DigitalBridge Group, Inc.

Greetings and welcome to the Digital Bridge Grouping 4th Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Severin White, Managing Director, Head of Public Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to DigitalBridge's fourth 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 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, February 24, 2023, and DigitalBridge 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 10-K to be filed with the FCC for the year ending December 31st, 2022. Great. So we're going to start with Mark summarizing the progress we've made in 2022. Jackie will outline our financial results and updated guidance and turn it back over to Mark to outline what we're focused on in 2023. With that, I'll turn the call over to Mark Ganse, our CEO. Mark?

Thanks, Sev, and thank you, our investors, for your continuing interest in DigiBridge, particularly as we enter 2023 and navigate the final stage of our transformation. I'd like to start today by putting 2022 and the progress we made this year in context. Most importantly, through a dynamic macro environment, we delivered growth this year, maintaining our position as the partner of choice to top operating management teams and institutional investors that are allocating capital to general infrastructure, which has proven itself to be one of the most durable asset classes. First, on corporate strategy, we established our asset management platform as the strategic growth driver for our business going forward, successfully building out a full-stack profile with new complementary strategies. Next, capital formation. It's our most relevant near-term KPI. When you look forward to revenue and earnings growth, this is where you'll find our best opportunity. Here, we exceeded our fundraising targets for the year, building up significant embedded earnings growth going forward into 2023 and beyond. Finally, and most importantly, our portfolio continued to perform with strong leasing, driving solid outcomes for our investors. The best way to deliver growth in today's environment is to create free cash flow from organic leasing and escalators. Again, this is what matters, portfolio performance. And here is where we really excelled. We'll talk a little bit about that today. Next slide, please. In 2022, DigitalBridge really established our asset management platform as the strategic growth driver for our business going forward. The fundamental shift was about orienting our company around a scalable asset life high return business model. As we've detailed before in our corporate overview, the returns on capital associated with investment management are superior and allow us to establish a leading market position off a smaller capital without having to tap capital markets regularly to grow our business. This is an alternative. We believe a superior alternative way to own digital infrastructure. We achieved a number of key strategic objectives last year that allowed us to advance this roadmap. First, we scaled our full-stack profile both organically with the launch of our core and credit strategies and also through M&A as we telegraphed to you, our investors, with the acquisition of AMP's infrastructure equity business, now rebranded as InfraBridge. This gives us a compelling middle market capability with a digital plus investment focus. We consolidated the ownership of our investment management platform, buying back WAPR's minority stake so that 100% of our investment management earnings flow back to you, DigiBridge shareholders. Finally, we continued to simplify our business profile, starting with the databank recap. This was the first step in deconsolidating our operating segment, which represents the last phase in our corporate transformation. some very important strategic progress this year that sets us up to win in 2023 and beyond.

Next slide, please.

In addition to advancing our investment management roadmap, we allocated capital strategically across four accretive transactions while continuing to maintain strong liquidity at the corporate level. As I've mentioned before, maintaining strong liquidity in this environment is a strategic imperative to DigitalBridge. In 2022, we allocated over $800 million in cash to accretive M&A in our investment management profile, as well as continuing to optimize our capital structure. Let me elaborate a little bit on that. First, let's start with the WAFR stake. For a little bit under $500 million in cash, including the earn-out, as well as the issuance of stock, we purchased AMP's infrastructure equity franchise next and bought back over $110 million of common and preferred stock taking advantage of market dislocation in the fourth quarter of last year. Those investments are set to generate over 85 million in incremental pro forma earnings, which translates to EPS of over 49 cents per share. While we deployed significant capital in 2022, we also prioritized and have maintained strong liquidity. Today, that stands at almost $700 million. Further, We continue to delever our business, reducing both investment level and corporate debt on a per-rata basis during the course of 2022. Again, in this environment, this is essential to my battle plan. The ability to allocate capital in line with our priorities while maintaining strong liquidity and deleveraging were significant achievements this year.

Next slide, please. Next is capital formation.

This is really the KPI that drives future revenue and earnings growth. Here, we finished off the year with a solid fourth quarter. We raised $1.4 billion across four of our strategies. That took our cumulative fundraising to $8.5 billion for the year and fee earning equity to $4.8 billion, exceeding our 2022 midpoint target of $3.8 billion by 26 percent. As that capital kicks into high gear, in the first quarter of this year and beyond, you'll see the revenue growth follow in our financials.

Next page, please. So, where does that put us across the platform?

As of today, we're at approximately $28 billion in FIEM. That's 52% higher than last year, with half the growth coming from organic fundraising and the other half via our acquisition of AMP, which we just closed at the beginning of February. We're excited about that acquisition, and we've already commenced the full integration of the teams and back office operations. We're looking forward to the growth in InfraBridge, and we're excited about the prospects that that business has for DigiBridge shareholders. The other really important thing here to note is the proliferation of colors you see on the slide. We've talked about building the full stack, and what you're starting to see is the manifestation of those efforts. On top of our flagship DigiBridge partner series funds, we've gotten significant growth in co-investment, permanent capital vehicles, and liquid strategies. And now we're laying in capital for our credit and core strategies. That's significant embedded revenue and earnings growth that will manifest itself in 2023. This enables us to scale and execute our go-forward business plan.

Next slide, please.

So the third piece that's relevant here as we look back in 2022 is the success we've had across our global portfolio. On the front end, that means actively investing in new platforms on a global basis. In particular, I want to highlight two signature transactions that we did in the back half of last year. Number one, the $11 billion take private of Switch. And secondly, the $18 billion GDT, GD Towers partnership with Deutsche Telekom. I also want to call out the growth we're seeing in Asia. Both with new platforms and tuck-in acquisitions, we've been able to execute across existing portfolio companies in that geography. We remain excited about that theater, and we're looking forward to investing there in 2023 and beyond. And look, all of this is enabled by continued growth in AUM and FIEM that we've experienced over the last few years. We're now with investments in five continents. So again, let me put that in a proper perspective for you. In summary, one, we beat Fium by 26% in 2022 against our budget. 52% Fium growth since 2021. And 56% AUM growth over the last three years. We continue to post some of the fastest growth metrics in all of the key areas that matter in the asset management sector.

I couldn't be more pleased with our execution. Next page. So why can we post this type of growth? Simple.

Our investments are outperforming in the most important metric of all, organic revenue growth at the asset level. Our performance continued to be strong this quarter with growth on a year-over-year basis and monthly recurring revenue across all of our food groups. This is the foundation for the performance of our franchise over time. Deliver organic growth. On the right side, you can see the conservative portfolio debt metrics that we put in place over a year ago and have been able to manage effectively through a dynamic macro environment. 42% loan to value, 74% of that debt fixed, with an average full extended maturity of over seven years. This is conservative management of the capital structures at our portfolio companies. This was not accidental. This was a plan we put in place at the beginning of COVID. We led multiple securitizations at the end of 2020, 2021, and 2022, setting up our portfolio companies to maximize their liquidity by having fixed debt with only one covenant, which is a DSDR ratio, and no cash traps. This is a playbook that worked incredibly well for us in 2001 and 2002, and worked very well for us in 2008 and 2009. And it's working again. When you deliver great performance on a portfolio company level, that manifests itself in good outcomes for our investors, this is really the heart of the business. Let's talk about a few of those outcomes on the next slide, please. The reason we're so focused on portfolio performance is because, ultimately, strong performance drives great outcomes for our investors. When we say our investors, we mean our LPs and, of course, you, our public shareholders at DigitalBridge. In 2022, despite a rising rate environment, and inflation we delivered, generating realizations at attractive valuations well in excess of our caring values in generating carried interest for you, our shareholders. These are deals we closed in the third and fourth quarter of 2022, not two years ago at the peak when multiples were greater than mid-20s and low-30s. First, advantage towers. We cornerstone their IPO a year and a half ago and generated a strong return for our investors that was otherwise a challenging market, reinforcing the durability of digital infrastructure and towers in particular. Second, Wildstone, which is our leading digital media platform that we sold to Untinned. Again, strong returns on a net basis at a substantial premium to where we maintained it on our books.

