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.

Next page, please.

Before I turn it over to Jackie to cover the financial results, I want to highlight some of the great progress we made last quarter, continuing to simplify our business and our capital structure. First, we rolled out a new corporate overview that highlights the elevation of our asset management platform as the strategic growth driver in our business. We are the leading specialist asset manager investing across the sector with strong secular tailwinds. Simple. It's a very scalable asset light and high return on invested capital business with one simple KPI, doubling our assets under management over the next three years. Next, we strengthen liquidity. which I described earlier as a key success factor in periods of dislocation like this. Last quarter, the data bank recap, sale of legacy assets, and a partial return of warehouse investments brought over $500 million back to our balance sheet. We decluttered our corporate liabilities with the transfer of a $225 million of CLOs, and next quarter we'll free up even more capital to fund the AMP acquisition while maintaining strong liquidity. Finally, during the third quarter, we took advantage of dislocated markets. We told you we would. We bought back 53 million of our preferreds at a discount. Even better, we were able to execute stock buybacks of over $50 million, retiring 2.4% of our shares outstanding. We believe buying more of our own business at these levels will prove to be a very compelling investment over time and increase EPS. All three of these initiatives advanced our track record and continued progress towards greater simplification. This was a simple tenet that I promised to all of you. I know during turbulent markets, the pace of change can flip from executing ahead of expectations to are they doing too much? But rest assured, we're not doing too much. We remain focused on further simplification and maintaining strong liquidity through this period. With that, I'd like to turn it over to Jackie Wu to cover the financial results. Jackie.

Thank you, Mark, and good morning, everyone. As a reminder, in addition to the release of our third quarter earnings, we filed a supplemental financial report this morning, which is available within the shareholder section of our website. Starting with our third quarter results on page 11, the company continues to see strong year-over-year growth driven by fundraising in our investment management business and realized performance fees. For the third quarter, reported total consolidated revenues were $297 million. which represents an 18% increase from the same period last year. Gap net income attributable to common stockholders was a $63 million loss, or $0.39 per share. The third quarter includes a $60 million loss related to a mark-to-market adjustment from our remaining legacy Brightspire shares. Total company adjusted EBITDA was $29 million, which grew from $18 million in the same period last year. Distributable earnings was $39 million, which included $20 million of net carried interest received from both the data bank recapitalization and Wildstone realization, plus $9 million of realized capital gains on DBRG's investment in Wildstone. Note that distributable earnings does not include realized gains on data bank, as this is a consolidated asset within our operating segment. And a reminder, its realization was added two times multiple on invested capital. We are focused on growing our recurring cash flow profile, which continued to be positive in the third quarter, accelerated by significantly reduced corporate debt service and continued growth from fundraising. Digital AUM was $50 billion in the third quarter, which grew by 33% from $38 billion in the same period last year. We expect to continue our strong growth trajectory, and including the recently announced pending transactions of AMP Capital, Switch, and GD Towers, we will have reached over $65 billion AUM on a pro forma basis. Moving to page 12, the company continues to grow recurring investment management revenue and earnings, driven by increased fee earning equity under management. Excluding one-time fees, Consolidated fee-related earnings increased by 14% year-over-year, while the company's share grew by 68%, benefiting from 100% ownership following the buyout of Whopper's 31.5% interest during the second quarter. Moving to page 13, our digital offering segment has continued its growth in the third quarter. Consolidated adjusted EBITDA was $91 million during the third quarter, which is a 13% increase from the same period last year, driven by continued data center acquisitions, including Houston Area Data Centers at DataBank and CA22 at Vantage SDC. During the third quarter, the company sold 35% of its ownership interest in DataBank. Turning to page 14, we have seen continued growth in our digital reporting segments. particularly in our high-margin investment management business. We should note that the pro forma amounts shown on this page include the pending AMP transaction. Since third quarter 2021, our annualized fee revenues increased from $106 million to $235 million, and FRE increased from $60 million to $123 million on a pro forma basis. We are excited to have increased exposure to this high-growth IM business, which has materially improved the company's cash flow profile since it is asset-light and anchored by long-dated fee streams. Looking at the right side of the page, in line with our forecast, our annualized revenues decreased from $132 million last year to $114 million, and annualized EBITDA decreased from $56 million last year to $47 million last year. as a result of the successful recapitalization of databank, which lowered our ownership percentage from 22% to 13%. Subsequent to the end of the quarter, we sold down to approximately 12% ownership of databank. Turning to page 15, the company has built significant liquidity for the digital bridge balance sheet. Our liquidity has increased by $435 million since last quarter, driven by proceeds from both the data bank and Wildstone transactions, partial return of warehouse funding, and continued legacy asset sales. We are on track to reach our forecast of $623 million of balance sheet liquidity in the first quarter of 2023 and are strongly positioned to cover our near-term obligations, such as the closing of AMP capital acquisitions. Additionally, we have further potential sources of capital, including BRSP shares and remaining legacy assets which can be utilized to offset medium-term obligations, such as the upcoming 2023 convertible note repayment and future fund commitments. We expect to remain well positioned to deploy capital for creative uses. Moving to page 16, we have continued to make significant progress improving our debt metrics. Our corporate debt-to-IMFRE ratio is 6.4 times, down from 8.9 times last quarter. Our overall debt has decreased by approximately 23%. This reduction is primarily driven by lower pro rata debt as a result of the data bank recapitalization, a $152 million reduction in total debt, and a deconsolidation of warehouse investments. We are on track to meet our goals for the first quarter of 2023. We will pay down the convertible notes due in April, continue to syndicate our share of databank, and transfer our warehouse debt to the funds. Digital Bridge continues to make significant progress simplifying the balance sheet, reducing debt, and improving corporate leverage metrics. We target corporate leverage over time in the three times to five times range. In summary, and as I've continued to reiterate, our company is strong and healthy, driven by our sector-leading asset-light investment management business that generates high-quality, predictable, and long-dated fee earnings. We expect to have a strong finish to 2022 as our near-term fundraising and our growth prospects remain robust. And with that, I will turn it back to Mark.

