| | |
| Cautionary Statement Regarding Forward-Looking Statements |
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This presentation may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond the Company’s control, and may cause the Company’s actual results to differ significantly from those expressed in any forward-looking statement. Factors that might cause such a difference include, without limitation, difficult market and political conditions, including those resulting from supply chain difficulties, inflation, higher interest rates, a general economic slowdown or a recession; our ability to raise capital from investors for our Company, our funds and the companies that we manage; the performance of our funds and investments relative to our expectations and the highly variable nature of our revenues, earnings and cash flow; our exposure to risks inherent in the ownership and operation of infrastructure and digital infrastructure assets, including our reliance on third-party suppliers to provide power, network connectivity and certain other services to our managed companies; our exposure to business risks in Europe, Asia, Latin America and other foreign markets; our ability to increase assets under management and expand our existing and new investment strategies while maintaining consistent standards and controls; our ability to appropriately manage conflicts of interest; our ability to expand into new investment strategies, geographic markets and businesses, including through acquisitions in the infrastructure and investment management industries; the impact of climate change and regulatory efforts associated with environmental, social and governance matters; our ability to maintain effective information and cybersecurity policies, procedures and capabilities and the impact of any cybersecurity incident affecting our systems or network or the system and network of any of our managed companies or service providers; the ability of our portfolio companies to attract and retain key customers and to provide reliable services without disruption; any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the general volatility of the securities markets in which we participate; the market value of our assets and effects of hedging instruments on our assets; the impact of legislative, regulatory and competitive changes, including those related to privacy and data protection and new Securities and Exchange Commission (“SEC”) rules governing investment advisers; whether we will be able to utilize existing tax attributes to offset taxable income to the extent contemplated; our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended; changes in our board of directors or management team, and availability of qualified personnel; our ability to make or maintain distributions to our stockholders; our understanding of and ability to successfully navigate the competitive landscape in which we and our managed companies operate and other risks and uncertainties, including those detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 under the heading “Risk Factors,” as such factors may be updated from time to time in the Company’s subsequent periodic filings with the U.S. Securities and Exchange Commission (“SEC”). All forward-looking statements reflect the Company’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. Additional information about these and other factors can be found in the Company’s reports filed from time to time with the SEC.
The Company cautions investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this presentation. The Company is under no duty to update any of these forward-looking statements after the date of this presentation, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do so.
This presentation is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities of the Company. This information is not intended to be indicative of future results. Actual performance of the Company may vary materially.
The appendices herein contain important definitions and information that is material to an understanding of this presentation and you should read this presentation only with and in context of the appendices.
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DigitalBridge | Supplemental Financial Report | | |
| | |
| Important Note Regarding Non-GAAP Financial Measures |
|
This financial supplemental package includes certain non-GAAP financial measures and operating metrics that are not defined by generally accepted accounting principles, or GAAP.
The Company conducts its business through its one reportable segment of Investment Management. On December 31, 2023, the Operating segment was discontinued following full deconsolidation of the portfolio companies in the Operating segment, at which time, the activities thereof qualified as discontinued operations. Accordingly, the measures of DE and Adjusted EBITDA exclude the Operating segment for both 2023 and the comparative period of 2022.
The Company reports the following non-GAAP financial measures attributable to the Operating Company: Distributable Earnings (“DE”) and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) on a Company-wide basis, and specific to the Company's Investment Management segment, Fee Related Earnings (“FRE”) and FRE before the effects of new investment strategies, as represented by Investment Management Adjusted EBITDA. DE and FRE are the most common metrics utilized in the investment management sector. The Company believes these non-GAAP financial measures supplement and enhance the overall understanding of its underlying financial performance and trends, and facilitate comparison among current, past and future periods and to other companies in similar lines of business. The Company uses these non-GAAP financial measures in evaluating the Company’s ongoing business performance and in making operating decisions. For the same reasons, the Company believes these non-GAAP measures are useful to the Company’s investors and analysts. As the Company evaluates profitability based upon continuing operations, these non-GAAP measures exclude results from discontinued operations. These non-GAAP financial measures should be considered as a supplement to and not an alternative or in lieu of GAAP net income (loss) as measures of operating performance, or to cash flows from operating activities as indicators of liquidity. The Company's calculation of these non-GAAP measures may differ from methodologies utilized by other companies for similarly titled performance measures and, as a result, may not be fully comparable to those calculated by the Company's peers. In evaluating the information presented throughout this supplemental financial report, refer to the appendices to this presentation for definitions and reconciliations of non-GAAP financial measures to GAAP measures. For purposes of comparability, historical information in this presentation may reflect certain adjustments to information reported in prior periods.
