 2023 and $60M+ by 2025 at the midpoint Attractive Valuation Forward multiples reflect expected rapid growth in Digital IM platform Compares favorably with: DBRG target deployment multiples: 20x EBITDA; Public Alt Asset Mgmt peers: Averaging 25-30x FRE; Other recent transactions: Barings Asia Wafra will continue to participate in upside through stock ownership, 50% of consideration in stock Post-Transaction DBRG Share +$38 +$46 ($ in millions; FRE mid-point at DBRG share) Pre-Transaction DBRG Share +46% Run-rate ‘22 DBRG FRE Increases by Pre-Transaction Wafra Share +$60 DBRG Fee-Related Earnings Guidance Strategic transaction gives DigitalBridge 100% Ownership of Fast-Growing Digital IM Platform. Note: There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Readers should refer to the discussion in the Cautionary Statement Regarding Forward- Looking Statements section at the beginning of this presentation. 1) 2022 Incremental FRE represents run-rate FRE, DBRG does not expect to recapture IM FRE paid to Wafra for 2022 prior to transaction close (1) (1) Guidance Previously reported on 2/24/2022
7 CHANGE TO CONVENTIONAL C-CORP INCREASES FLEXIBLITY Ability to reinvest and scale – Prioritize fast-growing digital platform over time over REIT ‘gymnastics’ Wafra transaction is excellent example of ‘highest and best use’ of capital that does not fit REIT structure Other examples: Warehouse investments on balance sheet, acquisition of other attractive non-REIT qualified assets Long term perspective - Future performance fees (carried interest) expected to impact REIT income tests, Simplification - Streamlined structure, lower administrative expenses DigitalBridge has maintained pragmatic approach to legacy REIT status… ‘Does it serve our strategy?’ In connection with Wafra transaction, will revert to conventional C-Corp structure, not pursue REIT election. Capital Loss Carryforwards (Est) Net Operating Losses (Est) Q1 2022 Estimate Balance $1,000M Q1 2022 Estimated Balance $100M Generally applicable to: Gains/Losses from Investments Performance Fees (carried interest) Generally applicable to: Income from Digital Operating Note: Digital IM already in taxable REIT subsidiary, NO CHANGE Note: There can be no assurance that actual amounts will not be materially higher or lower than these expectations. Readers should refer to the discussion in the Cautionary Statement Regarding Forward-Looking Statements section at the beginning of this presentation. TAX IMPLICATIONS – DE MINIMIS Analysis of potential tax implications conducted using Company’s published forward guidance highlights significant and attractive DigitalBridge tax attributes which make REIT election unnecessary Result: 5-Year NPV of tax impact expected to range from $10-60M T X IMPLICATIO S – DE MINIMISADDITIONAL STRATEGIC FLEXIBILITY
8 DIGITALBRIDGE ACQUIRES AMP CAPITAL INTL INFRA EQUITY BUSINESS Strategic Fit – similar ‘value-add’ infrastructure equity franchise targets smaller - $100-500M - high-return mid- market opportunities with Digital+ mandate New digital logos and expanded global LP base Advances "Full Stack” IM Strategy Accretive Transaction to Boost DBRG Earnings High Caliber Plug-and-Play Team Accretive transaction expected to boost 2022 Digital IM run-rate fee related earnings (“FRE”) by $22.8M, ~20% above midpoint of prior guidance FEEUM higher by $5.5B, to $24.3B as of 1Q22 Experienced investment team, augments DBRG’s industry- leading team of digital infra professionals 25+ professionals based in UK with a shared focus on generating attractive long-term risk-adjusted returns Accretive transaction represents unique opportunity to achieve Day 1 scale in complementary mid-market segment with management team, portfolio of existing investments, strong earnings, and further FEEUM growth potential. TRANSACTION