Thanks, Jackie. In our last section, I want to cover the second success factor I outlined at the beginning of the call, our ability to deliver great outcomes for LPs and our shareholders despite a backdrop of market volatility. During the third quarter, we closed two realizations at very attractive valuations, generating strong proof points that we expect will catalyze, one, future capital formation as we go out and raise new capital next year, and, that generated over $20 million in net carry to our shareholders. This is so critical for the future of this firm. We need to continue to form capital, and we need to continue to deliver great results for you, which in turn delivers carry back to our public shareholders. This was a key proof point in this quarter. The first stage of the data bank recap was upsized from $1.2 billion to $1.5 billion, and we reached a subsequent agreement to take the total recap up to $2 billion creating a new long-term continuation vehicle that brings in new investors with fee and carry. We also closed on the full sale of Wildstone, our first realization in Jitteridge Partners 1, generating a great IRR and a solid 1.7 MOIC for LPs in less than three years. Another important data point here is the sale price is over 40% above our carrying value. This is a great indicator of our conservative approach to marking our portfolio. As part of our strategy to build the fastest-growing outdoor media infrastructure business in Western Europe, we executed over a dozen tuck-in acquisitions. I want to personally give a shout-out to my partner, Damian Cox, Wildstone's CEO, who executed a value-add, build-it-upright, out-of-the-box playbook that DigitalRidge has executed time and time again. Kudos to Damian and the entire team. Next page, please. Before we move on, it's worth giving some more context to the DataBank case study, because it's such a great example of our ability to deliver results on multiple fronts, all at the same time. To start, in just two and a half years, we've turned a $500 million investment off the balance sheet into almost a billion dollars of value. That's a two times MOIC and an internal rate of return of 32%. Next, we're harvesting over $400 million in profits as part of the recap, at 30 times trailing EBITDA, while maintaining participation in the continued growth at DataBank. As importantly, investors continue to demonstrate growing interest in the opportunity despite unsettled financial markets, highlighting enduring value that we're creating in this platform. Finally, in addition to doubling our money and taking half the value off the table at a great valuation, we're also boosting the management fees we earn, In this case, up 27% from prior levels. This incremental management fees don't have any associated costs. So this is literally 100% flow through to earnings. Next slide, please. Before I wrap up with the quarterly CEO checklist, I want to take a minute to acknowledge a milestone in the journey Ben Jenkins and I set out in 2013 when we formed DigitalRidge 1.0. My vision was pure, passionate, and simple. We wanted to back great management teams with best-in-class platforms anchored by long-term leases and strong secular tailwinds supporting the digital infrastructure ecosystem. Nine years into this journey, the mission remains the same, as does the passion. This year, not only did we break into the top 10 infrastructure managers ranked by Capital Formation, but we're the first specialist infrastructure fund manager to reach the top 10. Look, none of this could have happened without the entire team of over 250 professionals at DigitalBridge making it happen every day around the globe. I'm deeply grateful for their hard work and support. And here's the best part. We think the journey has just begun. Next page. Finally, as I always do, I like to close the call with the CEO checklist. This is where I take stock of what we've accomplished and what I'm looking forward to getting done in the periods ahead. First, capital formation, our key KPI. We've raised over $6.8 billion year to date and over $3 billion in the last quarter alone around the data bank recap, new investment strategies, new platform companies through our successful co-investment program. Next, I've delivered great outcomes for you, our investors, and our LPs with the data bank recap that got upsized twice last quarter and Wildstone, our first full realization from DBP1. We generated over $20 million in carry for DigitalBridge shareholders as part of these deals. This is the key proof point. Our program is working, and our carry is very valuable for you, our public shareholders. Finally, we further simplified our business with a clear business model centered around our asset management platform. We boosted liquidity by over $500 million, and we executed an accretive preferred and common stock repurchases. We got a lot done during the third quarter. And I've got another compelling list of to-dos in the quarter ahead. Raising capital around core and credit. Closing our very accretive AMP transaction at a corporate level. Getting the switch transaction closed into our IM platform. And continuing to deliver and strengthen our liquidity position. I'm confident we can accomplish these goals because notwithstanding market volatility, our business is incredibly resilient. managing long-term capital on behalf of the leading global LPs and shareholders in a sector with strong secular tailwinds, led by a team with a 25-plus year track record of execution. Once again, I appreciate your continued interest in DigitalBridge, and I look forward to sharing our progress next quarter as we execute on our strategic roadmap to double AUM over the next three years. With that, I'll turn it back over to the operator to initiate the Q&A section.

Thank you.

Thank you. At this time, we will be conducting our question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. We have a first question from the line of Michael Elias with Cohen. Please go ahead.

Great. Thanks for taking the question, guys. Two, if I may. We'll start with the first one, and I'll circle back on the second. So you've been clear about repositioning the digital bridge story to one focused on the investment management business, given its higher growth, its asset light, among other factors. Just as you think about simplifying the digital bridge story further, do you think it makes sense to fold in the operating business into the investment management business so that you can refocus investors solely on the merits of IM? Thanks.

Hey, Michael. Good morning. Well, look, we've already started down that road, right? I think the key to this quarter is the recognition that DataBank has now been transitioned into a continuation fund. So the importance there is moving from an operating business into a long-term permanent capital vehicle. So that asset now has officially been transitioned into our IAM platform. And we did so, I think, pretty graciously, right? Because not only did we return capital back to the balance sheet and create a great outcome and a great return, but we also increased our management fees at the same time while keeping control, operational control of the asset. So one down, one to go. Vantage SDC continues to remain on our balance sheet. It's not in a continuation fund vehicle today. It is in a permanent capital vehicle, which is a long-term partnership amongst a series of institutional investors. And once again, we do maintain operating control of that asset. And we're thinking, you know, around a couple of different ideas on how we would transition that asset into our IM platform. But I think what you've seen in this quarter is the final sort of piece in the puzzle around simplification. and the commitment to what we believe is the asset-light approach to owning and operating digital infrastructure. Good question, but thank you.

Great. Thanks for that, Mark. And my second question would be, you've laid out clearly your target to double your fee. Just as we think of the path forward from here, how would you describe the opportunity to raise that another flagship fund just as we think about LP appetite. And then as part of that, you know, relative pockets of opportunity that you see as you look to deploy incremental capital that you raise. Thanks.

Yeah, thank you. Again, the right question to be asking at the moment. So first and foremost, around capital formation, we had a really strong third quarter in a market that I think we all understand has some has some crosswinds. and some challenges. The fact that we raised $3 billion in the quarter when a lot of folks are not raising any capital, I think is proof that this particular management team is capable of raising capital in the storm. I actually think people appreciate that in the storm is when you can find, to your point, Michael, the best opportunities. So we're pretty excited around capital formation. We're very busy. Our entire senior leadership team is out fundraising right now. We clearly think our flagship product is working. Over 90% of the second fund is now committed and spoken for. So naturally, we are working on new strategies here at the firm. And those strategies align very carefully with our guidance for next year and our guidance out until, of course, 2026. Products that are working particularly well at the moment, our credit product is working really well. We're very excited about that. Our returns are clearly wide of what we'd expected, and we're seeing a doubling in the pipeline of opportunity and credit. So Very excited about what Dean is doing and Josh Parrish and Chris Moon. Those guys are really knocking it out of the park. And so we continue to see good opportunity. I think also investors, as we highlighted in the quarter, when we create co-investment opportunities, when we give our LPs a chance to go side by side with us in opportunities that they like, once again, they're choosing the opportunities. We're finding that investors really like that approach. They want to be able to create a bespoke portfolio in digital infrastructure. And given the depth of our portfolio and the global reach of it, we can really tailor those solutions for clients. And that's really advantage for Digital Bridge and advantage for Digital Bridge shareholders because we can sit with a sophisticated insurance company, a sovereign wealth fund, a U.S. pension system, a Canadian pension, and we can tailor to what they're looking for. And given that we have exposure to liquid securities, ventures, credit, core, and our flagship product and co-investments, We really have an arsenal of ideas that we can bring to clients to make sure that they're putting capital to work, Michael, intelligently in digital infrastructure and that we have the right teams that are executing those strategies very surgically. This is an entirely transformed company today. Where we've come in the last two years and our ability to work with investors on a global basis and tailor their needs to take advantage of what we think is a great secular opportunity is second to none. And I think that speaks to the difference between being a generalist and being an industry specialist like we are. That industry specialist investment management asset-led approach is now bearing fruit. You see it in this quarter. You're going to see it in the subsequent quarters. And we're really happy with the simplification. And most importantly, I'm really happy with the focus of where we're going. This team is incredibly focused. And, you know, we're going in the right direction of travel now.

Thanks for the call, Mark. Much appreciated.

Thanks, Michael. We'll talk later. Appreciate it.

Thank you. We have next question from the line of Dan Day with B Raleigh Securities. Please go ahead.

Yeah. Morning, guys. Appreciate you taking the question. So, yeah, if we go back in time like a year or so ago, it seemed like a no-brainer that you could, you know, raise these secured notes, take out the preferred shares, capture the spread between the two. Things have changed a lot over the last year. The cost of capital has come up. We're suddenly in an environment where that 7% dividend on the preferreds really doesn't seem all that expensive. So maybe can you just talk about your view on the preferreds and the stack of priorities for the dry powder you've got on the balance sheet and how that may have changed over the last quarter or two?

Yep, great question. So I think our priorities are changing every quarter, right? I think you have to be very agile in this environment, and we're constantly as a team and as a board reassessing where we put capital to work. I think we demonstrated in this quarter that we are very committed to buying back our stock. We executed a very successful $55 million share buyback program that Jackie and I executed, and we feel really good about where we bought the stock, and we think Ultimately, it'll be beneficial for shareholders because this only enhances EPS. I think we've been very opportunistic when we think we can take our shots on the preferreds. And when we think it's accretive to other things that we're doing, then it makes sense. But right now, you're right. The cost of capital overall, Dan, has moved up. And so that bar's moved up in terms of the returns that Jackie and I can generate for our shareholders today. So we're being very selective about where we're putting capital to work, as we should. You know, if this was a year ago, you're right. We'd be happy with an outcome where we'd get an 11%, 12% IRR on buying our preferreds back. Today, that doesn't work. You know, for us, we're seeing opportunities where we can get returns in the low to mid-20s using our balance sheet. So we're going to be incredibly selective about how we deploy the balance sheet. Jackie's done an incredible job restoring strong liquidity, as you see in this presentation today. Over $400 million of cash today, $300 million undrawn on the VFN. subject to market conditions on Brightspire being worth, you know, $200 to $240 million. This company has over $900 million of liquidity. We have over $4.8 billion of firepower down in our fund level. We have a very, very strong liquid position so that we can play offense in what we think is, candidly, a very volatile market that's going to create really good opportunities. I think we've, both Jackie and I and the senior leadership team, we're building and operating businesses in 01 and 02 and 03. We obviously, Jackie and I both operated through 08 and 09, which created a lot of really good opportunity for where he was. And it created a lot of opportunity for my management team and what we were doing. So this is a management team that understands how important liquidity is. And we cannot emphasize enough that having availability of almost $5.8 billion of firepower to go play in this environment and to invest intelligently and create superior returns That is our highest responsibility to shareholders right now. And at the same time, what's been awesome about what we've been able to accomplish in the last few quarters is we've taken net leverage from almost nine times down to almost six times in this quarter, and we're targeting our net leverage to three to four turns in March of next year. So very few businesses out there can say that they can do that, that they can rotate to liquidity, that they can delever their balance sheet, and at the same time put up 20% to 30% organic growth like we've been doing. This is a really, really unique platform. And I think having that opportunity to have that liquidity, our discretion, we think is a real privilege. And we plan to put it to work in a very intelligent way. I don't know, Jackie, if you want to add anything else. Sorry.

No, no problem, Dan. You're exactly right. It is cheap cost capital now. And keep in mind, our balance sheet is super strong because of it, too. It's perpetual. It's not due anytime soon. And And we've got more than enough liquidity to cover any and all of our financing needs, especially given an asset-wide investment management model. So Mark is absolutely correct.

Awesome. Just one follow-up from you. When we did the AMP global acquisition earlier this year, you guys talked a lot about opportunities for other complementary M&A within investment management. It would seem with AMP, it made a lot of sense. It was a middle market, a little different space than the flagship DBP funds. I mean, going forward, it feels like you have to look a lot harder to find an asset manager that's both complementary in nature and also playing specifically within digital infrastructure. So maybe you can just talk a little bit about what investment management fund types or products you currently don't have exposure to that maybe you'd like to, which ones make more sense to go out and acquire versus kind of starting your own product organically.

Thank you. Great, great question.

I think, look, you'll see just in this year alone that we've been able to effectively demonstrate that we can do both, right? We acquired the AMP platform, which gives us access to middle market digital infrastructure, which is writing those tickets between $100 to $250 million, which is just something we don't do. And so that was pretty valuable to us. In addition to that, their logistics platform and their renewable energy platform were very interesting to us. I think power is in an all-time premium. the ability to source renewable energy adjacent to digital infrastructure will candidly be the difference between who wins and loses over the next 10 years. So we're very focused on that. At the same time, we stood up new platforms. We stood up, for example, our DigitalBridge Alpha Fund with Alan Bezoza and his team coming out of Dorsal, previously out of Janus, stood up that business. That is a long, liquid strategy. It's performing quite well, and we were able to hire a team get it up and running. Now they've got a year's worth of track record, and we're seeing results in terms of fundraising and, most importantly, performance on that fund. Another example of that is credit and core. We stood up two new strategies there, backing Dean Karras and Mike Zupan, Josh Paris, Chris Moon, and then, of course, in our core fund, Matt Evans and Peter Hopper, two great industry veterans that are well-heeled in core strategies and data infrastructure. Last but not least, our Ventures Fund, getting Alex Vilela coming out of Qualcomm Capital, being helped by Matty O'Hannon and some other folks on our team here. That's been incredibly valuable for us, too. We've done our fifth deal out of that strategy. And once again, that was homegrown. So, look, the last thing that's missing here for us is how deep are we going to go in infrastructure? I think as we integrate the AMP platform and we put the right people in place and we, of course, harvest some of their assets and start investing in new assets, We'll continue to monitor the Digital Plus strategy and let folks know how we're going to invest in those verticals. I would mention one other thing before we go on to your next question, which is we are not in private equity today. That is one strategy that is clearly absent, you know, from our quiver. We have the option of either standing up a team or there are a series of other investment managers that are very strong, that have a deep track record over 20, 30 years, in digital private equity. And as we think about that, that is the missing piece of our ecosystem. So that can be everything from investing in tech to SaaS platforms to other forms of digital media and infrastructure. So there's quite a few firms that do it, do it well. They're friends of ours. Sometimes we've co-invested alongside of them. And what I would say is we're looking at a variety of different platforms that could fulfill that. So we're not afraid to build. We're not afraid to buy. We've got strong liquidity if we want to go by. And what I can tell you is Jackie and the team have been very busy evaluating new ideas.

Great. Appreciate it as always, guys. Thank you. Thanks. Thanks, Dan.

Thank you. We have next question from the line of Jay Dramani with KBW. Please go ahead.

Thank you very much. But we are seeing a big change in the cap rate environment across the real estate space. So I was wondering if you could share your insights on the digital sector. In multifamily, we've seen about 10% to 15% change in valuation, much more severe than that in the office. Are you seeing the landscape spill over into digital infrastructure valuations, notwithstanding the very strongly accretive transactions that were consummated previously? recently.

Yeah. Thanks, Jade. Good morning. Well, look, I would tell you that across the, you know, sort of five different basic food groups, we've seen some degradation in value and then in some sectors we've seen no degradation of value. Let me walk you through where we see value. I would tell you, first of all, in the in the digital media infrastructure space, the transaction that we did with on tin on Wildstone was candidly a real marker. That multiple at 26 times indicates that that marketplace is hanging in. And obviously, we'll have to see other digital media infrastructure assets trade for us to figure out if that market is going to loosen or tighten. But we feel pretty good about that. Tower pricing, I think, is, you know, on a private market basis, has probably lost maybe, you know, two to three turns in value. I mean, assets that would have traded at, you know, 31 to 32 times a year ago. Today you're trading at, you know, 26 to 27 times. I think you look at ultimately when we do close the Deutsche Telekom transaction, that'll be closer to 23 to 24 times. And that's a premium asset. You hear a lot of rumors about what's happening with the Vodafone portfolio. Everybody will be watching that transaction if something does happen there. And there's been numerous private market transactions here in the U.S. and in Latin America that have all traded in the mid to high 20s. So we haven't seen a material degradation in tower valuations. in the private markets. I would say Fiber, the most recent transaction is Lumen in Europe. I mean, if you look at what, for example, Lumen sold their Latin America assets for to Stone Peak, that was a low teens multiple. And then you see these European assets traded 11 times. You know, that's a pretty big disconnect from where Mubadala ultimately invested alongside of EQT, which was rumored to be, you know, in the low 20s. You know, fiber continues to be kind of the wild card. We're seeing valuations all over the place, Jade. Nothing is really hanging in. But I think investors are discerning on fiber between what is consumer-facing and month-to-month 30-day cash flows versus what is long-term cash flows where you've got, you know, 5, 10, 20-year IRUs and long-term agreements. So there's a lot of discrepancy in fiber valuations today. And then In small sales, you know, the market continues to sort of defy gravity. I mean, if you look at what BAI paid for ZenFi, by example, we can't even put a multiple on it. We think it was somewhere in the, you know, low 30s. And so, you know, not a lot of small sale businesses come up for sale. And there's another private market transaction in the U.S. that is rumored to be trading in the, you know, low to mid 30s. And so small sale platforms are really rare, Jade. So we're not seeing any degradation anywhere. and the cap rates related to mobile small-cell infrastructure. In fact, I would almost offer those multiples have actually gone up because of the scarcity and how much demand is coming in small-cell infrastructure over the next decade, which is candidly going to be a faster-growing vertical than towers.

Great. I appreciate that, Keller. The stock is down today, and a lot of the positive A lot of the commentary has been positive. I think one of the issues with Digital Bridge and the valuation is understanding earnings. You have given guidance on digital IM and on operating, but translating that to earnings is still, I think, challenging for investors, and there continues to be some noise, some noise with the consolidation, some one-time items, as well as equity, income, accounting-related noise. So is there anything, any commentary you could provide on earnings per share, or do you expect in the coming quarter or so to be able to provide some kind of outlook that would really allow investors to ring fence what earnings per share might look like over, say, the next one to two years?

Jay, that's a great question. Our expectation is that we'll be able to provide EPS guidance And a clear mapping of it going into next year. So that's our expectation, our plan. And you're right, it's gotten a whole lot better than certainly a couple years back when we had a lot of fair value or equity method earnings accounting. Really, the noise this quarter stems from, as you mentioned, the one-time items really catch up the true ups. associated with prior year and into this quarter, as well as the fair value accounting associated with the Bright Spire shares that we have on our books, and that's just really a function of math. So if you back out the Bright Spire share fair value true up this quarter, almost all of the loss is associated with that. So those are really the two items that drove this quarter in terms of the EPS.

I'll just say, Jade, with respect to the noise, I think, you know, my experience in this arena is that, you know, public investors hate complicated stories. And what we've told you and what we've told the street very clearly is we've been very focused on cleaning up the story. We're past the cleanup phase. We're now in the simplification phase. We've moved DataBank over into the investment management business. We will eventually move Vantage SDC over in that direction. And ultimately, when you do that, it really cleans up the business, Jade, into one clean business unit that's very easy for investors to understand. The integration of AMP, the Wofford transaction, future fundraising that we have told you is coming in the subsequent quarters in terms of our guidance, none of that remains unchanged. We cannot be more clear about where we're going. And if folks can't do the math, they can certainly pick up a phone, and we're always happy to have a call with them and explain to them exactly where we're going. The ultimate success or failure of this firm is based on our ability to simplify the business, unify it into one business unit, and then, of course, go out and continue to deliver the organic growth that we've been delivering in our investment management business for the last, what, eight quarters? We've been putting up, you know, double-digit organic growth in our investment management platform, and we see nothing that will take us off of that top track over the next, you know, four to eight quarters. We're very confident about where we are. And every quarter, Jade, this story gets easier for investors to understand. Less leverage, more liquidity, more fundraising, less complication. In fact, now you can actually put a value on carry for the first time. We've actually proven that we can distribute carry and we can exit certain assets. So that's something that historically no one's given us credit for. And here we are managing over $20 billion of fee-bearing, carry-bearing dollars at work. And now you get to see some of that success or a taste of it in this quarter with DataBank and Wildstone. We're in the right place. We're doing the right thing. And this simplification of the business is going to make it very easy for investors to understand EPS next year.

Thank you very much. Appreciate the comments. Thank you, Jade. No problem, Jade.

Thank you. We have next question from the line of Rick Plantis with Raymond James. Please go ahead.

Hey, thanks, everyone. This is Brent on for Rick this morning. First question on the data bank recap, thinking about further stages of that, is there any additional color you can give in terms of not only your timing, but the ability to get similar terms as you continue through that recap? And also just want to confirm whether you do still intend to hold a piece of that on the balance sheet once we get past the recap?

Yeah, thank you. It's a great question. So, Data Bank is already now in a continuation fund. The fundraising remains open until August of next year. We can take subscriptions all the way up to August next year. There is $600 million remaining open that has not been committed to yet. We have high conviction that we will fill that $600 million between now and August. And ultimately, that leaves us with a 7.9% stake in the company once the fundraising is fully complete. That will deconsolidate DataBank off of our balance sheet, and it'll sit very comfortably in a continuation fund inside of our investment management platform, and that is where you'll see the earnings ultimately attribute to.

Yeah, that's helpful. And then on the investment management side, is there any sort of breakdown you can give us on your LP base in terms of the kinds of investors, whether it be sovereign funds, insurance companies, pension funds? as well as maybe geographically and whether that's changed at all as you've grown and sort of built your brand?

Yeah, thank you. We don't disclose the exact names of our LPs, but sometimes our state U.S. pension fund LPs have to make disclosures when they enter our funds. So sometimes you do pick that up in some of the trade journals, but our investors remain confidential. But I can tell you sort of the two buckets that you've given me, which is geography and what type of asset allocators we work with. So from a geography perspective, our number one fundraising environment and market remains North America. I won't give exact percentages, but it is a very substantial amount of our capital formation. Historically speaking, number two has been Europe, number three has been the Middle East, and number four has been Asia, and number five has been Latin America. We do see a lot of opportunity right now in Asia. I just came back from a two-week trip where I was in Asia working with our LPs. Ben Jenkins was there a week ago. Jackie was there about six weeks ago. So we're incredibly active in that theater right now. We do believe that we have been historically under-allocated from those LPs. They're really excited about what we did in Fund 2. The three investments that we made in Asia are all performing or high performers in our second fund. And investors, really, Asian investors haven't had exposure to a digital specialist like us. So we're kind of the new kid on the block. And we're taking a lot of meetings. There's a lot of interest. And for new strategies, we anticipate our percentage of fundraising coming out of Asia is going to accelerate into our strategies next year. The Middle East, we also have been very active in that region as well. It's a region where those economies are doing quite well. I was in that region for a couple of days last week seeing LPs. Very, very excited about what we're doing. As you can imagine, because of their natural resources, those sovereign wealth funds are experiencing rapid inflows, not outflows, where you see some pension systems experiencing outflows. So good fundraising is about watching the market, reading the market, and really paying attention to Pension systems that have really an inflow issue, not an outflow issue. And so we're tracking that very carefully and being very surgical about where we're spending our time. The fundraising environment is tough right now. It's not an easy environment. You have to know exactly where to go. As I said before, you have to be very surgical. It was not accidental that we raised $3 billion last quarter. It took a lot of hard work. It took a lot of focus. And we've continued that hard work into this quarter. And we have a very, very specific game plan for fundraising for next year. We ratified that fundraising plan this week here when we were here at our public board meetings and had our strategic planning sessions with senior leadership. We are ready to go. And our entire senior leadership team is going to be out on the road talking LPs, tailoring ideas for them, and creating opportunities for them to invest in digital infrastructure. We have one of the best fundraising apparatuses out there in the investment management space. The gentleman who leads that, Kevin Smithen, and our partner, Leslie Golden, they do an amazing job of really connecting with LPs. And as we said on the call today, a strong co-investment program really builds a lot of currency, relationship currency with your LPs. We've been very good at that. We're very active listeners. And the fact that we have so many different digital investment management platforms, we can really tailor an investment program that works for that specific relationship. To answer your last question in terms of where we're allocated to, I would say, you know, pension systems tend to be our biggest bucket of allocation. Number two would be sovereign wealth funds. Number three would be insurance companies. Number four would be what are called fund-to-fund managers. And then number five would be what I would call private offices, private family office capital. We take capital traditionally from accredited investors only. And kind of in our fund products group today, you know, sort of minimum check sizes are kind of 25 million and up.

Got it. That's helpful. And then kind of the other side of the coin, is there any color you can give on your public investor base and really just how that's changed as you've de-readed and focusing more on the IM side and now introducing the dividend as we kind of think about the appetite for the dividend and dividend growth and just long-term capital in your public stock, how should we think about that and how that's evolved?

Thanks. It's a thoughtful question.

So, look, our shareholder base started changing about two years ago. When Jackie and I moved into the chair, we really focused on building very good long-term relationships with investors that Jackie and I have known for over a decade. Really investors that understand how to back great management teams that are focused on long-term secular growth and that understand digital infrastructure. And obviously have known Jackie and myself in our other capacities through the years. So when you look at our top 10 shareholders, these are long-term holders. And through this down cycle, they're adding. And a lot of this stuff you can see, it's public information. I'm not sharing anything with you that's non-public information. As it relates to REIT investors, you know, we actually still have some REIT investors in our capital base. They understand that what we're doing is intrinsic fundamental real estate. Even though we're doing it in an asset-like platform now, fundamentally nothing has changed. We are still builders and owners and operators of the best digital real estate in the world. In fact, our portfolio is some of the most high-quality assets in the world. And because of the fact that the balance sheet has a big position in each of the funds, If you own a share of DigitalBridge stock, you own those assets and you enjoy the benefits of those assets as well as the management fees and the carry associated with the success in those assets. But look, the asset life business model is new and people generally take a little bit of time to understand and invest in what's new. And I think we just got to keep pounding the story through and it's making sense. You know, good, strong institutional investors understand the quality of this team They understand the quality in our experience, and they also understand that we've been through the fire before. 01, 08, now in 22, this is a management team that is very battle-tested and understands how to navigate a storm. Look, I can't change what the share price is today. All I can do is continue to go out and talk to our public investors, explain where we're going, do it with authenticity, do it with transparency, and Jackie and I work tirelessly. We work seven days a week. We work 68 hours a week. Our entire teams work side by side with us. This is a team that's very committed to getting shareholders to the right place. The public equity story will follow. As I've always told you and Rick, we're always six months ahead of you guys. The stuff that we're doing in this quarter, you don't find out until six months from now. So when we sit here with a lot of confidence and a lot of conviction, it's because we know we're executing. And most importantly, we know how to execute through the storm, building strong liquidity, deleveraging the business. All of these things are seminal to a sound strategy to build long-term growth and EPS, which is where we're going.

Very helpful. Thanks, guys. Thank you. Thank you.

We have next question from the line of Richard Cho with JP Morgan. Please go ahead.

Hi, I had one follow-up to the digital IAM business. As we look at the FRE there, what should our margin kind of target be longer term, given that there's some volatility in the quarter-to-quarter? And then on a larger picture one, just what are you seeing as the big deal-making challenges that people should be aware of in the next few quarters?

Yeah, sure. On the FRA margin side, it's consistent with what we've provided in our longer-term guidance, which is in that 50% to 60% range for FRA. Surely there are some catch-up fees that does cause some fluctuations Q2Q, but that is the consistent type margin profile that you should expect in our investment management business.

And I think as an add-on to that, as we have launched new investment management products, we're seeing that those products are really profitable as they scale because the infrastructure required to launch a new fund, we have all that here in our home office now. We've got the SEC accounting, and we've got the fund-level accounting. We've got the reporting, asset management. All of those skills are now resident in-house. And so as we bring new ideas onto the platform, it's really easy to ramp those ideas up, particularly as we look around the corner and as we continue to build our flagship product. Our investment management team is pretty set. Maybe occasionally there's associates and analysts that come and go. There's, you know, VP and principal level folks being promoted. But our senior partnership structure, the senior leaders across this firm are set. We're not adding any new SG&A to really build out new strategies. All of the strategies are here for the exception of private equity, which we discussed earlier today on the call. And so we're getting finally the benefits of scale. This was a choppy quarter. As Jackie said, there were some one-timers in third quarter last year. And there were some one-timers in third quarter this year that can't only one was quite good and one was not quite good. But again, investors need to focus on the normalized earnings that Jackie mentioned earlier. That is the true north of the business, the run rate. And that run rate is scaling and growing and growing quite fast. That's the key takeaway from the quarter. I think on dealmaking, just having come from a conference with a lot of my peers and and talking to them where I think everyone was pretty open and transparent. You know, look, dealmaking today is challenging. It's not impossible. You know, the best of breed firms know how to be creative and get deals done. And we're doing that. I think, as you can see inside the quarter, we announced a series of new transactions. And where we find the activity is strongest today in dealmaking is actually down in the existing platforms. So why do we say that? Our existing platforms are doing M&A. because they have liquidity, they have strong liquidity. We have, as I said earlier, we have close to 4.89 billion of callable capital in our funds, so we can support our existing portcos as they do both on M&A and they continue to grow. We saw that, as I said, inside this quarter. For example, like Atlas Edge in Europe did a fantastic tuck-in in Germany, acquiring a series of edge data centers that were absolutely central to the growth of that business. We did that transaction quickly. discreetly. We had the capital at our discretion. Our partner, Liberty Global, who shares that business with us, Mike Fries and Charlie Bracken, also understood how to move quickly there. And so we're seizing opportunity at the portfolio company level. Having strong companies that are that are candidly have been deleveraging is very important. I mentioned today how we've been able to delever our operating businesses even in this volatile market. And that's really important. So having a strong balance sheet having access to liquidity, that's never been more important than it is today. You know, in terms of new platform formation, we've got a lot of great new ideas. We've got, you know, just an investment committee this morning. We looked at five new ideas. We're open for business. We have a lot of capital. We're being very hawkish, as I said earlier, about how we deploy that capital. Look, the bar's moved up. The cost of capital's moved up. And we've had to be more creative on how we finance transactions. Green loans. You know, for example, is a great way to do it. Looking to banks in foreign territories that are open for business and have strong balance sheets. You know, look, you go back, Jackie, to 2008 when you and I were in the tower business. You know, the loans that we did in 2009 at that point were mostly Canadian banks. We had to go outside the United States to borrow capital. American Tower did that. Global Tower Partners did that. You know, in 2001 and 2002, we had to go out and we had to find private debt capital to get things financed as we engaged in a series of prepack bankruptcies around the CLEC space and other digital infrastructure assets that were over levered at that time. So you have to be creative. And I also think you need friends in this environment. We're working very carefully with a lot of our friends at other private credit shops. We're looking at banks in different places to go find capital. And then I think there are windows where you can take advantage of of certain government programs for lending. And for example, down in Latin America, we're spending a lot of time with OPIC. That's open for business. They're lending money to digital infrastructure companies that are engaging in greenfield activity like new data centers and new towers. So you got to work a little harder. It's no different than it was in 01 and 08. But once again, having a team that's been through that fire and understands how to navigate it and most importantly knows how to grow through it and having strong liquidity, those are the teams that win.

Great. Thank you. You're welcome. Thank you.

Thank you. Thank you. We have next question from the lineup, Eric Lutko with Wells Fargo. Please go ahead.

Hi, thanks for taking the question. I'll just ask one. So curious if you could just comment on in your data center businesses, we saw some of the mega cap cloud companies report slowing cloud revenue growth this past quarter. And there's been some, concern around smaller enterprises, you know, repatriating workloads from the cloud. So maybe you could talk a little bit about what your leasing pipeline looks like within Hyperscale and Enterprise, particularly Advantage and Databank. And then, you know, has that been impacted at all by some of the supply challenges we continue to see in the market around, you know, long lead times for equipment and power procurement? Thank you.

Thanks, Eric. Always good to hear from you. That's a three-part question, so let's unpack it. First and foremost, around leasing pipelines. We just came out of, for example, the Data Bank board meeting yesterday, and their leasing pipeline has actually held steady. So, for example, Data Bank, for the year, has hit 158% of their leasing budget. It's been a fantastic year for leasing at Data Bank. Meanwhile, with the sales pipeline vacillating between $25 million in net bookings and $29 million in net bookings, And today that pipeline sits at 28 million. So coming out of one of the strongest quarters the company has ever had, the pipeline actually has gone from, you know, it was 29 million in June. It fell as low as 27 million in September. And now here coming into November, the sales pipeline is at 28. So we've actually seen the pipeline on the edge computing side move up, Eric. So I think that's a good thing. And we've also seen lease rates move up, you know, between 10 and 12 percent on the edge side. I think that's pretty consistent with what you heard from Charles and the team at Equinix yesterday. So this notion of having highly interconnected data centers on the edge is where you want to be. At the same time, in our hyperscale business, we've had a year that is really hard to even understand. But particularly, you know, bookings in Asia were up 60% year over year. Our European bookings were up over 220% year over year. And our North American bookings were up 128% year over year. These are astounding numbers, Eric. in terms of what Vantage has been able to do. And then, of course, Scala down in Latin America, our hyperscale platform down there, their booking's also up over 156% year over year. So where are those pipelines today? They're generally holding. I would say the pipeline down in Latin America is actually up a little bit, quarter over quarter. The pipeline in North America for Vantage has held steady. Asia-Pac is up about 20% in terms of the leasing pipeline, and Europe is actually up quite significantly. What's interesting to me, Eric, is about Europe. Europe, to me, is one of the most challenging and, for us, one of the biggest opportunities right now. There's not a lot of power. You really had to be in Europe two years ago acquiring land, getting will serve letters, building your substations, lining up power for the next five years. And that is something that Surreal and the Team Advantage did really well, is they acquired a lot of land, acquired very significant amounts of power to come to those campuses, thinking not just in two-year increments, but really thinking strategically in five-year increments. As we see that Vantage is outleasing its peers as a factor of two to one in Europe, that's not accidental. That was because of the planning that the team put in place two years ago to procure the right amount of land and the right amount of power. Now, you did hit one thing on the head. Europe definitely has supply chain issues in terms of specialized componentry related to cooling and other factors in the data centers and certainly componentry related to servers, which are really a customer issue, not our issue in hyperscale, that is delaying some installs. I would tell you that on average, you know, new installs are suffering somewhere between a 60- to 90-day lag in Europe, and we're not seeing that same consequence in Asia-Pac at all. In Asia-Pac, actually, we've seen supply chains be quite open. And then in North America, it's very anecdotal. It really goes market to market. Some markets we're delivering on time. Like, for example, we posted something today about Salt Lake City 6, which is a new 22-megawatt facility in Salt Lake for Data Bank. We actually delivered that site approximately about 60 days earlier than when we thought we'd deliver it. Now, but there's also markets where we're having challenges. You know, Santa Clara has no power. Everyone knows the challenges around the transmission and distribution of Dominion in Data Center Alley. And then, of course, we've got some challenges in Texas. as that grid needs to be upgraded and transformed. So there's markets where power is actually really the bottleneck. And so you've got to be creative and you've got to think long term. And I think this was the genius of what we saw in Switch and partnering with Rob Roy. That's a business today that's based on 100% renewable energy. And what Rob has done and done a very good job of is acquiring big swaths of land in key markets where he's not reliant on the grid, where he's gone out and he's found alternative sources of energy to navigate around that. And so in kind, we're finding demand that switches up because we've solved the power issue. And we've got large amounts of land, a lot of energy capacity, and that business we think will perform quite well for us. So, you know, the key here is being surgical, right? Having management teams in the markets that understand the opportunities and can, you know, exceed their peers in terms of leasing and in pipelines. But I would tell you by and large, in this quarter, pipelines are holding. What you've said about the hyperscalers in terms of their curtailing of CapEx, you know, look, we haven't seen that yet. We hear about it. We hear that they want to curtail CapEx. But to be honest, their businesses are still growing. The velocity of data consumption, the velocity of data storage, particularly in Europe, where you have very, very high data sovereignty laws, you can't navigate around that stuff, Eric. And so you got to keep turning up capacity. What I think you will see is much like we've seen in and towers and fiber and small cells through the years is when you look back in 01 and you look back in 08 when the cost of capital got expensive and you pull the liquidity out of the system and you pull it back and that cost of capital gets expensive for the mobile operators, inevitably what happens is they stop self-performing and they work with folks like us that can show up, can build for them, deliver on time, and create good value for them. And as I said earlier, we have a very strong liquidity position We are executing on Greenfield at the portfolio company level. All of our businesses have excess cash on their balance sheets. We took leverage down. We made that decision last year to securitize all of our businesses and de-lever. And that was a smart decision. And I made that proclamation in May of last year in front of close to over 100 of our LPs globally, telling them that we thought a recession was coming. We weren't afraid to call it. And so by calling it, we prepared for it. And once again, having a good management team that's prepared and understands how to navigate the storm is everything in this environment. Who you back is where you want to be focused on right now if you're an investor.

Thanks, Eric.

Thank you. We have next question from the line of John Atkin with RBC Capital Markets. Please go ahead.

Thanks very much. So I think you've given a lot of good color on fundraising and then just now on kind of capital deployments and trends that you're seeing. If we could maybe pivot to towers a little bit, and we've heard the peer plays all kind of have their conference calls. We've had the carriers talk a little bit about their 5G plans. So anything you're seeing by region that, you know, would either amplify or maybe provide a contrasting view with what we've heard so far from the MNOs and the tower companies?

Yeah, well, look, what I would say is what we're hearing anecdotally is certainly some customers are going to put more CapEx out next year. We're really confident around what T-Mobile is doing. We're confident that Charlie gets fully financed, and we're going to continue to support DISH. Look, our revenue growth year over year is up close to 26%. Organic revenue growth up at the DBRG level for all of our towers globally is up 6.8%. Jonathan, this is a pretty good environment. Leasing pipelines are holding steady. We haven't seen any degradation. We have heard anecdotally from AT&T that they may cut some CapEx. I think that's public information. I'm not sharing non-public information that's been out there that perhaps some of their CapEx may be curtailed. We haven't seen that so far from Verizon. And so domestically here, our customers are healthy. They're having success launching their 5G products. They're having success 5G to the home. And we do believe that, you know, at some point, CapEx will go down, Jonathan. That's what happened in 01. That's what happened in 08. It's logical to assume that there will be, you know, some sort of diminishment of CapEx. I don't know, Jackie, you're around for both those cycles, too. Any thoughts around CapEx at all that you're hearing?

Look, I think it's very consistent with what you're saying, Mark. And at the end of the day... We are blessed to be an emission-critical secular tailwind winner in our industry. So it's going to continue, and they've clearly stated their needs to densify, and they've bought a lot of spectrum, and they're going to need to deploy it. So I think it will be good for us in the short and intermediate runs, no matter what.

Thanks for that. In terms of LATAM macro towers, maybe principally Brazil, just interested in any Any takes there? And then outdoor small cells, you talked a little bit about that, but maybe, you know, is 2024 going to be the year or maybe 2023 or when do we see any kind of an uptick in demand?

It's coming, Jonathan. It's coming. No, I think we've started to see an uptick in small cell capex spending towards the back end of this year. There are a series of new RFPs or different requests for different city builds by all the carriers. Once again, the carriers for small cells in the last two years have been doing a lot of self-performing. We don't think that that makes sense for them to go forward. We think that in a market where CapEx is constrained and we think liquidity is constrained and interest rates are going up, even the big mobile carriers feel that pain. I think there'll be a continued desire to rotate to outsourcing and small sales are difficult. You got to hold a lot of whip on your balance sheet and it's time consuming. It's labor intensive. And so, you know, we are seeing a pickup in an outdoor backlog, particularly a fresh wave, which is our European business. and of course at XNet here in the U.S. So we're very optimistic long-term about small cells. It always takes a little longer, Jonathan, as you know. We always think the big small cell bookings are right around the corner, and inevitably this macro environment creates a crosswind that certainly could defray some of that CapEx not only into 23, but as you said, your intuition is correct, Jonathan. We do think small cells will be most prevalent in 24 and 25. We think that's really when the customers have told us they're going to densify. And, you know, we're building small cells in cities like Santiago, Bogota. London, of course, is one of our big growth markets right now with what's going on at Freshwave. And then all across the major markets here in the U.S., all four carriers are now actively, you know, with new contours on the street for outdoor small cells. You should continue to ask this question every quarter because we're happy to give you the granular detail in actually four different markets because Edgepoint is now doing small sales as well in Southeast Asia.

Yeah, and we're cheering the carriers on as they're continuing to deploy their 5G home options and products. It's great for people, right, to get access to high-speed Internet and 5G services at home without, you know, putting fiber all the way to the side of the house and the further densification of the cell network is absolutely crucial for that. So the more success they have there, the better for our business.

And then macro tower leasing in Brazil and opportunities for you to either see inorganic or maybe organic growth in that type of market?

Sorry, Jonathan, I didn't catch the full question. I missed the first part of it.

Macro, yeah, yeah, yeah, macro tower demand in Brazil and what you're seeing in terms of organic growth prospects as well as maybe inorganic growth prospects down there.

Well, look, I think on the inorganic side, we've been very active on the M&A side. I think you saw SBA was active as well. So we continue to invest in Brazil. It's proven to be a very strong market for us in terms of the organic growth. It's actually the second fastest organic growth market for us. So that's, you know, 10 percent organic growth this year. And we're very pleased with what's happening in Brazil. So we're seeing a lot of good M&A opportunity. We're seeing strong organic growth.

Brazil has been one of the bright spots for us. Thank you. Thank you.

Thank you. We have next question from the line of Rick Prentice with Raymond James. Please go ahead.

Hey, guys. Sorry, trying to be in two places at once on earnings day. Mark, I want to follow up on a couple of things. I'm glad to hear the small cell commentary to Jonathan's question. We've been suggesting small cells would be kind of a middle of the 2020 decade item, so it sounds like that's what you're seeing. Can you give us a little color on the self-performing to outsourcing kind of ballpark what percent that could be in the U.S. Is that something we've also thought that fiber budgets at companies like Verizon might come down and more goes? Is there some ballpark frame you can help us understand the small cell, cell performing to outsourcing trend?

Well, I think, look, I won't divulge what each carrier does, but I think today it's pretty much a 50-50 mix with each of the four carriers having very different mixes. So, you know, there's one customer in particular that's doing 80-20 self-perform. There's one customer that's doing kind of 40-60 self-perform. There's one customer that's doing zero self-perform and 100% outsource. So, Rick, you can't paint it with one paintbrush. What I can tell you is we are active with all four customers right now in the U.S. Some are more active than others on the outdoor side. On the indoor side, our value proposition has never been stronger. Between Boingo and Extinet, we're very busy. extremely busy, in fact, on the indoor side. We can't even keep up with the amount of work that we're doing because the carriers have decided self-performing on indoor is a bad idea. And so a lot of that, you know, I would say, you know, today, indoor is probably 90% outsourced, 10% self-performed. It's just too difficult and it's too expensive. So the shared infrastructure model works on the indoor side, Rick.

Another question I think might have come up earlier.

And sorry, Rick, one other thing, because we operate in Europe as well. Small cells in Europe today is 100% outsourced in Europe, which is good news for Freshwave.

Yeah, it's good for the carriers too. You mentioned, I think touched on briefly, the Vantage Tower portfolio out there. I'm not asking where you think it goes or who's the winner out there, but what does it mean for your stake in the business? How does that get affected by what's being discussed out there?

Look, I think we'll make a decision if there's an offer for the company or there's a partial offer for the company, we'll look at it as an important shareholder, the largest shareholder besides Vodafone, and we'll vote with our wallet and vote with our LP's best interest. The price talk that we've heard around it is incredibly accretive for us, and our fund investors win and make money, and that's what we're here to do. We're here to raise capital, deploy it, and make sure we create winning outcomes for investors. That's the core focus of what Digital Rich does today. So thankfully, we got in on that IPO at an early price. We're delighted to help Nick Reed and Pierre Clotz get that IPO done. And if there's an outcome to sell that asset at a great price, then we will cheer them and support them.

We always like seeing that carried interest get actually realized in performance fees.

That's for sure.

Final point for me. T-Mobile on their earnings call talked a little bit about would they be interested in doing some of their own fiber or would they partner with people on fiber? Any thoughts about wireless operators moving more into fiber and how that might play out? Again, maybe not specific to T-Mobile, but just in general. It was an interesting comment by them I found on the call this quarter.

Well, look, I think they're all doing it, right? I mean, T-Mobile's been, you know, Mike's been really direct about what he wants to do. And I think Deutsche Telekom as a parent co understands the value in bringing not only wireless to the home, but in certain markets, you know, supplementing that with fiber where they have a strong brand and a strong customer relationship. AT&T is already doing it very successfully. I mean, what, you know, what Jeff McElfrish is up to and, you know, and Chris Sambar and the team, they're executing well on the fiber side. And They're out raising infrastructure capital, private capital to supplement that build. And, you know, I think that model has worked well in Europe in terms of carriers working with investors to do it. We've worked with customers to help build their backbone or their wholesale network for fiber to the home. And we would, of course, support not only AT&T, but T-Mobile. And we've supported Verizon in the past in building fiber for them. So what you see is a recognition, Rick, that You know, having multiple technology paths to retain the sub or to retain the consumer is what's on the mind of Timo, AT&T, and Verizon, and even Charlie and Dish. I mean, you know, taking control of the customer and being able to deliver technology for them across the platform makes a lot of sense because ultimately, as you know, Rick, to get that customer and get them signed up and put them on your platform is very expensive. You certainly don't want to see them leave.

Makes sense. Thanks for the color. You're welcome. Thanks, Rick.

Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back over to Mark Genzy, CEO, for closing remarks. Over to you, sir.

Yeah, thank you. Look, first and foremost, I want to thank everyone for their time and attention today. I want to close in saying, you know, here's what matters. You know, what matters in an environment like this is having strong liquidity. What matters is our strong balance sheet and our commitment to de-lever. I think taking leverage from where it was when we inherited this company to ultimately three to four turns and perhaps even inside of that over the next 120 days is absolutely central to our success. Having the right firepower to execute deals that we think are going to be opportunistically strong in this quarter and next quarter is absolutely vital. And we're very fortunate to have the firepower to continue to go out and deal make. Simplification. It's really important. I want to thank the team. We've gotten this business into a place where the investment management platform, our asset light approach to digital infrastructure, it's working. And it requires some patience. And I know investors sometimes are frustrated by the lumpiness in the prints, but we're getting there. Every quarter this gets easier, and we can promise you our commitment to that is to every quarter to make it easier for you, our investors. And last but not least, you know, returning profits back to you, our shareholders. In this quarter, the data bank and Wildstone outcomes cannot be underestimated. We have an incredibly valuable portfolio. You saw with the Wildstone transaction that we sold that business way north of where our NAV is. Jackie and my background is we're very conservative. We mark our portfolio companies very conservatively, and we think ultimately, as we continue to build the platform, and we continue to exit investments, that's good news. That is incredibly good news for your shareholders. It cannot be understated, and it cannot be overlooked how important carried interest is as a part of our methodology to how you ultimately frame this business and how you value it. So those are kind of the five key things that matter. And I just want to continue to thank all of our investors for their support. If you want to continue the dialogue with us, Severn White is always available to you. Jackie and I are available to you. This is a partnership between us and our shareholders, and we always welcome the dialogue. Thanks, everyone. Have a great weekend, and thank you again for being a part of the DigiBridge story.

Take care.

Thank you. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.