DE:
DE generally represents the net realized earnings of the Company and is an indicative measure used by the Company to assess ongoing operating performance and in making decisions related to distributions and reinvestments. Accordingly, we believe DE provides investors and analysts transparency into the measure of performance used by the Company in its decision making.
DE reflects the ongoing operating performance of the Company’s core business by generally excluding non-cash expenses, income (loss) items that are unrealized and items that may not be indicative of core operating results. This allows the Company, and its investors and analysts to assess its operating results on a more comparable basis period-over-period. DE is calculated as an after-tax measure that differs from GAAP net income (loss) from continuing operations as a result of the following adjustments to net income (loss): transaction-related costs; restructuring charges; other gain (loss); unrealized principal investment income (loss); non-cash depreciation and amortization expense, non-cash impairment charges (if any); amortization of deferred financing costs, debt premiums and discounts; our share of unrealized carried interest allocation, net of associated compensation expense; non-cash equity-based compensation costs; preferred stock redemption gain (loss); and straight-line adjustment to lease income and expense. Transaction-related costs are incurred in connection with acquisitions and include costs of unconsummated transactions, while restructuring charges are related primarily to severance and retention costs. These costs, along with other gain (loss) amounts, are excluded from DE as they are related to discrete items, are not considered part of our ongoing operating cost structure, and are not reflective of our core operating performance. Other items excluded from DE are generally non-cash in nature, including income (loss) items that are unrealized, or otherwise do not represent current or future cash obligations such as amortization of deferred financing costs and straight-line lease adjustment. These items are excluded from DE as they do not contribute to the measurement of DE as a net realized earnings measure that is used in decision making related to distributions and reinvestments. Income taxes applied in the determination of DE generally represents GAAP income tax related to continued operations, and includes the benefit of deductions available to the Company on certain expense items excluded from DE (for example, equity-based compensation). As the income tax benefit arising from these excluded expense items do affect actual income tax paid or payable by the Company in any one period, the Company believes their inclusion in DE is appropriate to more accurately reflect amounts available for distribution. The items we have excluded from DE are generally consistent with the exclusions made by our peers, which we believe allows for better comparability to the DE presented by our peers.
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DigitalBridge | Supplemental Financial Report | | |
| | |
| Important Note Regarding Non-GAAP Financial Measures |
|
Adjusted EBITDA:
Adjusted EBITDA is a supplemental measure derived from DE and generally presents the Company’s core operating performance on a pre-tax basis, based upon recurring revenues and independent of our capital structure and leverage. We believe Adjusted EBITDA is useful to investors as an indicative measure of the Company’s profitability that is recurring and sustainable and allows for better comparability of the Company’s performance relative to its peers independent of capital structure and leverage. However, because Adjusted EBITDA is calculated without the effects of certain recurring cash charges, including interest expense, preferred stock dividends, and income taxes, its usefulness as a performance measure may be limited. Adjusted EBITDA is calculated as DE adjusted to generally exclude the following items attributable to the Operating Company that are included in DE: interest expense as included in DE and income tax benefit (expense) as included in DE consistent with an EBITDA measure, preferred stock dividends, placement fee expense, and our share of incentive fees and distributed carried interest net of associated compensation expense. Items excluded from Adjusted EBITDA include preferred stock dividends as Adjusted EBITDA removes the effects to earnings associated with the Company's capital structure, and placement fees as they are inconsistent in amount and frequency depending upon timing of fundraising for our funds. Additionally, Adjusted EBITDA excludes incentive fees and distributed carried interest net of associated compensation expense to be consistent with the FRE measure for our Investment Management segment, as discussed further below.
