DigitalBridge Group, Inc.

Greetings and welcome to the Digital Bridge Group third quarter 2023 on your 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, Kevin Wright, please go ahead.

Good morning, everyone, and welcome to DigitalBridge's third quarter 2023 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, November 1, 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 Form 10-K filed with the SEC for the year ending December 31, 2022, and our Form 10-Q to be filed with the SEC for the quarter ending September 30, 2023. Great. Let's get started with Mark providing an update on our key objectives for 2023. Jackie will outline our financial results and turn it back over to Mark to talk about the opportunities we are capitalizing on at DigitalBridge Credit. With that, I'll turn the call over to Mark Gansey, our CEO. Mark?

Thanks, Devin. I'm pleased to share our results for 3Q 2023 as we posted some very strong financial performance that was a function of both the steady progress we've made building a predictable fee income earning stream and the one-time benefits we realized from our simplification initiatives. So first, let's start by covering our top three priorities for 2023, beginning with fundraising. In Q3, we generated strong year-over-year growth in our investment management platform, with fee income of 57% and segment level FRE of 36%, both slightly higher than last quarter's already strong growth, powered by higher FEM from core, credit, and co-investment, along with our second full quarter of contribution from InfraBridge. New capital formation came in at $2 billion, with our flagship DigitalBridge partner series leading the way, and the balance from new strategies, including credit, which I'll cover in Section 3 today. LP interest in digital infrastructure is robust. On the back of AI-driven demand, I'm pleased to confirm we are on track to achieve our fundraising goals for the year. On the simplification front, we completed the databank recap in September. which resulted in another $50 million back to you, DigiBridge shareholders, bringing our total proceeds to $471 million and generating a 32% internal rate of return to DigiBridge shareholders. Our balance sheet also got a lot simpler, with $2.3 billion of debt deconsolidated in connection with the data bank closing, as we brought our ownership in that asset under 10%. We're also advancing our simplification objective by rolling out additional disclosures on fund performance, consistent with our alternative asset management peers. Investors have consistently asked for this, and we're delivering. On that point, portfolio performance, our third key priority. We demonstrated strong results, particularly in the data center vertical, with monthly recurring revenue of 20%, and the other three verticals all delivering mid to high single-digit growth. Let's detail fundraising and our simplification progress before we get into the financials. Next slide, please. On new capital formation, I'm pleased to report we raised $2 billion since last quarter's earnings, bringing us to a total of $5.4 billion year to date. The majority of that, around $1 billion, came from continuing commitments to our flagship DigiBridge partner series, which will start generating fee income today, triggered by the strategy's first closing. We've also completed additional co-invest syndications and brought in more capital in our liquid and credit strategies during Q3. We believe this progress puts us on track to hit our fundraising targets as we come into the fourth quarter, which has been seasonally very strong for us given our fundraising cadence. Look, it's been a tough year for capital formation. It's been one of the toughest that I can remember. But the key here is perseverance. Perseverance of the team and persistent interest in data center infrastructure spurred by advances in generative AI has put us in a good position to deliver on our goals. Again, I want to reaffirm our guidance and our belief that we'll hit our fundraising goals for 2023. Next page, please. So as you can see here, we continue to generate solid year-over-year growth in both FIEM and AUM. We ended last quarter with about $30 billion in FIEM, up almost $10 billion over the prior year. That's 46% annual growth driven by equal measures of organic capital formation and contribution from the infra-bridge acquisition we closed earlier this year. On the right, asset center management which tracks the NAV of the assets that we manage, was up to $75 billion last quarter. Again, 48% higher over the prior year.