MULTIPLE (all figures USD) IM Platform Consideration(1) IM platform+carried interest $192M Incremental IM FRE(1) Run-Rate 2022 Estimate $23M Transaction Multiple(2) 8.4x Other Consideration Sponsor Fund Investments Acquisition of sponsor fund commitments to GIF I and GIF II at 4Q21 fair value; Future appreciation will correlate with investment performance $136M Max Potential Earnout(1) See following page for detail on contingent consideration $129M Attractive Valuation 1) Assumes FX of 1 AUD = 0.7162 USD 2) Transaction Multiple calculated as: IM Platform Consideration / Run-Rate 2022 FRE Estimate; excludes long-term Contingent Consideration and dollar-for-dollar Sponsor Fund Investments
9 NEW TRANSACTIONS TO ACCELERATE DIGITAL IM GROWTH $82 2022 $143 Post GIF Transaction DBRG Share ($ in millions; FRE mid-point at DBRG share) Original FRE Guidance DBRG Share +74% Run-rate ‘22 DBRG FRE (1) Increases by Consolidating Wafra stake and opportunistic AMP transaction to generate powerful earnings growth in Digital IM, with run-rate DBRG fee-related earnings 74% higher than at beginning of year, executed at attractive valuation levels. Note: There can be no assurance that actual amounts will not be materially higher or lower than these expectations, for 2022 and beyond. Readers should refer to the discussion in the Cautionary Statement Regarding Forward-Looking Statements section at the beginning of this presentation. 1) 2022 Incremental FRE represents run-rate FRE 2) Assumes FX of 1 AUD = 0.7162 USD 3) Transaction Multiple calculated as: IM Platform Consideration / Run-Rate 2022 FRE Estimate; excludes long-term Contingent Consideration and dollar-for-dollar Sponsor Fund Investments (1) $120 Post Wafra Transaction DBRG Share (2) Attractive Valuation Levels Wafra & AMP Capital Transaction Consideration ($800M+$192M; Does not include potential earnouts) $992M Incremental IM FRE $61M Blended Transaction Multiple 16.3x
10 KEY INVESTMENTS ADVANCE FULL-STACK STRATEGY VENTURESCREDITCORE+ DigitalBridge made ‘warehouse’ investments across all three new verticals - CORE, CREDIT, VENTURES - outlined as key components of its Full-Stack strategy built to pair the best ideas in digital infrastructure with the right capital. Transaction: Announced deal to acquire the mobile telecommunications tower assets of Telenet Group Holding NV in all-cash transaction valued at €745M, or $820M1 Scope: Unique opportunity to create first independent TowerCo in Belgium. Expansive, nationwide footprint of 3,322 sites including: • 2,158 owned sites • 1,164 third-party sites Key CORE+ characteristics: stable, predictable cashflows, high cash conversion, and long-term contracts Transaction: DigitalBridge Credit, in partnership with Canadian pension CPP Investments, invested $220M in a HoldCo term loan to support the continued growth of Everstream Solutions, LLC Everstream operates a business-only, enterprise- grade US fiber network serving large and mid-sized enterprises with 27,000+ route miles of fiber Signature Digitalbridge Credit investment highlights team’s ability to provide skill capital, acting as value- add credit solution partner to companies in the digital ecosystem Transaction: DigitalBridge Ventures led a $60 million Series C funding round in Celona, Inc., including participation from Lightspeed, Cervin, Norwest, Qualcomm Ventures and NTTVC Founded in 2019, Celona is a leading innovator in the global private LTE/5G infrastructure market, which is forecast to grow over 5x to almost $6 billion by 20241. Extends IM platform into high-growth companies across emerging digital infra technologies that benefit from DBRG deep domain expertise and portfolio ecosystem to accelerate growth 1 IDC WorldWide Private LTE/5G Infrastructure Revenue Snapshot. 1 Based on exchange rate as of March 24, 2022.
11 BUILDING A FULL STACK DIGITAL INFRASTRUCTURE INVESTOR ‘Full stack’ approach to Digital Infrastructure allows DigitalBridge the ability to invest, operate and capitalize on $400+ billion of anticipated annual global capex that enables us to pair capital to the right risk-adjusted opportunity. Ability To Leverage Existing Relationships Strong Investor Interest Big TAM Proprietary Deal Flow EQUITY CORE+ EQUITY LIQUID CREDIT VENTURES D ig ita lB rid ge S tr at eg ie s DBP I / DBP II RISK / RETURN SPECTRUM REQUIREMENTS Target Returns R is k
12 2 2022 FINANCIAL RESULTS
13 1Q 2022 FINANCIAL OVERVIEW NOTE: All $ in millions except per share & AUM 1Q21 4Q21 1Q22 Y/Y% Consolidated Revenues $31.1 $59.9 $44.9 +44% Consolidated FRE $20.1 $34.8 $24.6 +22% DBRG Pro-Rata Share of Revenue $21.4 $39.9 $30.6 +43% DBRG Pro-Rata Share of FRE $13.6 $23.8 $17.0 +25% Consolidated Revenues $189.2 $189.9 $202.5 +7% Consolidated Adjusted EBITDA $82.3 $84.5 $88.7 +8% DBRG Pro-Rata Share of Revenue $32.7 $32.5 $36.4 +11% DBRG Pro-Rata Share of Adjusted EBITDA $13.9 $14.2 $15.5 +11% TOTAL COMPANY 1Q21 4Q21 1Q22 Y/Y% Consolidated Revenues $220.6 $255.9 $257.5 +17% DBRG OP Share of Revenues $54.1 $77.9 $76.7 +42% Net Income (DBRG Shareholder) ($264.8) ($20.7) ($262.3) Per Share ($0.56) ($0.04) ($0.46) Adjusted EBITDA (DBRG OP Share) $12.5 $21.0 $20.5 +63% AFFO / Distributable Earnings ($10.2) ($5.4) $1.6 Digital AUM ($B) $32.0 $45.3 $46.6 +45% DIGITAL INVESTMENT MANAGEMENT (IM) DIGITAL OPERATING Regular-way dividend beginning in Q3 -- recurring cash flows have turned positive and are expected to accelerate as Wafra & AMP begin to contribute and we grow into our targets while further optimizing our capital structure
14 DIGITAL EARNINGS SUMMARY $189.2 $189.9 $202.5 $31.1 $59.9 $44.9 $220.3 $249.8 $247.4 1Q21 4Q21 1Q22 Digital Operating Digital IM $82.3 $84.5 $88.6 $18.2 $32.5 $22.3 $100.5 $117.0 $110.9 46% 47% 45% 1Q21 4Q21 1Q22 Digital Operating Digital IM Combined Margin Consolidated Adjusted EBITDA(1)Core Digital Revenues(1) (1) Includes Digital Operating and Digital Investment Management segments. Excludes Corporate and Other segment. (2) Digital IM includes $1.3M and $8.1M in 1Q21 and 4Q21, respectively, of catch-up fees earned, which are customary fees paid on 3rd party capital as if it were raised on the first closing date. Additionally includes $5.7M of incentive fee income earned on liquid products. ($ in millions) ($ in millions) Y/Y 68% 68% 68% 17% 17% 18% DBRG % Digital IM Digital Operating 68% 68% 68% 17% 17% 17% Core Digital Revenues were $247M in 1Q22, down slightly Q/Q as expected due to one-time fees earned during 4Q21 including $8M of catch-up fees alongside DBP II’s final close and $6M of incentive fees on liquid products Consolidated Digital Adjusted EBITDA was $111M during 1Q22, a $2M increase from 4Q21 when excluding one-time catch-up fees earned during 4Q21 Y/Y Digital IM - 1x Items 22
15 $76M $79M $85M $100M $124M $137M $155M $175M $235M $41M $43M $47M $48M $70M $78M $88M $106M $124M 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 Annualized Revenue Annualized FRE $36M $34M $62M $84M $131M $131M $132M $138M $145M $13M $13M $28M $39M $56M $55M $56M $60M $62M 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 Annualized Revenue Annualized EBITDA STABILIZED GROWTH Digital IM and Digital Operating divisions have continued to grow consistently with ‘lower left to upper right trajectory’. As a result of the purchase of the Global Infrastructure business from AMP Capital, annualized FRE now exceeds the $120M midpoint of 2022 FRE guidance Continued growth in Digital Operating driven primarily by successful M&A at Vantage SDC and DataBank CONSOLIDATED INCLUDES 31.5% MINORITY INTEREST EXCLUDES 1X ITEMS DBRG SHARE 100% ATTRIBUTABLE TO DBRG Investment Management Digital Operating (1) Includes pro-forma run rate adjustments for the AMP Capital transaction; The purchase of the AMP Capital business is currently under contract and expected to close 1Q22; The purchase of the AMP Capital business is subject to customary regulatory closing conditions. We can provide no assurance that it will close on the timing anticipated or at all. 1 AM P AM P
16 MORE CAPITAL TO ALLOCATE Additional firepower remains available after strategic acquisitions of Wafra and AMP close, generated from launching our new products & strategies and harvesting the last remaining legacy investments ~$1,000 ~$1,400 $650 $500 $389 $328 Current Liquidity Wafra AMP New Products & Strategies BRSP & Remaining Legacy Future Capital to Allocate Capital Structure Optimization Share Repurchases & Dividends Strategic Digital M&A Incubation of New IM Products Capital Allocation Framework ($ in millions)