Investment Management Fee Related Earnings (IM FRE):
Investment Management FRE is presented as Investment Management Adjusted EBITDA, further adjusted to exclude FRE associated with new investment strategies. Investment Management FRE is used to assess the extent to which direct base compensation and core operating expenses are covered by recurring fee revenues in a stabilized investment management business. Investment Management FRE is measured as recurring fee revenue that is not subject to future realization events and other income (inclusive of cost reimbursements associated with administrative expenses), net of the following: compensation expense (excluding non-cash equity-based compensation, and incentive and carried interest compensation expense), administrative expense (excluding placement fee expense and straight-line adjustment to lease expense) and FRE associated with new investment strategies. In reconciling Investment Management FRE to GAAP net income (loss), adjustments are made to first arrive at Investment Management Adjusted EBITDA, which generally excludes the following: our share of incentive fees and carried interest net of associated compensation expense; unrealized principal investment income (loss); other gain (loss); transaction-related and restructuring charges; non-cash equity-based compensation costs; straight-line adjustment to lease expense; placement fee expense; investment expense; and in line with an EBITDA measure, non-cash depreciation and amortization expense, interest expense, and income tax benefit (expense). Consistent with an FRE measure, Investment Management Adjusted EBITDA excludes incentive fees and carried interest net of associated compensation expense, as these are not recurring fee revenue and are subject to variability given that they are performance-based and/or dependent upon future realization events. In calculating Investment Management FRE which reflects the Company’s Investment Management segment as a stabilized business, Investment Management Adjusted EBITDA is further adjusted to exclude Start-Up FRE. Start-Up FRE is FRE associated with new investment strategies that have 1) not yet held a first close raising FEEUM; or 2) not yet achieved break-even Adjusted EBITDA only for investment products that may be terminated solely at the Company’s discretion. The Company evaluates new investment strategies on a regular basis and excludes Start- Up FRE from Investment Management FRE until such time as a new strategy is determined to form part of the Company’s core investment management business. We believe that Investment Management FRE and Investment Management Adjusted EBITDA are useful measures to investors as they reflect the Company’s profitability based upon recurring fee streams that are not subject to future realization events, and without the effects of income taxes, leverage, non-cash expenses, income (loss) items that are unrealized and other items that may not be indicative of core operating results. This allows for better comparability of the profitability of the Company’s investment management business on a recurring and sustainable basis.
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DigitalBridge | Supplemental Financial Report | | |
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| Note Regarding DBRG Reportable Segments / Consolidated and OP Share of Consolidated Amounts |
|
This presentation includes supplemental financial information for the following segments:
Investment Management (IM)
This segment represents the Company's global investment management platform, deploying and managing capital on behalf of a diverse base of global institutional investors. The Company's investment management platform is composed of a growing number of long-duration, private investment funds designed to provide institutional investors access to investments across different segments of the digital infrastructure ecosystem. In addition to its flagship value-add digital infrastructure equity offerings, the Company's investment offerings have expanded to include core equity, credit and liquid securities. The Company earns management fees based upon the assets or capital managed in investment vehicles, and may earn incentive fees and carried interest based upon the performance of such investment vehicles, subject to achievement of minimum return hurdles. The amount of incentive fees and carried interest recognized, a portion of which is allocated to employees and former employees, may be highly variable from period to period. Through the end of May 2022, earnings from the Investment Management segment were attributed 31.5% to Wafra prior to the Company's redemption of Wafra's interest in the investment management business.
Corporate and Other
The Company's remaining investment activities and corporate level activities are presented as Corporate and Other.
Other investment activities are composed primarily of the Company's equity interests as general partner affiliate in its sponsored investment vehicles, the largest of which are the DBP flagship funds, InfraBridge funds, DataBank and Vantage SDC post-deconsolidation, and seed investments in liquid securities and other potential new strategies. With respect to seed investments, these are not intended to be a long-term deployment of capital by the Company and are expected to be warehoused temporarily on the Company's balance sheet until sufficient third party capital has been raised. The Company's remaining non-digital investments consisted, for the most part, of shares in BRSP that were disposed in March 2023. The Company's other investment activities generate largely principal investment income, driven by fair value changes of underlying investments held by its investment vehicles, and to a lesser extent, interest income or dividend income from warehoused investments and investments of consolidated investment vehicles.
Corporate activities include corporate level cash and corresponding interest income, corporate level financing and related interest expense, corporate level transaction costs, costs in connection with unconsummated investments, income and expense related to cost reimbursement arrangements with affiliates, fixed assets for corporate use, compensation expense not directly attributable to reportable segments, and corporate level administrative and overhead costs. Costs which are directly attributable, or otherwise can be subjected to a reasonable and systematic attribution, have been attributed to reportable segments. As segment results are presented before elimination of intercompany fees, elimination adjustment is made with respect to fee income earned by the Investment Management segment from third party capital in managed investment vehicles consolidated in Corporate and Other.
Fund Performance Metrics:
Certain performance metrics for our key investment funds from inception through December 31, 2023 are presented in this financial supplemental presentation. Excluded are funds with less than one year of performance history as of December 31, 2023, funds and separately managed accounts in the liquid strategy, co-investment vehicles and separately capitalized portfolio companies. The historical performance of these funds is not indicative of their future performance nor indicative of the performance of our other existing investment vehicles or of any of our future funds. An investment in DigitalBridge Group, Inc. is not an investment in any of our funds and these fund performance metrics are not indicative of the performance of DigitalBridge Group, Inc.