And then lastly,

and we continue to bring in new investors as that fundraising period stays open to the end of Q2 this year. That's a deal where we generated 2x MOIC for our balance sheet in just three years, an even better return for the original investors. Again, a significant premium to where we carried the asset on our balance sheet. This is what it's all about, investing in great platforms, best-in-class management teams, driving growth and performance, and then ultimately delivering great returns for our investors and shareholders. That's been my track record for the last 25 years. And now, as we exit future investments, you, our public investors, get to share in the profits with me and our team, creating alignment with you, our public shareholders. So that's the story in 2022. Significant progress on our corporate strategy, beating our capital formation targets, and continued performance at the portfolio level, all of which sets the table for a very successful 2023 and beyond. So with that, I'll turn it over to Jackie to walk through the financials.

Jackie.

Thank you, Mark, and good morning, everyone. As a reminder, in addition to the release of our fourth quarter earnings, we filed a supplemental financial report this morning, which is available within the shareholder section of our website. Starting with our fourth quarter results on page 14, the company saw strong year-over-year growth driven by fundraising in our investment management business and realized performance fees. For the fourth quarter, reported total consolidated revenues were $301 million, which represents an 18% increase from the same period last year. That net loss attributable to common stockholders was $19 million, or 12 cents per share. Total company adjusted EBITDA was $28 million, which grew by 32% from $21 million in the same period last year. Total company distributable earnings was a loss of $11 million, or 7 cents per share. It is important to note that our results this quarter were negatively impacted by a $53 million non-cash valuation allowance. Although we expect to have the ability to use the value of our NOLs, under GAAP standards, we have conservatively applied this reserve now. And as the company continues to generate growth in its earnings, it will be reversed in future periods. Digital AUM was $53 billion in the fourth quarter, which grew by 17% from $45 billion in the same period last year, including the recently closed transaction of AMP Capital, Switch, and GD Towers. We have reached over $65 billion AUM on a pro forma basis. Turning to page 15, our fourth quarter highlights have trended positively with fee revenues, fee-related earnings, and distributable earnings all up year over year when excluding the previously mentioned non-cast valuation allowance. The company raised $22 billion in fee-earning equity under management, up 22% year-over-year, and we raised $4.8 billion of fee-paying capital during the year, despite a very difficult fundraising environment. Furthermore, the company continues to prioritize the optimization of its capital structure. Our current corporate liquidity sits at approximately $680 million after closing the AMP capital acquisition. During 2022, we executed a share repurchase program and initiated a regular quarterly dividend, which we believe we have the capacity to increase in the future. We will touch on this in more detail later in the presentation. Moving to page 16, the company grew recurring investment management revenue and earnings, driven by fee earning equity under management. The company's share of revenues and fee-related earnings increased by 49% and 33% year-over-year, respectively, led by our increased ownership of the business following the acquisition of Wafra's minority stake. Moving to page 17, consolidated digital operating, adjusted EBITDA, was $99 million, which is a 17% increase from the same period last year, driven by continued data center acquisitions and organic leasing growth. The company's share of digital operating revenues was down 14% year over year, while adjusted EBITDA was down 15%. These reductions are attributed to the previously announced data bank recapitalization, which reduced the company's ownership from 22% at the beginning of the year to 11% in the fourth quarter. Turning to page 18, we have seen continued growth in our high-margin investment management business. Since the fourth quarter of 2021, our annualized fee revenues increased from $120 million to $233 million, and fee-related earnings increased from $73 million to $120 million on a pro forma basis. This includes the recently closed acquisition of AMP Capital's equity infrastructure platform, which was subsequently rebranded as InfraBridge. Looking at the right side of the page, our run rate fee revenues were $250 million. This provides an indication of expected revenues and is calculated simply by multiplying committed BUM at the end of the year by the average annual fee rate. Moving to slide 19, I will now outline our earnings guidance for 2023 and 2025. We are updating our 2023 and 2025 targets for the investment management business and are providing indicative guidance on run rate earnings. We've laid out two scenarios for 2023 based on our intent to opportunistically recapitalize and deconsolidate the operating segment, which once accomplished, frees up additional capital to allocate towards new earnings. This will shift the earnings profile of the business towards asset light, higher margins, lower capital intensity, and a higher DE as a result. We are expecting an exceptionally strong fundraising year in 2023, driven by our successor flagship fund product. Note that this is intended to represent FRE at the end of 2023, excluding catch-up fees and one-time items. Nominal earnings for 2023 will be impacted by timing of fundraising. We have additionally introduced guidance on distributable earnings now that we have begun generating positive recurring earnings and will begin to focus heavily on the bottom line going forward. Our strong liquidity position and near-term firepower allows for opportunistic deployment, which we expect to contribute significantly to run rate earnings in addition to the potential to generate realized gains and carried interest earned from further successful exits. Turning to page 20, we wanted to look back at where we've been to highlight what has been accomplished to date and how that continues to drive into the future. Back in 2018 and 2019, the company's legacy assets generated earnings on paper, but were over-levered and unsustainable. Over the next couple of years, we've shed over 99% of the legacy assets and moved the company from this low margin and unsustainable business model into a high growth, high margin, asset-like business with promising growth prospects led by our fundraising engine. We continue to see meaningful upside to our core model as presented, led by further M&A and capital structure optimization with compounding uplift from continued investment alongside our LPs and our funds, which target attractive IRRs and resulting carried interest as we begin harvesting exits like we successfully completed in the third and fourth quarter of 2022. No major transformation is easy, and we'd like to thank our shareholders for the continued support and patience. And I'm pleased to say that as we continue to execute this plan, DigitalBridge will be prime for long-term shareholder success. Turning to page 21, the company has built significant balance sheet liquidity, driven by proceeds from both the data bank recapitalization and return of warehouse investments due to successful fundraising. Following our recent acquisition of the InfraBridge platform for $316 million, we are strongly positioned with approximately $700 million of balance sheet liquidity. Additionally, we have further potential sources of capital, including Brightspire shares and remaining legacy asset sales, which can be utilized to offset medium-term obligations, such as the upcoming 2023 convertible note repayment, which we expect to retire with readily available cash on hand. Throughout 2023, we expect to remain well positioned to deploy capital for accretive uses. Moving to page 22, we have continued to make significant progress improving our debt profile with our debt to adjusted EBITDA ratio improving from 11 times down to 10 times. This reduction is driven by lower investment level debt in our operating segment as a result of the data bank recapitalization and transfer of warehouse investments into our newly raised core and credit funds, resulting in a $206 million total reduction in debt. We will pay down the convertible notes due in April and target the reconsolidation of the operating segment, leaving only the $300 million of securitization as the company's remaining debt. As we continue to execute upon our plan, we expect to achieve leverage ratios in the low single digits. 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 start to 2023 as our near-term fundraising and our growth prospects remain robust. And with that, I will turn it back to Mark. Thank you.

Thanks, Jackie. I want to finish out by laying my top priorities for 2023. This is a section we've done in previous Q4 earnings calls where I like to lay out the three things that matter. This year, it's pretty simple. Number one, we've got a fundraise. We will continue to form capital around new and existing platforms. Two, as I promised to all of you, simplification. getting the operating segment deconsolidated while we maintain strong liquidity. Lastly, we need to continue to perform at our portfolio companies with strong asset management through the cycle and driving free cash flow growth by industry leading organic revenue growth at the asset level. This is seminal to our success going forward. It's a tried and tested formula for me as a CEO. who has presided over the good and the bad times. The key in a market fraught with crosswinds is you have to have a simple and focused battle plan. We have that here at DigitalRidge in 2023 and beyond.

Next page, please. So let's start with fundraising.

This is really going to be our number one KPI in 2023. This is the metric that I know all of you will have your eyes on quarter to quarter. Our plan is to raise more than eight plus billion dollars of net new capital across our platforms. That will break down essentially into three buckets of opportunity. First, we're going to launch our next Ditteridge partner series. Two, we're going to finish raising around our core and credit strategies that we started last year where we have excellent momentum heading into the first part of this year. Three, we're going to continue to grow our co-invest program. supporting the acquisition of new platforms, as well as providing additional capital to existing portfolio companies to fuel their growth. Our co-invest program over the last four years has been really one of the standout attributes of why institutional investors want to partner with us. That incremental FIEM is going to drive a substantial amount of high margin, reoccurring fee revenues, as you can see on the right, with little to no incremental GNA. Now, this is largely the fact that we invested heavily in 2022 in systems and people. We invested in those people to seed and grow new products, and the fruits of that labor will pay off in 2023 with high margin FRE. We're confident that we can achieve these targets because we continue to see very strong interest in the digital infrastructure asset class by the world's leading institutional investors. that naturally are attracted to its combination of persistent growth, durability, and the recognition that DigitalRidge is the leading investor in the sector.

Next page, please.

So, next up, my priority continues to be advancing the simplification of our corporate profile, which will ultimately result in the deconsolidation of our operating segment into IM. There are three drivers here that I want you all to pay attention to. Number one, significantly reduced complexity. This is the number one thing we talk to public investors about today. The financial consolidation of businesses that we own, a combined 12 percent of, in my view, distorts true DigitalBridge shareholder revenues, cash flows, and capital structure, which leads to unnecessary complexity that is a tangible cost burden and makes it challenging for investors to understand, what does DigitalBridge own? We're kind of getting sick of hearing that question. We're going to make things simple. The second key here is the acceleration of a pure play corporate profile. What will ultimately emerge is a lean, profitable asset manager serving secular growth markets devoid of the complexity of assembling and then pulling apart two business models, which makes it tough on you, our investors. Lastly, we expect this initiative to unlock incremental capital that we can redeploy in order to fuel the growth in the form of incremental digital M&A and our optimization of our capital structure. We're essentially monetizing assets at attractive multiples and then redeploying them at lower levels into businesses that compound over time. We've demonstrated this already with the acquisition of AMP, taking over the full stake of our IAM business from WAPTRA, and we will do that again in 2023. Next slide, please. So, what does, this look like when we finalize our asset manager profile? Well, here is just a quick illustration of what we look like today, on the left, with two segments. Two-thirds of our earnings coming from investment management, and one-third coming from the operating segment, which is predominantly Vantage SDC and DataBank. So, migrating to the right side of the page, going forward, our earnings will be driven by reoccurring revenues and earnings from our investment management platform, supplemented by income from retained principal investments, which is the residual amount that we'll keep in managed SEC and data bank, in essence, as the GP of those continuation vehicles. Strategically, one of the most attractive aspects of this transition is we are more closely aligning our capital with that of our limited partners. The ability to align the balance sheet and private LPs with our public investors is where we're going. And we think that symmetry bodes well for all parties, and it creates the right outcomes for all investors. Next slide, please. So, at the end, this is what that simpler profile looks like on a financial basis. As you can see, the transition will reveal a fast-growing asset manager levered to the secular growth market in digital infrastructure. The incredible 42 percent three-year CAGR on FRE is growth that we're anticipating over the next few years. This manifests itself in very strong financial performance. We have a simple algorithm with NuFiam generating revenue at an average rate of 90 bits and very attractive incremental margins. As I stated before, my focus go forward is to grow our profitability. This is an attractive high-growth profile that's simple to understand and appreciate.

Next page, please.

So finally, I want to address where we're going to put the money to work and what our priorities are going forward so there's no confusion. As you can see, over the past few years, we've allocated capital to a combination of uses. I think we as a management team have demonstrated we tend to be very pragmatic about these choices. One of our biggest allocations has been almost $400 million in GP commitments alongside of our LPs. We structurally allocate about 2% to 3% of the equity in each of our fund vehicles, and in the long run, especially as we finalize our capital structure optimization, we expect to allocate more capital to this high return use case. We're eating our own cooking, and we like to see our capital compound at attractive rates, and we think you'll agree with that. The second primary use is accretive digital M&A, as I stated a few pages ago. Between the Wofford Transaction AMP last year, we deployed over $500 million in cash to continue to build our IAM platform and increase our exposure in this high-quality earnings stream. We'll continue to be active here with a focus on strategic and complementary platforms so we can accelerate growth. As I highlighted in my last quarterly earnings call, we've also been looking at the notion of entering the private equity space in digital infrastructure, which is a space that we do not occupy today. We think there are good opportunities here and a fertile ground, and we'll continue to build that organically and also go out and look at accretive M&A. The third piece is capital structure optimization. Look, here we've been opportunistic. We bought back preferreds last year, which we expect to continue to be a use of free cash flow going forward. In the near term, as I promised, we'll pay down our $200 million of 2023 converts when they come due on time in April with cash on hand. Finally, repurchases and dividends. We took advantage of what we see as an attractive price for our stock last quarter, buying back $55 million, and we also retained a one-cent dividend last year in terms of making sure that we stayed committed to our promises. We intend to continue to maintain what we call a low but grow dividend policy, and we're going to continue to execute share repurchases opportunistically over time, measuring it against the other three categories of where we can put capital to work. The key here is, as we look at our capital allocation framework, is a focus in the nearer term on successfully executing creative digital M&A the way we have last year, and continue to rationalize and optimize our capital structure, as we did last year. Over time, we'll have more free cash flow to invest alongside RLPs and compound shareholder capital.

Next page, please.

So, in conclusion today, let's bring it back to where we're going and where we want to take you, our investors, in 2023. What's my scorecard for the year ahead? Pretty simple. Here's my checklist. One, we're going to fundraise. As most of you know, I'm laser-focused right now on forming $8 billion in new net capital around our DigitalBridge partner core and credit strategy, as well as co-invest. Two, simplification. We're going to finish our transformation with the deconsolidation of the operating segment and continue to deliver our business. And lastly, portfolio performance. Continue to invest in high-quality digital businesses, driving free cash flow through organic growth, and investing in the best management teams in the digital infrastructure ecosystem. Taking a step back, I believe that these are really our control variables for 2023. These are the things that we can go out and execute. And my belief is, As we execute on these three initiatives, good things will happen at the company, and most importantly, good things will happen for you, our shareholders. With that, I want to thank you for listening to our earnings presentation this morning, and I'd like to turn the call back over to our operator to initiate our Q&A session.

Operator.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on the telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would 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.

Our first question is from the line of Rick Prentice with Raymond James.

Please go ahead.

Hey, thanks, everyone. This is Brent on for Rick this morning. First question, you talked about M&A in the IM segment. With the AMP deal done, what new swim lanes might a target fit into to expand your offering? You mentioned private equity. What else should we be thinking about there?

Well, good morning. It's Mark, and thanks for tuning in. So I think we've been pretty prescriptive about that. I've made it very clear that private equity, digital private equity, is a high priority of us. There are many firms that are in middle market digital private equity that do investing in digital infrastructure and TMT and also software and SaaS models. We think there's a couple of really good teams out there that we have a lot of respect for. We're out talking to all of them, just like we would be in our traditional investment management space. We talk to all the management teams. And so we've been spending the last year getting to know a couple of those management teams. And we think there's a good opportunity to add that part of our IAM business through an acquisition. And that's why we've been harvesting the cash so that we can be opportunistic. What we've also said is, you know, I think I've also been pretty prescriptive about, you know, the importance of renewable energy and the ability to power digital infrastructure with renewable energy. We've seen that case study, you know, full force at Switch where we're outperforming, you know, our leasing projections, our full year of leasing in 22 exceeded our three-year guidance. And customers want to be in data centers and they want to be around digital infrastructure that has renewable energy. So we're spending a lot of time around thinking about how we can grow the infra bridge platform and continue to add strength in the renewable space. So those are really my two areas of focus today is really private equity, digital private equity, middle market and renewable energy. We're very focused, got a number of targets. And obviously we have a guide in terms of what we think we're going to do in M&A. We did well last year with the Wofford and AMP deals. And I think this management team, those that follow me know that we've got a pretty rich history in doing M&A. So, you know, our confidence and conviction level around that is pretty strong.

Got it. And on the DE guidance, what kind of carried interest is assumed in that guide and Is that sort of the difference between the upper end and lower end of the guide? Yeah, I'll defer to Jackie on that.

Great. The biggest difference in the guide really in the range is driven by the fundraising range, but we have not assumed carried interest in our guidance. So that would be incremental upside to our numbers.

Okay. And then, Mark, you'll have a lot of funds to deploy if you hit this guide. And then you also have some portfolio codes that might be nearing time to exit. So could you just give us an update on how you're viewing M&A multiples right now globally, what looks attractive, what looks less attractive?

Yeah. So, look, it's kind of the tale of two cities, right? I think, you know, the high-quality – digital infrastructure assets are still hanging in and are holding their value and i think what you're seeing is and when i say high quality businesses that have contracted cash flows greater than you know 5 10 15 years that are more than 80 exposed to investment grade counterparties uh and businesses that have securitized debt you know long-term capital structures that are that are portable you know we proved that in the wildstone transaction we proved that out in the databank transaction You know, we had portable capital structures and we had high quality assets with long-durated cash flows. I think what you're also seeing is the tail of the other side of the city, which, you know, I sort of telegraphed about two, three years ago, which is you have a series of generalist infra funds that went in, bought a lot of fiber that was facing consumer that did not have long-term contracted cash flows, which we were very clear we were staying away from. So, you know, the last two to three years, we've been focusing on quality. the Deutsche Telekom transaction, Switch, Landmark. These are businesses that have high exposure to investment-grade counterparties and long-term leases, and that's where we deployed capital. We went left and we played risk off. The rest of the world went right and paid high multiples for residential fiber and other businesses that don't have long-term cash flows. We've always been very careful to stay away from businesses that have consumer-facing graphics and are built on hope dividends. We don't invest on hope dividends. It's just not what we do at DigitalBridge. And so, you know, it comes as no surprise in the third quarter and fourth quarter that both of our funds, DigitalBridge Partners 1 and 2, moved up in value while we saw, you know, other counterparties in private equity and other forms of investing in the space either at par or moved down. And I think that was largely because of our disciplined investment framework, which we continue to execute today. So the setup as we go forward is really interesting. We think there are good opportunities to play in kind of three types of investment opportunities as we form all this new capital. One, we do think there is dislocation. And when there's dislocation, you can invest, you can take advantage of a remark to market. And we're certainly seeing that in the fiber to the home space. And we think there's going to be good opportunities to not play in that sector in the mid-20s, but play in that sector back down again in the you know, low teens, if not even single digits. So we're looking very carefully at some of those businesses because we think they're finally reflecting their value. And maybe that's the right time to enter fiber to the home or resi fiber. We'll continue to look at towers on a global basis. Towers have always held up very strong in these, you know, sort of turbulent macro environments. Got a number of tower deals we're working on. We still like data centers. We like private cloud. We like what we're doing at Switch. We certainly like what we're doing in public cloud with Vantage, and we have numerous data center opportunities to execute in this fund, focusing on private and public cloud narratives. Another area that I think that we're seeing a really good opportunity is in network infrastructure that is based on SaaS models. So software-defined networking businesses that were trading in the mid-30s are now trading back down in the low teens again. That's an interesting opportunity as we think about what makes networks tick in the future. And then, of course, we'll also look at digital media assets. We had a great experience with the Wildstone acquisition. The outdoor media business is coming under some pressure right now, like other sectors. So it's a combination of value shopping, high-quality shopping. And then the last of the three legs to the stool of where we'll invest is what we call backing management teams and new ideas. It's something that we've done time and time again. We've stood up new businesses, new ideas, and we're not afraid to do that with the right management team. It has to be sort of best in class. So a lot to do right now. We've got a very big pipeline of new ideas that we're prosecuting for our new DigiBridge Partners strategy, and we're pretty optimistic about the things that we're doing right now.

Thanks. And last one for me, when should we expect the 2023 Investor Day?

I'll leave that to Severn White. Severn, you want to answer that question?

Yeah, I think we're looking potentially at June. So more to follow on that.

Great. Thanks, guys. Thank you.

Thank you. Our next question is from the line of Eric Luchow with Wells Fargo. Please go ahead.

Great. Thanks for taking the question in the morning, everyone. I wanted to get an update on the deconsolidation of DataBank and Vantage SBC. Obviously, you've had a successful recap thus far of DataBank. Could you kind of remind us what you have left to do there? And maybe, you know, do you think you can continue to achieve the, I think, 30 times multiple that you did on the initial stages of the recap? And then separately, with Vantage SBC, what type of appetite do you see out there today from investors for more stabilized data center assets like Vantage SBC versus more of a development platform like you have in the fund business?

Yeah, thanks, Eric. Those are great questions. Let's start with databank. I think that's kind of the easier one. First of all, since we announced the transaction last June with Swiss Life and EDF, the headline multiple was close to 30 times. What I'm pleased to tell you is that multiple today is not 30 times. The businesses, as you saw from digital operating results, which were very strong year over year, Data Bank has massively outperformed its business plan. In fact, had its best quarter of leasing in company history in the fourth quarter. And today, you know, the subscription period on that fund, remember, that's a continuation fund, Eric. That stays open until June 30th. So investors can subscribe all the way to June 30th at the initial share price. So investors that have been patient and have continued to look at the company have the chance to invest and clearly now have the chance to invest in the you know, lower to mid 20s type multiple. So the business has managed to take that entry multiple down from 30 to 28, now closer to 25 to 24 times. We've had spectacular execution at DataBank, I'm pleased to say. So what we did, Eric, is we had a number of different initiatives in flight with Switch and Deutsche Telekom. So we actually turned off the DataBank fundraising in fourth quarter. We're reigniting that fundraising starting March 1, where we'll take subscriptions again. and we'll take subscriptions all the way until the end of June 30th. We do have roughly about 22 investors in the data room doing the work. We feel really good about our ability to raise another $600 million there. That gets us – that $600 million, if I'm correct, Jackie, that takes us from about 12% down to 6% or 7%. You'll have to back me up on the numbers here.

I'm on the road fundraising. No worries. We're at around 11% right now, and that will take us a little under 8%.

So really high conviction, Eric, around DataBank, largely because the business is just performing at an incredible pace. So we're pretty optimistic that we'll get that done here in short order. Advantage SDC, same story. It's a business that continues to execute against its plan. Really hard to find, you know, at that entry price and at that cap rate, the quality of the cash flows of domestic U.S., close to 100% investment grade, 15-year leases with investment grade cloud players. And as you can imagine, other parts of the world, maybe not U.S. pensions, but certainly Asian pensions, Australian pensions, Middle Eastern sovereign wealth funds, between Asia and the Middle East and Australia, we're finding that there's a lot of appetite for high-quality yielding assets. And again, the entry price would be the same as it was when we initiated that continuation fund, as you know, Advantage SDC sits in a continuation fund already. And so we've got very strong momentum there. You know, part of my team is in Australia this week fundraising, and some of my team next week is in Asia, and some of my team is in the Middle East. So we're constantly fundraising, Eric. It's really candidly our strength, and it's why we feel really confident about the 2023 guidance that we've laid out. And once again, that guidance is, you know, eight plus billion of new fundraising, just to be entirely clear with everyone. We have an expectation that we're, you know, we're going to beat that target. So that's the update on two of those. And by the way, if we sell a stake in Vantage SDC, again, you know, call it if we sell what, Jackie, we're sort of telegraphing, we might sell half that stake, which would take us from 12% to about 6%. You want to give us the math on that?

Yeah, sure. So we're a little over 13% ownership advantage SDC now. And under GAAP considerations, we would get to below 9.5% to deconsolidate our position. Obviously, we'll be opportunistic with any sort of recapitalization there. Gotcha. That's helpful.

Thank you both. And just one more for me, Mark. There's been some debate in the fixed income community, so maybe you could help clear the air around the outlook for Zayo within your portfolio, just based on where the bonds have traded earlier this year. So maybe you can just give us an update on their cash flow and growth outlook and the performance of that fairly large portfolio asset. That would be helpful. Thank you.

Yeah, sure. We're certainly under no obligation to talk about that asset, but I really like you, Eric. But anyway, we're forecasting roughly 5.5% to 6.8% organic net growth this year at Zayo. We had a very, very strong fourth quarter, strongest revenue bookings in the company's history in 2022, and the strongest quarter of net installs in the company's history in Q4. We have spent the last two years rebooting the management team, candidly redoing the back office systems which needed a lot of work and repair we've put more capex into the physical plant just renovating certain routes and building redundancy and strength over 120 million invested in last two years that was you know at our election it was discretionary capex to make sure the network is strong and then we've got a best-in-class sales team led by Andres Orlando's so you know we've made all the right moves we're starting to see the results and And we're very confident in that company. The routes that Zayo has and the customers it has are pretty indelible, really difficult to replicate what Zayo has on a nationwide basis. And so we know in time the network wins, and we know the quality of the cash flows and the quality of the customers win. I think the business had a set of headwinds. We knew that when we underwrote the deal. We had a battle plan to fix it, and that's what I've been focused on for the last, you know, better part of three quarters since the second quarter last year. It's one of the boards that I personally sit on, and investors can go to sleep at night knowing that I'm very involved in that business day-to-day with Steve Smith, and I quite enjoy it, and I like the management team, and I know where we're going, and it's headed in the absolute right direction, and the financial performance will show that this year. So we have strong conviction in the bonds.

Perfect. Appreciate the update. Thanks, Eric.

Thank you. Our next question is from the line of John Atkin with RBC Capital Markets. Please go ahead. Thanks.

So just two questions on capital formation. Can you talk a little bit about how your discussions with investors has changed? change just given what's going on in kind of the macro economy and financing costs and just overall capital markets conditions? And are you expecting to get largely kind of repeat investors or folks that are new to the family or new to digital, just trying to get a sense of how you get to that target and how the discussions maybe this year might be different from what you've had in prior cycles? And then on the simplification of the capital structure, I think you kind of alluded to this earlier, but maybe just to repeat, what are the procedural milestones to keep in mind that might influence the timeline around deconsolidation? Thanks.

Let me take the easier one, which is deconsolidation. I think we just laid that out. We've got teams in place right now uh that are talking to investors on both assets i think databank sort of comes first vantage sdc comes second we've committed to deconsolidating both of those assets this year i've given you a june 30 timeline on the databank fundraising that's when the subscription period ends in that continuation fund and we've got 22 logos in there in the data room doing the work 600 million is the target uh verbal commitments right now are almost quadruple that just to give you a sense of our conviction level around the data bank process uh the vantage fcc process uh sell down there just uh started and there it's a combination as i said sovereign wealth funds pension funds particularly japanese korean and australian pension funds roughly about 14 logos have been invited to look at that and what's also interesting right now if you follow fundraising Jonathan, you'll know that there are literally hundreds of billions of dollars sitting on the sidelines in secondary funds. So, you know, folks that do secondaries like Partners Group, Blackstone, RDN, who are quite expert at that, are also looking at the opportunity. It's a really high quality set of assets. And what I've always found in my line of work, Jonathan, is when there's hundreds of billions of dollars sitting on the sidelines chasing very few deals that are of high quality, usually you win. So we've got secondary folks looking at it as well. Not at a discount, to be clear. And our conviction level around just the quality of the Vantage assets is quite strong. So I can't give you a specific timeline. We haven't put a timeline on that process yet. But again, we have guided that we will get both of these assets deconsolidated. And look, at the end of the day, people need to understand the motivation of the deconsolidation. I think we've been hearing from investors that they want us to simplify the business. And by deconsolidating and moving the two operating assets to IM, is going to be met with a lot of support. I'm not doing it because investors are telling us we need to do it. I'm doing it because I know we have to delever our business. And I think some of the comments that Jackie made about leverage earlier today are absolutely seminal to what we're doing. I'm maintaining high liquidity. I'm getting our target leverage subbed four times as fast as we can. And by having low leverage and high liquidity, that's how you play a market like this. That worked for me back in 2002 and 2003, and that worked for us in 2009 and 2010. It's a playbook that works. So we want to be known as the digital infrastructure investor with low leverage, a lot of liquidity, and firepower to go play offense, which we absolutely 100% intend to do. Let's switch gears to your first question, fundraising and what's going on there. We have about 80 investors, Jonathan, in our second fund, Digital Bridge Partners II. As we launch our new Digital Rich Partners strategy, we've already been out talking to those investors, our Fund 2 investors, over the last 120 days. I'm pleased to say out of those 79 investors, not one of those investors has said no to our next strategy. That's pretty stunning. Now, I don't expect we'll get 100% renewal on those investors, but we are anticipating about an 80% renewal rate on that $8.3 billion of capital. but also accepting that the denominator effect will make checks about 20 to 30 percent smaller. So where does that lead us? If you run that calculus at a 25 percent smaller check and an 80 percent take rate, you still have some fundraising to do. So we've been doing that. We've been out for the last 120 days. We're in dialogue with 200 new logos. That's not a typo. 200 new investors that we have outreach to that have verbally indicated they have interest of about $30 billion. Keep in mind, we've got 17 salespeople globally. Kevin Smith and Leslie Golden are the best in the business. We fundraise 24-7. We have very sophisticated back office tools that enable us to predict what investors are doing, where are they in the process, what's the probability that they get through diligence, what's the probability they get to IC, and what's the probability they get to yes. So we put that all into the supercomputer, and we get a pretty good outcome for fundraising this year. Now, a lot can happen. We accept that the environment is incredibly turbulent. It's choppy. Investors have choices. But we also know that investors are not walking away from digital infrastructure, Jonathan. They're not walking away from renewable energy, and they're not walking away from credit. So renewables, digital infrastructure, and credit are the strategies that are working. That is where investors are putting capital to work. We had successful fundraising in January. We've had successful fundraising in February. We're obviously not at liberty to report those results until the next quarterly earnings. But again, I want to be clear with everyone on the phone today. We have very strong conviction around what we're doing in fundraising. And we've got the data and the dialogue, you know, and the sales team to support that. So again, I think if you're taking anything away from this call is you have somebody who has a lot of conviction in our fundraising now based on the various discussions we have going on.

Does that help, Jonathan? Yes, it does. Thanks very much.

Thank you. Our next question is from the line of Jade Romani with KBW. Please go ahead.

Thank you very much. A question about fundraising. Does digital infrastructure fall within real estate or infrastructure, and does that designation make any difference? in terms of the outlook?

You know, it's infrastructure, right? I mean, you go back to DigiRich Partners strategy one and strategy two, I'd say strategy one, Jade, 25% of the capital was coming from real estate buckets. You pivot to strategy two, 8.3 billion, about 10% of that capital came from real estate allocators. And as we look forward and think about what we're doing with the new strategy, I think it's pretty much all in for at this point. I don't think real estate investors are looking at, you know, our series of fund products as real estate. I think it's the conversations we have, Jade, are with the head of infrastructure, the CIOs of real assets. I mean, our connectivity with investors now is pretty strong. And I think what we've found is that our home, our home for our capital is infrastructure. Unless, of course, we're out raising money for credit or we're out raising money for our venture growth strategy or liquid securities products. Those are different. Those are obviously different conversations, but in our core digital rich partners, flagship strategy, it's real assets. And underneath that it's in front.

So does that create an opportunity to broaden the focus to overall infrastructure? There could be synergies and fundraising with respect to all the LPs you're talking to, or do you think that's more of a risk to dilute your focus?

No, I think, look, we obviously are, you know, very skilled at fundraising. We've almost tripled the size of our fundraising team. I mentioned it on the call. We did invest a lot in SG&A last year because we're building a growth engine, Jade, to get to $150 billion of assets under management. You know, I'm guiding to, you know, $275 to $290 million of FRE in 2025. And the way we get there is by fundraising. And the way we get there is building scale in our credit product, building scale in our core product. Certainly InfraBridge is a big part of our growth strategy as well. We like the Digital Plus strategy. We like what we're doing there. Certainly like the team we have in place there in terms of digital logistics and renewable energy. There's a lot of room for us to grow there. We picked up five world-class fundraisers from InfraBridge, bringing our total team to 17 people globally, and they've got a bunch of logos that we didn't have, and we've got a bunch of logos they didn't have. So the synergies in the InfraBridge deal are yet to be entirely apparent to the street, Jade, but I can tell you we're fully integrated day one. Jackie Wu and Ben Jenkins and Liam did a great job integrating that team into our operations. So the day we closed, everybody was on the same same page for fundraising, asset management, and back office and accounting. And so we're hitting the ground running on ImproVidge. It took a little longer than we would have liked to have closed the transaction, but it really just gave Jackie more time to integrate the back office side and it gave Liam and Ben more time to integrate the investment management team. So clearly strong synergies in fundraising now, much bigger team, a lot of interest in what we're doing, not just in DigiBridge partners in our flagship strategy, but also some of the other co-investment vehicles and other strategies that we have going on right now. We think we're in the right place. We've got the right dialogue going, and now it's just time to close some capital, which I think we will, just albeit at slightly smaller check sizes this year.

Thanks. And just the last question on the overall environment. Does rationalization that's playing out in the tech sector more broadly create any flow-through impacts to the underlying businesses? Will that slow the growth rate and have any impact on LP appetite to invest in this space?

So, look, what we have is the results from the fourth quarter, which we shared from you today. Organic growth in 2022 is at record levels across fiber, towers, small cells, and data centers. Certain data center verticals are growing faster than other. I think I highlighted this in my PTC conversation in Hawaii, we see private cloud, uh, being massively on the rise and certainly renewable powered, uh, private cloud is, is on the rise because of, you know, just cybersecurity attacks, people wanting that tier five security that switch has. And certainly there's been no abatement in leasing advantage. I mean, surreal, uh, outleast Equinix and the outleast digital realty last year, uh, on the public cloud side. So we've got the right CEOs, we've got the right management teams. And, um, Certainly, they've got access to capital. We did a very good job securitizing most of our portfolio companies, as I highlighted in our earnings deck. By having only one covenant jade, which is just a DSCR ratio, and no cash traps at those securitizations, our companies are minting free cash flow. And so what we're doing is harvesting cash down at those 27 digital infrastructure companies. We're reinvesting back into the businesses, not pushing dividends out to LPs. We think this is the right moment to reinvest in new towers, new data centers. We're seeing higher rents. Data center rents are up 12% in the public cloud. They're up 6% globally. And so we're seeing higher rents and we're seeing better returns on a single tenant basis. So we have fully funded business plans for 2023. We do see CapEx being trimmed by the mobile carriers. We do see CapEx being trimmed in enterprise spend. And we do see CapEx being trimmed in cloud. But all that being said, all of our business plans are pointed to very strong, high single-digit, low double-digit organic growth next year. So this is the narrative, Jay, that played out in 2009 and 2010 for us. We had strong liquidity. We lowered our leverage. We had fixed debt in the form of securitized debt, and it enabled us to play offense. We're running that same playbook, not just at one company like we did at Global Tower Partners, but we're running that playbook at 27 companies. So you're getting a force multiplier at DigitalBridge. You're getting global scale. As Severin said, five continents we're operating today. It's a truly remarkable business, and we're going to see the benefits of having scale, having strong liquidity, and having great customer relationships. We anticipate a very strong 2023.

Thank you.

Thank you. Our next question is from the line of Michael Elias with Cohen & Company. Please go ahead.

Great. Thanks for taking the questions. Two, if I may. First, just as we think about the incremental capital that you're looking to deploy, I know you talked about the verticals that you're looking to invest in, but maybe if you could just double-click on the geographies that are a focus. I believe you flagged Asia earlier in the call. Just thinking about how you're prioritizing deploying capital across regions. And then my second question for you would be, You know, one of the key themes, at least for the data center space, has been a rise in pricing, Mark, which you just talked to, driven in part by supply chain and then also tighter occupancy. Now, any color on how you see pricing evolving across the verticals of common infra and if you think that could be a further tailwind for your businesses this year?

Thanks. As always, Michael, good question. It's very thoughtful. Let's try to take the second one first because it's top of mind. Our business plans in 2023 are not predicated on higher pricing to customers. Let me repeat that. We are not predicating our growth results on just making our customers pay more. That's a bad playbook. Had I run that playbook in 2002 and 2003 and 2009 and 2010, when the markets turn and get good, customers don't come back to you. So we tend to be very pragmatic about how we price. We don't want to gouge. We certainly don't want to be someone who shapes the price and then the customer gets angry, and when their capital structure recovers and they've got more liquidity and their CapEx spending accelerates, we get left behind. I've watched other publicly traded digital infrastructure companies do that, and they'll admit they won't admit it today, but back then they would have admitted they suffered for it. So we've learned from that past, right? And you've got to always look at the past and look at these down cycles, and this is where you pick customers up. You don't step on them. And I'm very clear about this with all of our 27 CEOs. There's a right way to behave. There's a right way to treat your customers. And there's a reason why we had incredible growth in the dot-com crash and the mortgage crisis because we knew how to play those cycles. We're doing the same thing today. We're putting customers first. We're taking care of them. And the growth rates will follow. Yes, we have moved up pricing. I don't want you to walk away from the conversation saying we haven't moved tower rents up. We haven't moved data center routes up. Fiber rents actually have stayed pretty static. And small cell pricing has stayed pretty static. But in towers and in data centers and select verticals and select markets where we have a unique permitting position or we have a unique power position, Michael, we are pricing that space accordingly as one would expect. So I do see good growth in 23. It won't be as good as the growth was in 22. Looking at the January leasing results from all the portfolio companies, I'd say we're on plan, mostly a little bit slightly ahead of plan, but You can't read much, Michael, in the first quarter. I think the fun conversation we're going to have is over the summer, you know, checking in with us at the sort of half pole, right? You know, halfway through the race, where are we? I think when we're, you know, out at your conference in, you know, in Boulder or some of the other summer conferences, it'll be interesting to check in then and figure out, you know, where are we against plan? How's leasing? Where are rates? You know, where's CapEx spending? Those are all things that we're going to monitor pretty closely and The good news is I get to talk to you four times a year like this, and so I'm always pretty transparent with you, and I'll share with you what I'm hearing. Does that make sense?

Absolutely. Appreciate those comments. And then just any color on, you know, geographies where you're focused on deploying to capital.

Yeah, yeah. So, look, I mean, we're always shifting a little bit, right? There was, you know, if you look at DigiBridge Partners 1 and DigiBridge Partners 2, DigiBridge Partners 1, we put 20% of the fund in the LATAM. We put about, you know, 40% to 50%. 45% in Europe and about 30% to 35% in the U.S. Then that shifted in fund two. We decided to go, you know, we sort of took risk off in Europe, put about 30% to 35% there. We moved up in the U.S. and Canada to close to 42%, 43%. We did very little in Latin America, about 5%. Then we did 20% in Asia. So Asia was a big part of our strategy in DigiRidge Partners 2. I think for this year, from an allocation perspective, as I highlighted on the call today, I like what we're seeing in Asia. There's some technicals there that we like. And so we're going to continue on the same cadence in Asia. We're seeing good opportunities. We're seeing a lot of our customers are looking to sell infrastructure. And keep in mind, you know, a lot of the carriers sold their infrastructure, Michael, 15 years ago in the U.S. In Europe, they started selling five, six years ago. And Asia is kind of the last big theater where you're going to see a lot of infrastructure to be sold. So I think that's me telegraphing that a little bit. I'm still a little risk off on Europe. I think the way we play Europe is through dislocation. I think you've seen a couple of fiber to the home bankruptcies in the last two to three weeks. You know, we've been looking around some of those. So in Europe, we're going to be a little more opportunistic. I don't think we pay up for high quality platforms in Europe. I think in the U.S., it's business as usual. I think we've been pretty consistent across the last two funds about what we've done in the U.S. And we like the U.S. We like the technicals. It's our home market. We like some of the things we're seeing in Canada. I wouldn't give up on investing in Canada. And then I think in Latin America, as they start to emerge from some of the recessions they had five, six years ago, we do like some of those markets. But again, a very limited amount of capital. I don't see us going crazy in LATAM. But I think the big winners over the next two years for us will be here in our home market and in Asia are really the two standout areas for geography, Michael.

Awesome. Really appreciate the call, Mark. Thank you. Yeah, thank you, Michael. Appreciate it.

Thank you. Our next question is from the line of Dan Day with B Riley Securities. Please go ahead.

Yeah, morning, guys. Appreciate you taking the questions. Thanks for all the color on the deconsolidation of Data Bank Advantage. I think the other piece of the simplification pie that we've spent less time on is some of the non-core assets that you planted the best, like the Brightspire shares. some of the other kind of legacy colony capital stuff just kind of laying around still. Any update on the timeline for divestiture of those? Is that going to be a 2023 event? And would that have any impact on the DE guide that you gave? Thanks.

I think we've been pretty clear about that as well, that this would be the year that we'd finish divesting of all the non-core assets. That timeline remains unchanged. that cash can be put to good work on digital M&A. And that's what we intend to do, you know, rotate out of stuff that doesn't have an high IRR, high yield. So we'll focus on that. And then it also gives us the opportunity to put more capital into our new funds because that's working. I mean, you know, that's clearly, you know, the right strategy for us is to continue to invest in digital. So I think what you'll see is by the end of this year, an incredibly clean, you know, low-levered, you know, sector-focused, you know, asset manager that's putting up incredibly strong, you know, FRE numbers. And, you know, and our goal is, as usual, is to beat our guidance. I think that's something this management team has long had a rich history of doing is beating our guidance. So, but look, on Brightspire, you know, Jackie's been running with that. And I'm sure, Jackie, any incremental color you want to give on Brightspire?

Yeah, sure. So we've always said we'd be responsible sellers, but Mark really said it. It's non-core, and our focus this year is to be opportunistic with selling to divesting those to the degree it makes sense for our shareholders and the price that we're going to get for it. And then the other legacy colony assets, really the principal one is a seller's note associated with healthcare, which We will continue to work with Highgate to monetize that where appropriate. And the other investments are pretty much gone. So we're really left with just those two.

Awesome. Thank you. And then appreciate the color on the common stock repurchases in the fourth quarter. Just wondering if you could give an average purchase price on those in 4Q. maybe how active you've been after quarter end, and if you have been active in 23 so far, whether that's been the common, the preferred, the mixed, and how much is on the authorization as of today? Thanks.

Yeah, sure.

It was basically at around $13, and we will continue to work with our board to see where it makes sense to be more opportunistic with taking the rest of it. taking the rest of it from a share buyback perspective.

Okay, so just to be, you're not commenting on any repurchase activity after quarter end. That's fine if you are. I just wanted to make sure.

We will not comment on that at this point, but we do have authorization left to do so.

Great. All right, guys. Thanks for taking the questions. That's all I got. Yeah, thank you.

Thank you. Our next question is from the line of Richard Cho with JP Morgan. Please go ahead.

Hi. I wanted to follow up on the potential investments in Asia. Do you see more opportunity with towers, data centers, or fiber? And would it be mainly carrier sales or investing in companies that are thinking about building? Just wanted to get a little more color there.

Yeah, thanks, Richard. Look, you wouldn't be surprised to hear this, but it's a little bit of everything, right? Some of these are carrier partnerships like we have with Deutsche Telekom, like we have with Liberty in Europe. Some of these are straight acquisitions. Some of these are divested assets, potentially a carrier divesting of their long-haul sub-oceanic network. It could be edge data centers where we're working with a specific customer. It could be It's a variety of things. I don't want to get too specific because it's obviously pretty strategic. We like to kind of run dark and silent, and then when we make our move, we announce the deal. But as I said before, Richard, the playground in Asia is very fertile. It's fertile from a customer perspective, from a carrier perspective. It's extremely fertile from a fundraising perspective. We're seeing incredible interest in what we're doing because we didn't raise a lot of capital, Richard, in Fund 1 and Fund 2 out of Asia. And You know, we're seeing a lot of interest in what we do as Asian investors, as you know, Richard, tend to be pretty conservative. So they looked at our first strategy. They looked at our second strategy. They generally like to invest in later generation strategies. And so the big kind of, you know, 23 surprise for us will be the fundraising in Asia. And we now have three full-time salespeople in Asia, which we had literally a year ago, we had none. And there are three absolute rock star fundraisers. So we went from having literally not a strong presence in that region to having a leading presence in that region from a fundraising perspective. And I'm pretty excited. I've taken two trips to Asia in the last 90 days. I'll take two more trips to Asia in the next 120 days. And we're pretty buoyant about what we're seeing there from a pipeline perspective, from a fundraising perspective. Our Singapore office is 17 full-time investment professionals now. So we're You know, we feel like we've got the right team on the street, right opportunity set, and we've got the right capital information. And those are the ingredients you need to be successful.

Great. And you've mentioned this in bits and parts throughout the Q&A, but just to circle back, I think there's some perception that you paid a very premium multiple for Switch. And it seems like, given how it's performed, you know, maybe it's not nearly as high as people assume. Any... kind of update there that you can provide that you want to clarify on that?

Yeah, look, I gave a pretty pointed speech in Hawaii about that, Richard. You should go check that out because it's pretty detailed. But I'll give you the highlights of that speech, which is we're three years ahead of leasing where we thought we'd be. That's kind of all you got to know. We thought we were going to do 16 megawatts. We did 77 megawatts. And the pipeline has quadrupled since we bought the company. And we just, it's one of those stories, Richard, that it's sometimes a company just performs better when it's private versus being public. They were constrained of capital, as you know, being a public company. Um, the management team had a tough time. You know, it's not a business you can run quarter to quarter, just not built for, for public market cadence and bringing a private allowed the company to make the right investments, the right long-term decisions. And it's paid off really well for us. We just had a board meeting this week, and the results are pretty outstanding. We're in this business for nowhere near 30 times anymore. Whoever's putting out that narrative just doesn't have the right information, and I'll leave it there. Business is performing well. Renewable energy for the major Fortune 100 enterprise companies, for the U.S. government, and for cloud players, it's not a nice to have. It's table stakes. These guys want to be in data centers where there's 100 percent renewable energy. And last thing I would just say is switches in places where we're the alternative to markets that are now shut down and have no power. So, you know, for example, Grand Rapids has turned out to be a nice alternative to northern Virginia. Reno is the alternative to Silicon Valley. Austin, Texas, is the alternative to Dallas and Houston. And so we're in really good high growth markets. we own the land, we control our real estate, we're fully permitted for the next 11 million square feet of data center space, and we have 1.5 gigawatts of unused power. So the combination of having a lot of land, a lot of rentable square feet, and a lot of power, and being unconstrained has put us in a huge advantage in some of these markets. And so that's why the business is crushing it today. And so we're going to we're going to continue to see outperformance in that asset. I'm really excited about what we're doing in switch and it's a blueprint for potentially, you know, what we do in private cloud in Europe and what we do in Asia. So, uh, we're not stopping there. We think there's like we've, like we did with Vantage. We took Vantage to Europe. We took Vantage to Asia. Um, the market for private, you know, tier five, uh, renewable power data centers is a, is a really interesting product. And so we're looking at that into the future. Where do we take switch next?

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

Thank you. Our next question is from the line of Matt Nicknim with Deutsche Bank. Please go ahead.

Hey, guys. Thanks for taking the question. Thank you for squeezing me in this late. But just two quick ones, if I could. First, on InfraBridge, if you could just talk about some of the incremental infrastructure opportunities in the mid-market, the deal opens up for DigitalBridge and maybe some of the near-term synergy it provides your IM business. And then just secondly, maybe for Jackie, the targets you put out imply corporate overhead goes from 50 mil this year to about 40 million in 2025 at a time when we're obviously seeing meaningful inflationary headwinds and the business is scaling. So I'm just wondering if you could talk about your confidence level and actually shrinking those corporate overhead costs. Thanks. Yep. Well, look, I think Jackie and I are in the corporate overhead discussions together, the CEO and the CFO. have put out a guide that we're going to take $10 million of costs out of the business this year. We've already taken steps to do that. You'll see it on a run-rate impact by the fourth quarter, but it's just taking prudent measures in a variety of directions. We're trimming some of our investment team. We're trimming some of the back office team. Jackie's done a great job. We're getting really good synergies now in terms of the financial reporting on the fund accounting side. We had some duplication of efforts there when we did the the merger a couple years ago, and I give credit to Jackie and his team. They're pulling a lot of cost out of the backside of the business, and we think we can continue to pull more cost out of the business. Bonuses are down year over year. We didn't get it done. So you'll see compensation is going to be down year over year, and it starts with the CEO taking a much lower bonus than I took the year previous, and it's just setting a tone with investors that that's the right thing to do. This management team is all about doing right by shareholders. Ever since Jackie and I took on this task of putting these two companies together and coming up with a new narrative, we're dead serious about taking cost out of the business. And you're going to see that this year from us. A very strong commitment to bring back the earnings potential of the business. I talked about profitability. We will be very profitable this year. As Jackie will tell you about catch-up billings and other fund products, taking the cost out of the business. The new fundraising comes on at an incredibly high margin. We're not adding people right now. That's the important thing you need to know. We added all the people last year. And so, you know, that's why you're seeing a lot of confidence in the, Matt, in the margin increase. And, you know, certainly looking forward to talking to you next Monday at your conference and going even deeper on this. But, you know, I don't think people are fully grasping what we've done here. You look at the 22.2 of PM that we generated last year, and you look at the sort of midpoint of our guide of 38 billion of PM next year. We're talking about growing Fiam by 78% year over year. I don't know of another asset manager on the planet that is telling investors they're going to put up 78% growth next year.

We are.

Can't say that strong enough. This team is dead serious about where we're going. We put the right pieces in place in 22. And once we're deconsolidated, we'll have leverage in the same zone as other alternative asset managers. And we're going to keep taking leverage down. So we're doing all the right things and The results are going to follow this year, and I'm happy to go, as Jackie and I are happy to discuss guidance, and we're happy to go as deep as you wish on any of those numbers. Matt, I lost your first question because I was so absorbed in the SG&A cuts and the taking $10 million of costs out of the corporate overhead. What was the first question? No worries. It was just around infrastructure. I was just wondering, incremental infrastructure opportunities at the mid-market, maybe some of the near-term synergy the deal provides. Well, look, the immediate synergies is in middle market infra, you know, they have three people doing middle market digital infra. And so, you know, they've got six investments, you know, 60% of their latest fund is digital. And so when you've got businesses like Expedient and EverStream, and they go from a bench of having three to 130 people to help them, as you can imagine, you know, that team is pretty excited to be with our team because, We're leaning in and we're helping on their investments, and there's a ton of value add to be delivered there. So immediate synergies are on the investment team. We talked about fundraising. They had an excellent fundraising team. I can't say enough about some of the fundraisers that we picked up, you know, Alice and Brian Lee in Asia. I mean, we picked up some really world-class fundraisers. I had the chance a couple weeks ago to be in Europe for 12 days fundraising, saw 50 LPs of which half were InfraBridge LPs, half were DigitalBridge LPs. And it's just fantastic to have a bigger sales team and be able to go out and touch more clients, which is what we're doing right now. So we're seeing already the payback on the fundraising side. Jackie, you want to talk about what you're doing in the back office, Jackie, with InfraBridge and where you see some of the cost synergies there. You're well ahead of your plan, and I think you've got a really targeted plan on how you get synergies there. And then we can come back and talk about other investable asset classes in InfraBridge. Go ahead, Jackie.

Yeah, sure. So I think when we first underwrote the deal, we had, you know, FRE overlays in the low to mid-20s, millions. And, you know, we're now looking closer towards 30. And that's principally because of the fact that we've been able to plug and play and have those funds really plugged right into our back office and our scalable processes. You know, when Mark and I first took over at Colony and now DigitalBridge, We had multiple ERP systems. It's now consolidated into one, obviously. If you look at the website, even just a couple years back, everybody and their neighbor was an MD, and now we've effectively pruned down that top echelon pretty sizably. So it's just working smarter and trying to be much more efficient with both processes and systems. and also streamlining titling and meritocracy and equity. So those things have allowed us to not miss the beat in terms of the amount of work that needs to go on, but certainly it allows for us to be much more efficient with doing it.

It's awesome, and I appreciate you guys taking the questions, and we'll see you next week, Mark. Looking forward to it, Matt. Thanks for the invitation. I appreciate it.

Thank you. As there are no further questions at this time, I would like to turn the floor back over to Mark Ganze for closing comments.

Well, thank you. And thank you all of you for your time today. I think this is a pivotal moment in the company's history, and we're at an inflection point. And I think that inflection point is advantage our shareholders. We've laid out guidance for next year. It is a guidance level that Jackie and I are very confident that we're going to hit next year. But most importantly, it's a guidance level that we believe we can exceed. We prioritize taking down leverage. We do not want to risk the company's balance sheet. There's an easy temptation in these markets to take on more leverage, do more M&A, and for the sake of growth. That's not what this management team is about. We have the building blocks in place to go out and execute the way you want us to execute, which is organic growth, which is where we achieve the highest returns. Our A plus billion of capital formation this year for a company of our size, and the CAGR growth that we're going to deliver is industry-leading. We believe that $8 billion-plus of capital will come on at incredibly high margins, and in addition to that, we believe we will also continue to realize great investments, which we have not underwritten in our guidance, as Jackie told you earlier. The 70-plus percent growth in FIEM will be industry-leading, and we have supreme conviction around our ability to hit on those numbers. Twenty-two point two to 38 is a realistic target for us. And my goal is to exceed and beat that as we've done with every metric we've put out in front of the street. So look, at the end of the day, it's about execution. I think you've heard from us today in a very granular fashion, what we're doing out there in terms of capital formation, how we're running our portfolio companies with prudence, and at the same time, growing from strength and playing offense with key customers. And then last but not least, preserving liquidity and deleveraging the company. These are the things that matter. You want to be with a wartime CEO that's been there and done that before and with a trusted CFO that's been there and done it before. Jackie and I are very confident in what we're doing. Stay with us. We won't disappoint. We're going to have a good year. We're going to go out and execute. We appreciate your time and we appreciate your patience and your support in Digital Ridge. Have a great weekend. And as always, Severin, myself, and Jackie are available to all of you at any time if you want to have a conversation with us. Take care.

And we'll be in touch soon. Bye-bye.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.