17 3 EXECUTING THE DIGITAL PLAYBOOK
18 ACCELERATING AND SCALING OUR CUSTOMER CENTRIC PLATFORM Our ability to support the growth of global tech and telco customers is fundamental to investments that increase the scalability of the DigitalBridge IM platform. Ability to serve global tech/telco customers at-scale Leverage balance sheet to grow highly scalable digital IM platform Prioritize 3rd party capital formation over equity issuance to build scale Capitalize on digital transformation, 5G and future network cycles with a sustainable reinforcing edge IM Capital Formation Scalable, High ROIC New Digital Infra Investment Opportunities Leverage Greater Scale to Serve Customers Better Building Scale to Serve Customers
19 2019 2020 2021 2022E LEVERAGING OUR COMPARATIVE ADVANTAGES TO GROW AT SCALE Asset-light model and expertise investing across the ecosystem are key differentiators that allow us to compete and win, growing more quickly than our digital infrastructure peers Fastest Growing AUM on Asset Light Model DIGITALBRIDGE* American Tower Crown Castle Equinix Digital Realty SBA Communications Rapid AUM growth drives scale Digital AUM Rankings $13.5B $30.0B $45.3B $60B+* CAGR 1 2 3 4 5 6 Sources: DigitalBridge * Assumes closing of transactions with Wafra & AMP Capital, and successful fundraising in line with expectations
20 7% 8% 12% 13% 16% 74% PERFORMING AS A CATEGORY LEADER WITHIN ONLY 5 YEARS Fast-growing asset-light model allows DigitalBridge to compete head-to-head with established players with two-to-three-decade head start EBITDA Growth CAGRS 1Q20 – 1Q22 Active Macro Towers by YE2021 34,000 40,000 128,000 218,353 30,000 TowerCo A TowerCo B TowerCo C TowerCo D DBRG 175 284 170 290 DC Co A DC Co B DC Co C DBRG 2021 Total MW Leased Sources: DigitalBridge and company IR websites 33 years 28 years 24 years 18 years 27 years 5 years 33 years 28 years 14 years 27 years 5 years 24 years 18 years 22 years 5 years
21 2022 KEY OBJECTIVES Secular Tailwinds Around Connectivity – Big Growing TAM The Leading Management Team 25+ years Investing and Operating Digital Assets Converged Vision with Exposure to Entire Digital Ecosystem Focus on realization of high-growth digital infrastructure platform Build a Full-Stack Digital Infra Investor Meet/Exceed Fundraising and Operational Targets Accelerate & Scale High Performance Platform
22 Towers Small Cells Fiber Data Centers Edge Infrastructure Hyper-Converged Digital Infrastructure DigitalBridge (NYSE: DBRG) is the leading global digital infrastructure investor, managing and operating assets across five key verticals: data centers, cell towers, fiber networks, small cells, and edge infrastructure DigitalBridge is the infrastructure partner to the Digital Economy
23 4 Q&A SESSION
24Strictly Private and Confidential 5 APPENDIX
25 Pre/Post Transaction Analysis Digital IM Current Post-Transaction Fee-Related Earnings (FRE) DBRG 68.5% / Wafra 31.5% DBRG 100% Corporate Share of Performance Fees1 (Carried Interest) DBRG 68.5% / Wafra 31.5% DBRG 100% for all future investment funds DBPI - Wafra retains 31.5% of corporate share DBP II – Wafra retains 20% of corporate Share; DBRG recovers 11.5% Corporate Share of GP Fund Commitments DBRG 68.5% / Wafra 31.5% Future - DBRG 100% Wafra retains investment stakes in existing funds (DBP I, DBP II, Coinvest, Liquid) Corporate Common Stock NA $410M, to be issued at $7.10 (the 20-day trailing VWAP prior to signing), resulting 57.7M shares, 8.5% of outstanding shares. Transaction Scope Conversion of Wafra’s investment in the Digital IM business: 31.5% share in fee-related earnings (FRE) and corporate share of performance fees (carried interest) Consideration $800M Upfront payment ($390M Cash / $410M stock) Cash consideration from balance sheet cash-on-hand, subject to certain net cash and closing adjustments $410M stock issued based on 20-trading trailing VWAP Earnout $125M earnout based on new capital formation targets $125M if $6B+; $100M if $5-6B; $90M if $4-5B Measurement is cumulative 2yr total over 2022 and 2023 calendar years; Consideration may include up to 50% in stock, at DBRG election Sponsor Fund Investments Existing GP Commitments and other fund LP investments are excluded from the scope of this transaction Close Date Projected to close in 2Q 2022 WAFRA TRANSACTION - SUMMARY OF KEY DEAL TERMS Key Deal Terms 1) Excludes Performance Fees (carried interest) allocated to management
26 Transaction Scope Purchase of AMPs International Infrastructure Equity Platform: Includes the Platform and existing funds including GIF I, GIF II & Co-Investment Vehicles IM Platform Consideration $143M Upfront Cash Payment for IM Platform $49M for rights to the carried interest for GIF I and GIF II Earnout $129M max earnout based on future fundraising of GIF III and IV Thresholds range from $1.5B to $4.75B raised Sponsor Fund Investments $136M for the purchase of the funded sponsor investments in GIF I and GIF II Acquisition of sponsor fund commitments to GIF I and GIF II at 4Q21 fair value; Future appreciation will correlate with investment performance Close Date Projected to close by end of year 2022 AMP INFRA EQUITY - BUSINESS PROFILE AND KEY DEAL TERMS Key Deal Terms(1) Notes: 1) Assumes FX of 1 AUD = 0.7162 USD Digital Infra Holdings Business Profile Leading global infrastructure equity manager with growing digital focus 25+ Investment Professionals Based principally in UK with investment exposure primarily in North America and Europe Fiber Data Centers Europe Asia North America Land Lease Fund Profile Developed Markets Exposure Growing Digital Focus – GIF II Digital Infra Other Over $5.5 billion of FEEUM, principally across $1.4B GIF I and $3.4B GIF II; 10 Yr fund lives, 1.2% avg. mgmt. fee Over 140+ limited partners across North America, Europe & Asia Pacific (all figures USD)
27 NON-GAAP RECONCILIATIONS ($ in thousands) 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 Digi tal IM n et in come ( loss ) $ ( 9,143) $ 28,194 $ 39,272 $ 15,786 $ 7,663 $ 2,702 $ 3,799 $ 2,424 Adjustments: Interest expense (income) 2,500 2,499 2,250 - (1) (1) (2) - Investment and servicing expense (income) 138 (12) - - 32 204 - - Depreciation and amortization 5,276 5,928 8,242 6,298 8,912 6,421 10,259 6,605 Compensation expense—equity-based 7,133 4,527 4,673 1,837 1,533 655 189 682 Compensation expense—carried interest and incentive (20,352) 25,921 31,736 8,266 (33) 994 912 - Administrative expenses—straight-line rent 159 75 74 50 (2) (1) 14 16 Administrative expenses—placement agent fee - 880 3,069 6,959 59 1,202 - - Incentive/performance fee income 40 (5,720) (1,313) (4,489) - - - - Equity method (earnings) losses 31,062 (31,608) (59,196) (11,203) 195 (6,744) (6,394) (277) Other (gain) loss, net 3,055 (52) (461) (119) (165) (102) (32) 8 Income tax (benefit) expense 2,374 1,852 3,089 2,236 7 (757) 144 (151) Digi tal IM Adjus ted EBITDA $ 22,242 $ 32,484 $ 31,435 $ 25,621 $ 18,200 $ 4,573 $ 8,889 $ 9,307 Exclude: Start-up Net G&A of certain new strategies 2,362 2,306 2,224 2,059 1,938 1,842 1,842 1,223 Digi tal IM FRE / Adju s ted EBITDA $ 24,604 $ 34,790 $ 33,659 $ 27,680 $ 20,138 $ 6,415 $ 10,731 $ 10,530 DBRG OP share of Digi tal IM FRE / Adjus ted EBITDA $ 16,989 $ 23,757 $ 22,922 $ 19,470 $ 13,583 $ 3,893 $ 8,148 $ 10,531 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 Digi tal Operat in g n et in come ( loss ) f rom con t in u in g operat ion s ( 74,141) ( 83,909) (71,822) (10,850) (64,260) (53,591) (38,795) (21,262) Adjustments: Interest expense 36,184 35,144 29,839 29,272 31,132 41,815 18,589 8,170 Income tax (benefit) expense (330) (1,941) 1,922 (66,788) (12,268) (6,967) (6,091) (2,673) Depreciation and amortization 122,891 126,436 120,458 126,227 122,221 78,554 73,032 28,571 EBITDAre: $ 84,604 $ 75,730 $ 80,397 $ 77,861 $ 76,825 $ 59,811 $ 46,735 $ 12,806 Straight-line rent expenses and amortization of above- and below-market lease intangibles (377) 370 482 (98) (399) (2,607) (2,106) 1,837 Compensation expense—equity-based 752 1,918 308 308 308 728 148 296 Installation services - 2,097 (4,058) 576 880 429 (65) 493 Transaction, restructuring & integration costs 4,636 3,188 4,042 2,999 4,670 1,155 420 1,021 Other gain/loss, net (956) 1,226 (285) 349 3 200 45 - D igi tal Operat in g Adju s ted EBITDA $ 88,659 $ 84,529 $ 80,886 $ 81,995 $ 82,287 $ 59,716 $ 45,177 $ 16,453 DBRG OP share of Digi tal Operat in g Adju s ted EBITDA $ 15,497 $ 14,200 $ 13,636 $ 13,776 $ 13,948 $ 9,620 $ 6,914 $ 3,294
28 NON-GAAP RECONCILIATIONS ($ in thousands) 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 Net income (loss) attributable to common stockholders $ (262,316) $ (20,686) $ 41,036 $ (141,260) $ (264,806) $ (140,575) $ (205,784) $ (2,042,790) Net income (loss) attributable to noncontrolling common interests in Operating Company (22,862) (1,946) 4,311 (14,980) (27,896) (15,411) (22,651) (225,057) Net in come ( loss ) at t r ibu table to common in teres ts in Operat ing Compan y an d common s tockholders ( 285,178) ( 22,632) 45,347 ( 156,240) ( 292,702) ( 155,986) ( 228,435) ( 2,267,847) Adju s tmen ts for FFO : Real estate depreciation and amortization 121,744 133,813 126,494 150,458 184,762 136,245 162,705 131,722 Impairment of real estate 23,799 (40,732) (8,210) 242,903 106,077 31,365 142,767 1,474,262 Gain from sales of real estate 3 (197) (514) (2,969) (38,102) (26,566) (12,332) 4,919 Less: Adjustments attributable to noncontrolling interests in investment entities (113,537) (89,727) (95,512) (162,021) (188,496) (79,874) (146,905) (329,601) FFO $ ( 253,169) $ ( 19,475) $ 67,605 $ 72,131 $ ( 228,461) $ ( 94,816) $ (82,200) $ ( 986,545) Addit ion al adju s tmen ts for Core FFO: Adjustment to BRSP cash dividend (9,089) (28,243) 9,478 (40,165) 55,648 (22,999) (18,207) 328,222 Equity-based compensation expense 18,720 19,416 9,038 11,642 19,299 8,288 7,879 10,152 Straight-line rent revenue and expense (2,548) (1,986) (1,925) (2,309) 17,225 (6,403) (6,281) (5,240) Amortization of acquired above- and below-market lease values, net (248) (333) (172) (1,498) 6,005 (1,229) (1,440) (531) Debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts 98,465 36,685 7,651 10,196 45,627 25,034 4,296 10,080 Non-real estate fixed asset depreciation, amortization and impairment 11,132 13,324 13,616 19,996 20,563 4,885 12,754 13,390 Restructuring and transaction-related charges 24,668 29,977 19,501 5,174 34,482 21,887 13,044 8,864 Non-real estate (gains) losses, excluding realized gains or losses of digital assets within the Corporate and Other segment 130,224 (52,611) 11,319 (151,773) 267,812 193,948 84,995 740,038 Net unrealized carried interest 13,078 (7,375) (27,953) (6,485) 189 (5,734) (5,170) 801 Preferred share redemption (gain) loss - 2,127 2,865 - - - - - Deferred taxes and tax effect on certain of the foregoing adjustments (589) 8,195 1,663 (42,536) (17,657) (8,764) (7,917) (3,092) Less: Adjustments attributable to noncontrolling interests in investment entities (18,700) (15,423) 12,438 146,687 (218,328) (143,262) (38,042) (182,607) Less: Core FFO from discontinued operations (9,003) 11,467 (123,075) (25,874) (12,391) 4,025 5,579 37,218 Core FFO $ 2,941 $ ( 4,255) $ 2,049 $ ( 4,814) $ (9,987) $ ( 25,140) $ (30,710) $ (29,250) Recurring capital expenditures (1,372) (1,097) (1,349) (764) (226) (233) (300) (220) AFFO an d DE $ 1,569 $ ( 5,352) $ 700 $ ( 5,578) $ ( 10,213) $ ( 25,373) $ (31,010) $ (29,470) ($ in thousands) 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 Core FFO $ 2,941 $ (4,255) $ 2,049 $ (4,814) $ (9,987) $ (25,140) $ (30,710) $ (29,250) Less: Earnings of equity method investments (6,691) (6,441) (5,784) (6,216) (4,440) - - - Plus: Preferred dividends 15,759 16,139 17,456 18,516 18,516 18,516 18,516 18,516 Plus: Core interest expense 13,280 13,775 14,160 11,834 12,387 11,972 12,234 12,625 Plus: Core tax expense (6,849) 631 (12,638) (8,224) (5,613) (9,974) (5,310) (6,536) Plus: Non pro-rata allocation of income (loss) to NCI 231 231 231 223 201 201 (751) - Plus: Placement fees - 603 2,102 4,767 40 823 - - Less: Net realized carried interest, incentive fees, and other adjustments 1,172 (1,092) (7) (1,565) 11 140 248 (549) Plus: Digital Operating installation services, transaction, investment and servicing costs 651 1,366 53 856 1,423 1,018 254 (42) Adju s ted EBITDA ( DBRG OP Share) $ 20,494 $ 20,957 $ 17,622 $ 15,377 $ 12,538 $ (2,444) $ (5,519) $ (5,236)
29 IMPORTANT NOTE REGARDING NON-GAAP FINANCIAL MEASURES This presentation includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles, or GAAP, including the financial metrics defined below, of which the calculations may from methodologies utilized by other REITs for similar performance measurements, and accordingly, may not be comparable to those of other REITs. Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): The Company calculates Adjusted EBITDA by adjusting Core FFO to exclude cash interest expense, preferred dividends, tax expense or benefit, earnings from equity method investments, placement fees, realized carried interest and incentive fees and revenues and corresponding costs related to installation services. The Company uses Adjusted EBITDA as a supplemental measure of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. However, because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited. FFO, Core FFO, AFFO and Distributable Earnings: The Company calculates funds from operations (FFO) in accordance with standards established by the National Association of Real Estate Investment Trusts, which defines FFO as net income or loss calculated in accordance with GAAP, excluding (i) real estate-related depreciation and amortization; (ii) impairment of depreciable real estate and impairment of investments in unconsolidated ventures directly attributable to decrease in value of depreciable real estate held by the venture; (iii) gain from sale of depreciable real estate; (iv) gain or loss from a change in control in connection with interests in depreciable real estate or in-substance real estate; and (v) adjustments to reflect the Company's share of FFO from investments in unconsolidated ventures. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity investments, and debt securities, as applicable. The Company computes core funds from operations (Core FFO) by adjusting FFO for the following items, including the Company’s share of these items recognized by its unconsolidated partnerships and joint ventures: (i) equity-based compensation expense; (ii) effects of straight-line rent revenue and expense; (iii) amortization of acquired above- and below-market lease values; (iv) debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts; (v) non-real estate depreciation, amortization and impairment; (vi) restructuring and transaction-related charges; (vii) non-real estate loss (gain), fair value loss (gain) on interest rate and foreign currency hedges, and foreign currency remeasurements except realized gain and loss from digital assets within the Corporate and Other segment; (viii) net unrealized carried interest; and (ix) tax effect on certain of the foregoing adjustments. The Company’s Core FFO from its interest in BrightSpire Capital, Inc. (NYSE: BRSP) represented the cash dividends declared in the reported period. The Company excluded results from discontinued operations in its calculation of Core FFO and applied this exclusion to prior periods. The Company computes adjusted funds from operations (AFFO) by adjusting Core FFO for recurring capital expenditures necessary to maintain the operating performance of its properties. The Company's calculation of AFFO is equivalent to Distributable Earnings (DE), the alternative asset manager industry standard metric, which the Company is adopting following it's conversion from a REIT to a C-Corp. The Company uses FFO, Core FFO and AFFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs, and such a measure is useful to investors as it excludes periodic gains and losses from sales of investments that are not representative of its ongoing operations and assesses the Company's ability to meet distribution requirements. The Company also believes that, as widely recognized measures of the performance of REITs, FFO, Core FFO and AFFO will be used by investors as a basis to compare its operating performance and ability to meet distribution requirements with that of other REITs. However, because FFO, Core FFO and AFFO exclude depreciation and amortization and do not capture changes in the value of the Company’s properties that resulted from use or market conditions, which have real economic effect and could materially impact the Company’s results from operations, the utility of FFO, Core FFO and AFFO as measures of the Company’s performance is limited. FFO, Core FFO and AFFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO, Core FFO and AFFO should be considered only as supplements to GAAP net income as measures of the Company’s performance and to cash flows from operating activities computed in accordance with GAAP. Additionally, Core FFO and AFFO exclude the impact of certain fair value fluctuations, which, if they were to be realized, could have a material impact on the Company’s operating performance. Digital Operating Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDA: The Company calculates EBITDAre in accordance with the standards established by the National Association of Real Estate Investment Trusts, which defines EBITDAre as net income or loss calculated in accordance with GAAP, excluding interest, taxes, depreciation and amortization, gains or losses from the sale of depreciated property, and impairment of depreciated property. The Company calculates Adjusted EBITDA by adjusting EBITDAre for the effects of straight-line rental income/expense adjustments and amortization of acquired above- and below-market lease adjustments to rental income, revenues and corresponding costs related to the delivery of installation services, equity-based compensation expense, restructuring and transaction related costs, the impact of other impairment charges, gains or losses from sales of undepreciated land, gains or losses from foreign currency remeasurements, and gains or losses on early extinguishment of debt and hedging instruments. The Company uses EBITDAre and Adjusted EBITDA as supplemental measures of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. EBITDAre represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which we believe is particularly helpful for generalist investors in REITs. EBITDAre depicts the operating performance of a real estate business independent of its capital structure, leverage and non-cash items, which allows for comparability across real estate entities with different capital structure, tax rates and depreciation or amortization policies. Additionally, exclusion of gains on disposition and impairment of depreciated real estate, similar to FFO, also provides a reflection of ongoing operating performance and allows for period-over-period comparability. However, because EBITDAre and Adjusted EBITDA are calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited. Digital Investment Management Fee Related Earnings (FRE): The Company calculates FRE for its investment management business within the digital segment as base management fees, other service fee income, and other income inclusive of cost reimbursements, less compensation expense excluding equity- based compensation, carried interest and incentive compensation, administrative expenses (excluding fund raising placement agent fee expenses), and other operating expenses related to the investment management business. The Company's calculation of FRE excludes expenses related to new strategies which have 1) not yet held a first close raising FEEUM or 2) for products which may be terminated solely at the Company’s discretion and have never achieved break-even FRE, in which case related revenues are also excluded (both collectively the “Start-up Net G&A”). The Company uses FRE as a supplemental performance measure as it may provide additional insight into the profitability of the overall digital investment management business. Assets Under Management (“AUM”): Assets owned by the Company’s balance sheet and assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. Balance sheet AUM is based on the undepreciated carrying value of digital investments and the impaired carrying value of non digital investments as of the report date. Investment management AUM is based on the cost basis of managed investments as reported by each underlying vehicle as of the report date. AUM further includes uncalled capital commitments but excludes DBRG OP’s share of non wholly-owned real estate investment management platform’s AUM. The Company's calculations of AUM may differ from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers. DigitalBridge Operating Company, LLC (“DBRG OP”): The operating partnership through which the Company conducts all of its activities and holds substantially all of its assets and liabilities. DBRG OP share excludes noncontrolling interests in investment entities. Fee-Earning Equity Under Management (“FEEUM”): Equity for which the Company and its affiliates provides investment management services and derives management fees and/or performance allocations. FEEUM generally represents the basis used to derive fees, which may be based on invested equity, stockholders’ equity, or fair value pursuant to the terms of each underlying investment management agreement. The Company's calculations of FEEUM may differ materially from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers. Monthly Recurring Revenue (“MRR”): The Company defines MRR as revenue from ongoing services that is generally fixed in price and contracted for longer than 30 days. This presentation includes forward-looking guidance for certain non-GAAP financial measures, including Adjusted EBITDA and FRE. These measures will differ from net income, determined in accordance with GAAP, in ways similar to those described in the reconciliations of historical Adjusted EBITDA and FRE to net income. We do not provide guidance for net income, determined in accordance with GAAP, or a reconciliation of guidance for Adjusted EBITDA or FRE to the most directly comparable GAAP measure because the Company is not able to predict with reasonable certainty the amount or nature of all items that will be included in net income. In evaluating the information presented throughout this presentation see definitions and reconciliations of non-GAAP financial measures to GAAP measures. For purposes of comparability, historical data in this presentation may include certain adjustments from prior reported data at the historical period.
30