Throughout this presentation, consolidated figures represent the interest of both the Company (and its subsidiary DigitalBridge Operating Company, LLC (the Operating Company" or “DBRG OP”)) and noncontrolling interests. Figures labeled as DBRG OP share represent the Company’s pro-rata share.
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DigitalBridge | Supplemental Financial Report | | |
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| | | Page |
| I. | Financial Overview | |
| a. | | 7 |
| b. | | 8-9 |
| II. | Financial Results | |
| a. | | 10 |
| b. | | 11 |
| c. | | 12 |
| d. | | 13-14 |
| III. | Capitalization | |
| a. | Debt and Preferred Stock Summary | 15 |
| b. | Secured Fund Fee Revenue Notes and Variable Funding Notes | 16 |
| IV. | Other | 17 |
| V. | Cash G&A Expense | 18 |
| | | |
| Appendices | |
| Reconciliation of IM FRE to Net Income (Loss) | 20 |
| Reconciliations of DE and Adjusted EBITDA and to Net Income (Loss) | 21-22 |
| Definitions | 23 |
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DigitalBridge | Supplemental Financial Report | | 6 | |
| | |
| Ia. Summary Financial Metrics |
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| | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ and shares in thousands, except per share data and as noted) (Unaudited) | 12/31/2023 - 4Q23 | 9/30/2023 - 3Q23 | 6/30/2023 - 2Q23 | 3/31/2023 - 1Q23 | 12/31/2022 - 4Q22 | 9/30/2022 - 3Q22 | 6/30/2022 - 2Q22 | 3/31/2022 - 1Q22 |
| Financial Data | | | | | | | | |
| Total Company | | | | | | | | |
| Net income (loss) attributable to common stockholders | $ | 100,607 | $ | 261,828 | $ | (22,411) | $ | (212,473) | $ | (19,356) | $ | (63,273) | $ | (37,321) | $ | (262,316) |
Net income (loss) attributable to common stockholders per basic share(1) | 0.61 | 1.60 | (0.14) | (1.34) | (0.12) | (0.39) | (0.24) | (1.84) |
| Distributable Earnings ("DE") | 17,931 | 32,618 | 5,503 | (7,430) | (22,305) | 26,704 | (6,752) | (11,647) |
DE per basic share(1) | 0.10 | 0.19 | 0.03 | (0.04) | (0.13) | 0.15 | (0.04) | (0.07) |
| Adjusted EBITDA | 31,985 | 24,435 | 32,040 | 15,100 | 16,979 | 15,385 | 14,786 | 6,446 |
| | | | | | | | |
| Investment Management | | | | | | | | |
| Total Assets Under Management ("AUM") (in billions) | $ | 80.1 | $ | 74.6 | $ | 72.2 | $ | 69.3 | $ | 52.8 | $ | 50.3 | $ | 47.9 | $ | 46.6 |
| Fee Earning Equity Under Management ("FEEUM") (in billions) | $ | 32.8 | $ | 29.9 | $ | 29.1 | $ | 27.7 | $ | 22.2 | $ | 20.5 | $ | 19.0 | $ | 18.8 |
| IM management fee revenue - DBRG OP share | 72,205 | 66,058 | 66,460 | 59,229 | 45,272 | 42,039 | 36,948 | 29,921 |
| IM FRE - DBRG OP share | 39,803 | 29,202 | 34,398 | 34,512 | 24,228 | 21,498 | 20,759 | 16,989 |
| IM FRE margin % | 54.8% | 44.2% | 51.8% | 58.3% | 53.5% | 51.1% | 56.2% | 56.8% |
| Net realized carried interest and incentive fees | 606 | 27,927 | (883) | 243 | 12,377 | 20,258 | — | (1,172) |
| | | | | | | | |
| Balance Sheet and Capitalization | | | | | | | | |
| Consolidated assets | $ | 3,562,550 | $ | 6,872,091 | $ | 10,757,065 | $ | 10,743,429 | $ | 11,028,503 | $ | 11,740,829 | $ | 11,877,288 | $ | 11,232,157 |
Consolidated debt(2) | 378,422 | 383,082 | 404,222 | 579,022 | 578,922 | 888,574 | 1,135,156 | 708,922 |
| DBRG OP Share: | | | | | | | | |
| Total Assets | 2,919,643 | 2,888,793 | 2,868,093 | 3,001,644 | 3,334,288 | 3,755,231 | 4,177,806 | 3,561,501 |
| Corporate debt | 378,422 | 378,422 | 378,422 | 578,422 | 578,422 | 578,422 | 648,422 | 578,422 |
| Investment-level debt | — | 1,351 | 7,006 | 149 | 124 | 177,396 | 348,196 | 130,500 |
Total Debt(2) | 378,422 | 379,773 | 385,428 | 578,571 | 578,546 | 755,818 | 996,618 | 708,922 |
| | | | | | | | |
| Corporate cash | 175,195 | 230,300 | 204,508 | 449,368 | 733,382 | 423,441 | 55,628 | 813,237 |
| Corporate cash & VFN / Revolver borrowing availability | 475,195 | 530,300 | 504,508 | 749,368 | 1,033,382 | 723,441 | 285,628 | 1,013,237 |
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| Perpetual Preferred Equity, $25 per share liquidation preference | 821,899 | 821,899 | 821,899 | 827,711 | 827,779 | 827,779 | 883,500 | 883,500 |
| | | | | | | | |
Basic shares and OP units outstanding(1)(3) | 175,751 | 175,806 | 175,017 | 174,630 | 172,558 | 175,770 | 176,733 | 162,265 |
Diluted shares and OP units outstanding(1)(3) | 186,406 | 185,943 | 185,506 | 185,243 | 182,907 | 188,478 | 191,185 | 180,758 |
| Common dividend per share | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | — | $ | — |
Notes:
(1) In August 2022, the Company effectuated a 1-for-4 reverse stock split of its shares of class A and B common stock. All prior period common share and per share information is presented after giving effect to the reverse stock split.
(2) Represents principal balance and excludes debt issuance costs, discounts and premiums.
(3) Basic shares and OP units outstanding for the respective quarters represent the shares/units outstanding at quarter end of Class A and Class B common stock, inclusive of unvested restricted stock and OP units. For the purpose of calculating basic DE per share, the basic shares and OP units represent the weighted average number of share/units during the respective quarters and is inclusive of vested deferred stock units. Diluted shares and OP units outstanding for the respective quarters represent the number of basic shares and OP units outstanding at quarter end, adjusted to include the effect of potentially dilutive share equivalents which are common stock issuable in connection with performance stock units, exchangeable senior notes and in-the-money warrants issued to Wafra.
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DigitalBridge | Supplemental Financial Report | | 7 | |
| | |
| Ib. Investment Management |
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| ($ in millions) | | | | | | | | | | | |
| Investment Management FEEUM | | 12/31/23 Annual IM Fee Rate | | 12/31/23 | 9/30/23 | 6/30/23 | 3/31/23 | 12/31/22 | 9/30/22 | 6/30/22 | 3/31/22 |
| DigitalBridge Partners I (DBP I) | | 1.10% | | $ | 3,571 | | $ | 3,345 | | $ | 3,311 | | $ | 3,180 | | $ | 3,165 | | $ | 2,802 | | $ | 3,048 | | $ | 3,034 | |
| DigitalBridge Partners II (DBP II) | | 1.18% | | 6,687 | | 7,996 | | 7,996 | | 7,996 | | 7,996 | | 7,996 | | 7,996 | | 7,996 | |
| DigitalBridge Partners III (DBP III) | | 0.96% | (1) | 2,671 | | — | | — | | — | | — | | — | | — | | — | |
| Separately Capitalized Portfolio Companies | | 0.75% | | 2,372 | | 2,402 | | 2,267 | | 2,187 | | 2,512 | | 2,370 | | 2,401 | | 2,372 | |
| InfraBridge Global Infrastructure Funds (GIF) & Other | | 1.16% | | 5,121 | | 5,083 | | 5,112 | | 5,083 | | — | | — | | — | | — | |
| Co-Investment (Sidecar) Capital | | 0.44% | | 9,646 | | 8,519 | | 7,990 | | 7,000 | | 6,525 | | 6,310 | | 4,651 | | 4,370 | |
| Digital Core, Liquid and Credit Strategies | | 0.67% | | 2,703 | | 2,591 | | 2,383 | | 2,248 | | 2,036 | | 1,021 | | 933 | | 1,013 | |
| IM FEEUM | | 0.86% | | $ | 32,771 | | $ | 29,936 | | $ | 29,059 | | $ | 27,694 | | $ | 22,234 | | $ | 20,499 | | $ | 19,029 | | $ | 18,785 | |
| | | | | | | | | | | |
| ($ in thousands) | | | | | | | | | | | |
| IM FRE | | | | 4Q23 | 3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | 2Q22 | 1Q22 |
| Fee revenue | | | | $ | 70,938 | | $ | 65,935 | | $ | 65,812 | | $ | 58,600 | | $ | 44,371 | | $ | 41,353 | | $ | 44,758 | | $ | 43,155 | |
Fee revenue, other (2) | | | | 1,267 | | 123 | | 648 | | 629 | | 901 | | 686 | | 355 | | 523 | |
| Other income | | | | 5,338 | | 420 | | 1,051 | | 492 | | 535 | | 386 | | 530 | | 251 | |
| Compensation expense—cash | | | | (25,989) | | (29,695) | | (26,286) | | (19,795) | | (17,805) | | (18,876) | | (17,725) | | (17,675) | |
| Administrative expenses | | | | (12,267) | | (8,736) | | (7,992) | | (6,329) | | (6,417) | | (4,450) | | (4,794) | | (4,012) | |
| Exclude: Start-up FRE of certain new strategies | | | | 516 | | 1,155 | | 1,165 | | 915 | | 2,643 | | 2,399 | | 2,335 | | 2,362 | |
IM FRE (3) | | | | $ | 39,803 | | $ | 29,202 | | $ | 34,398 | | $ | 34,512 | | $ | 24,228 | | $ | 21,498 | | $ | 25,459 | | $ | 24,604 | |
| | | | | | | | | | | |
DBRG OP share of IM FRE (4) | | | | $ | 39,803 | | $ | 29,202 | | $ | 34,398 | | $ | 34,512 | | $ | 24,228 | | $ | 21,498 | | $ | 20,759 | | $ | 16,989 | |
Notes:
(1) Annual weighted average IM Fee Rate would be 1.21% excluding rate reductions in effect the twelve months following the first closing date.
(2) Includes service fee income and one time catch-up fees earned, which are customary fees paid on newly raised 3rd party capital as if it were raised on the first closing date.
(3) For a reconciliation of net income / (loss) to IM FRE, please refer to the Appendices section of this presentation.
(4) In May 2022, DigitalBridge acquired Wafra’s 31.5% ownership in the Company's investment management business that Wafra initially acquired in July 2020, which resulted in 100% of the Company's IM FRE becoming entitled to DigitalBridge.
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DigitalBridge | Supplemental Financial Report | | 8 | |
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| ($ in millions) | | Inception date (2) | | Total Commitments | | Invested Capital (3) | | Available Capital (4) | | Investment Value | | MOIC | | IRR |
Fund (1) | | | | | Unrealized | | Realized (5) | | Total (6) | | Gross (7) | | Net (8) | | Gross (9) | | Net (10) |
| Value-Add | | | | | | | | | | | | | | | | | | | | | | |
| DBP I | | March-18 | | $ | 4,059 | | | $ | 4,668 | | | $ | 228 | | | $ | 6,126 | | | $ | 1,140 | | | $ | 7,266 | | | 1.6x | | 1.4x | | 16.8% | | 12.3% |
| DBP II | | November-20 | | 8,286 | | | 7,544 | | | 974 | | | 8,505 | | | 686 | | | 9,191 | | | 1.2x | | 1.1x | | 12.1% | | 9.1% |
| Core | | | | | | | | | | | | | | | | | | | | | | |
| SAF | | November-22 | | 1,110 | | | 867 | | | 476 | | | 878 | | | 12 | | | 890 | | | 1.0x | | 1.0x | | 3.7% | | 0.7% |
| InfraBridge | | | | | | | | | | | | | | | | | | | | | | |
| GIF I | | March-15 | | 1,411 | | | 1,488 | | | 406 | | | 1,279 | | | 1,070 | | | 2,349 | | | 1.6x | | 1.4x | | 10.0% | | 7.4% |
| GIF II | | January-18 | | 3,382 | | | 3,117 | | | 26 | | | 2,771 | | | 95 | | | 2,866 | | | 0.92x | | 0.82x | | <0% | | <0% |
| Credit | | | | | | | | | | | | | | | | | | | | | | |
| Credit I | | December-22 | | 697 | | | 368 | | | 426 | | | 324 | | | 77 | | | 401 | | | 1.1x | | 1.1x | | 16.8% | | 10.1% |
Notes:
(1) Performance metrics are presented in aggregate for main fund vehicle, its parallel vehicles and alternative investment vehicles.
(2) First close date of the fund, except for Credit I which is the first capital call date. InfraBridge funds were acquired in Feb-2023.
(3) Invested capital represents the original cost and subsequent fundings to investments. Invested capital includes financing costs and investment related expenses which are capitalized. With respect to InfraBridge funds, such costs are expensed during the period and excluded from their determination of invested capital.
(4) Available capital represents unfunded commitments, including recallable capital.
(5) Realized value represents proceeds from dispositions that have closed and all earnings from both realized and unrealized investments, including interest, dividend and ticking fees.
(6) Total value is the sum of unrealized fair value and realized value of investments.
(7) Total investment gross multiple of invested capital (MOIC) is calculated as unrealized fair value and realized value of investments divided by invested capital, without giving effect to allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized). Excludes capital attributable to the general partner, general partner affiliate and any other capital that is not subject to fees and/or carried interest. Gross MOIC is calculated at the fund level and does not reflect gross MOIC at the individual investor level.
(8) Total investment net MOIC is calculated as total value of investments, that is realized proceeds and unrealized fair value, divided by invested capital, after giving effect to allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized). Excludes capital not subject to fees and/or carried interest, including general partner and general partner affiliate capital. Net MOIC is calculated at the fund level and does not reflect net MOIC at the individual investor level.
(9) Gross internal rate of return (IRR) represents annualized time-weighted return on invested capital based upon total value of investments, that is realized proceeds and unrealized fair value, without giving effect to allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized). Gross IRR is calculated from the date of investment fundings (inclusive of the effect of third-party credit financing) to the date of investment distributions. For unrealized investments, assumes a liquidating distribution equal to the investment fair value, net of third party credit financing. Gross IRR is calculated at the fund level and does not reflect gross IRR at the individual investor level due to timing of investor level inflows and outflows, among other factors.
(10) Net IRR is gross IRR after giving effect to allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized). Net IRR is calculated at the individual investor level based upon timing and amount of fee-paying third party investor level inflows and outflows, and excludes syndicated proceeds and capital not subject to fees and/or carried interest, including general partner and general partner affiliate capital.
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 9 | |
| | |
| IIa. Financial Results - Balance Sheet |
|
| | | | | | | | | | | | | | |
| ($ in thousands, except per share data) (unaudited) | | As of December 31, 2023 |
| | Consolidated | | Noncontrolling Interests' Share |
| Assets | | | | |
| Cash and cash equivalents | | $ | 345,335 | | | $ | 25,922 | |
| Restricted cash | | 4,915 | | | — | |
| Investments | | 2,476,093 | | | 616,791 | |
| Goodwill | | 465,991 | | | — | |
| Intangible assets | | 103,750 | | | — | |
| Other assets | | 78,953 | | | 97 | |
| Due from affiliates | | 85,815 | | | — | |
| Assets of discontinued operations | | 1,698 | | | 97 | |
| Total assets | | $ | 3,562,550 | | | $ | 642,907 | |
| Liabilities | | | | |
| Debt | | $ | 371,783 | | | $ | — | |
| | | | |
| Other liabilities | | 681,451 | | | 19,734 | |
| Liabilities of discontinued operations | | 153 | | | — | |
| | | | |
| | | | |
| | | | |
| Total liabilities | | 1,053,387 | | | 19,734 | |
| Commitments and contingencies | | | | |
| Redeemable noncontrolling interests | | 17,862 | | | 17,862 | |
| Equity | | | | |
| Stockholders’ equity: | | | | |
| Preferred stock, $0.01 par value per share; $821,899 liquidation preference; 250,000 shares authorized; 32,876 shares issued and outstanding | | 794,670 | | | — | |
| Common stock, $0.01 par value per share | | | | |
| Class A, 237,250 shares authorized; 163,209 shares issued and outstanding | | 1,632 | | | — | |
| Class B, 250 shares authorized; 166 shares issued and outstanding | | 2 | | | — | |
| Additional paid-in capital | | 7,855,842 | | | — | |
| Accumulated deficit | | (6,842,502) | | | — | |
| Accumulated other comprehensive income (loss) | | 1,411 | | | — | |
| Total stockholders’ equity | | 1,811,055 | | | — | |
| Noncontrolling interests in investment entities | | 605,311 | | | 605,311 | |
| Noncontrolling interests in Operating Company | | 74,935 | | | — | |
| Total equity | | 2,491,301 | | | 605,311 | |
| Total liabilities, redeemable noncontrolling interests and equity | | $ | 3,562,550 | | | $ | 642,907 | |
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 10 | |
| | |
| IIb. Financial Results - Consolidated Segment Operating Results |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, 2023 |
| ($ in thousands) (unaudited) | Investment Management | | Corporate and Other | | Discontinued Operations | | Total |
| Revenues | | | | | | | |
| Fee revenue | $ | 74,394 | | | $ | (385) | | | $ | — | | | $ | 74,009 | |
| Carried interest allocation | 169,686 | | | — | | | — | | | 169,686 | |
| Principal investment income (loss) | 850 | | | 92,684 | | | — | | | 93,534 | |
| Other income | 7,377 | | | 5,704 | | | — | | | 13,081 | |
| Total revenues | 252,307 | | | 98,003 | | | — | | | 350,310 | |
| Expenses | | | | | | | |
| Interest expense | 2,631 | | | 2,595 | | | — | | | 5,226 | |
| Investment-related expense | 1,403 | | | (95) | | | — | | | 1,308 | |
| Transaction-related costs | 287 | | | — | | | — | | | 287 | |
| | | | | | | |
| Depreciation and amortization | 8,808 | | | 296 | | | — | | | 9,104 | |
| | | | | | | |
| Compensation expense | | | | | | | |
| Compensation expense - cash and equity-based | 40,702 | | | 9,046 | | | — | | | 49,748 | |
| Compensation expense - incentive fee and carried interest allocation | 113,920 | | | — | | | — | | | 113,920 | |
| Administrative expenses | 13,106 | | | 12,830 | | | — | | | 25,936 | |
| Total expenses | 180,857 | | | 24,672 | | | — | | | 205,529 | |
| Other income (loss) | | | | | | | |
| | | | | | | |
| Other gain (loss), net | 661 | | | (4,586) | | | — | | | (3,925) | |
| Income (loss) from continuing operations before income taxes | 72,111 | | | 68,745 | | | — | | | 140,856 | |
| Income tax benefit (expense) | 864 | | | 3,057 | | | — | | | 3,921 | |
| Income (loss) from continuing operations | 72,975 | | | 71,802 | | | — | | | 144,777 | |
| Income (loss) from discontinued operations | — | | | — | | | (33,529) | | | (33,529) | |
| Net income (loss) | 72,975 | | | 71,802 | | | (33,529) | | | 111,248 | |
| Net income (loss) attributable to noncontrolling interests: | | | | | | | |
| Redeemable noncontrolling interests | (14) | | | 1,883 | | | — | | | 1,869 | |
| Investment entities | 8,448 | | | 1,870 | | | (23,833) | | | (13,515) | |
| Operating Company | 4,560 | | | 3,752 | | | (685) | | | 7,627 | |
| Net income (loss) attributable to DigitalBridge Group, Inc. | 59,981 | | | 64,297 | | | (9,011) | | | 115,267 | |
| | | | | | | |
| Preferred stock dividends | — | | | 14,660 | | | — | | | 14,660 | |
| Net income (loss) attributable to common stockholders | $ | 59,981 | | | $ | 49,637 | | | $ | (9,011) | | | $ | 100,607 | |
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 11 | |
| | |
| IIc. Financial Results - Noncontrolling Interests’ Share Segment Operating Results |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, 2023 |
| ($ in thousands) (unaudited) | Investment Management | | Corporate and Other | | Discontinued Operations | | Total |
| Revenues | | | | | | | |
| Fee revenue | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| Carried interest allocation | 7,665 | | | — | | | — | | | 7,665 | |
| Principal investment income (loss) | 782 | | | 668 | | | — | | | 1,450 | |
| | | | | | | |
| Other income | 4 | | | 612 | | | — | | | 616 | |
| Total revenues | 8,451 | | | 1,280 | | | — | | | 9,731 | |
| Expenses | | | | | | | |
| | | | | | | |
| Interest expense | — | | | 42 | | | — | | | 42 | |
| Investment-related expense | — | | | 3 | | | — | | | 3 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Compensation expense | | | | | | | |
| Compensation expense - cash and equity-based | — | | | — | | | — | | | — | |
| Compensation expense - incentive fee and carried interest allocation | — | | | — | | | — | | | — | |
| Administrative expenses | 11 | | | 247 | | | — | | | 258 | |
| Total expenses | 11 | | | 292 | | | — | | | 303 | |
| Other income (loss) | | | | | | | |
| | | | | | | |
| Other gain (loss), net | (6) | | | 2,765 | | | — | | | 2,759 | |
| Income (loss) from continuing operations before income taxes | 8,434 | | | 3,753 | | | — | | | 12,187 | |
| Income tax benefit (expense) | — | | | — | | | — | | | — | |
| