DigitalBridge Group, Inc.

Greetings and welcome to the Digital Bridge Group Inc third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Severin White, Managing Director, Head of Public Investor Relations. Please go ahead.

Good morning, everyone, and welcome to DigitalBridge's third quarter 2022 earnings conference call. Speaking on the call today from the company is Mark Gansey, our CEO, and Jackie Wu, our CFO. I'll quickly cover the safe harbor, and then we can get started. Some of the statements that we make today regarding our business operations and financial performance are may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed on this call is as of today, November 4th, 2022, and Israel Bridge does not intend and undertakes no duty to update it for future events or circumstances. For more information, please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC and our Form 10-Q for the quarter ended September 30, 2022. Great. So we're going to start by covering our quarterly agenda. Mark will give our 3Q business update. Jackie will outline our financial results and turn it back over to Mark to wrap up Section 3, executing the digital playbook. We made some great progress towards our 2022 goals from capital formation to continuing to strengthen our capital structure. So let's get started. With that, I'll turn it over to Mark Gansey, our CEO. Mark.

Thanks, Seb. And I want to thank our investors up front for your interest and your continuing trust in the DigiBridge team. As we navigate, we believe very successfully a challenging macro environment. Today, I want to cover the three things that really matter. Something I've learned successfully navigating other market cycles over the last 27 years is when conditions get difficult, you sharpen your focus on a few key objectives. In our case, it's the three outlined on this page. First, forming capital. Forming capital around great digital infrastructure companies and investment strategies. I'll walk you through the success that we're having in raising capital in what are otherwise tough market conditions. Number two, delivering great outcomes for our investors. This is the heart of the Digital Ridge Value Proposition, and when we're successful, it has a compounding effect that stimulates further growth in our platform and generates performance fees for our investors and you, our public investors. We did that this quarter, closing the databank and wildstone transactions, and I'm going to talk about that in great detail in Section 3 today. The third objective, simplify our business. build liquidity to weather the storm and maintain the firepower to redeploy to creative uses while at the same time deleveraging our balance sheet and deleveraging our portfolio companies. This is how you weather the storm. So those are the three simple components of what it takes to win in this environment. Next page, please. Before we get into capital formation, I want to cover something we did last quarter and give you very specific insight into how our portfolio companies are performing. How are they handling inflation, interest rates, geopolitics, and supply chain headwinds? Once again, as you can see here, we continue to deliver growth across each of the core verticals. Tower, monthly revenue, reoccurring revenue, up 26%. Data centers, up 34%. Fiber bookings, up 5%. And small sales, monthly reoccurring revenue, up 28% year over year. This is critical digital infrastructure. These are the assets that enable our economy, whether it's a recession or whether it's a great economic backdrop. Everyone needs digital infrastructure to perform their daily life activities. That's testament not only to the incredible management teams we have running these businesses, but to the fundamental truth that the key driver of our businesses and our returns is the powerful secular demand for more, better, faster connectivity, not interest rates. Don't forget that. We've made money over the past 25 years because we are business builders in digital infrastructure. We're not financial engineers. In fact, it's that experience managing through the tough cycles that informs the conservative approach to portfolio debt that you see on the right side of the page. Last year, I delivered an edict across our portfolio to securitize many of our companies. That hard work has paid off as our portfolio is protected. This is not an accident. Our loan to value across the portfolio is 41% today. That's actually down from 43% last quarter. 75% of the portfolio has fixed rate debt. And the average maturity profile of our debt is eight years. These are astounding statistics. And once again, proving that we've built a resilient portfolio that is built to play offense while we defend our balance sheets of our most valuable assets. This is a portfolio that continues to grow driven by increasing customer demand that's conservatively capitalized to perform through this cycle. This is a playbook that has worked before. It will work today. Next is capital formation. We've highlighted it as the number one KPI to drive growth and earnings in our investment management platform. I'm incredibly pleased to report that on a year-to-date basis, we've raised over $6.8 billion, with $3.4 billion in FIEM, complemented by $3.4 billion as part of our very successful co-investment program, which I'm going to highlight on the following page. As you can see here, we raised over a billion in new FIEM last quarter. The upsizing of the databank recap and additional commitments to our new core and credit strategies are working. As we formalize first closes on these strategies over the next quarter, you'll start to see the financial impact flow through. This sets us up for continued growth not only through this year, but into 2023. The progress puts us on track to exceed the targets we laid out earlier this year, despite the volatility in financial markets that you're seeing today. In fact, This is the number one question we get on the road today. Can you still raise capital in this environment? Look, the answer is a resounding yes. Institutional investors continue to value the unique combination of resiliency and growth that digital infrastructure delivers, and they want to partner, especially now, with the leading specialists in the sector. Next page, please. Last quarter, I told you to expect to hear more from us on co-investment as the year progressed, particularly around the new signature platform investments we made in the U.S. data center space and European tower sectors. If you look at the middle two columns here, you'll see that we've raised co-investment commitments of over $2 billion to support these new deals last quarter. That's just in the last quarter alone. That's not including IFM or Brookfield. Those are new commitments, principally from our existing LP base. It's a powerful demonstration of the strong desire of our limited partners have to continue to allocate capital alongside of us into the highest quality digital infrastructure assets, alleviating an anxiety point for public investors today. We've raised the money. Even better, we've used up a lot of the fee-free co-invest allocation we make to our anchor investors, moving us closer to generating additional fium on future co-invests and catalyzing important capital formation as we move more than 90% committed in our flagship Digital Bridge Partners II fund. Our co-investment program is an important commitment to our LPs. It helps drive fundraising by deepening the relationships with key strategic LPs as we evaluate and underwrite opportunities together. To wrap up on capital formation, the bottom line is simple. We raised $6.8 billion year to date. across the platform, with over $3 billion of that in the last quarter alone. We remain confident and convinced of our ability to raise capital into the back half of this year.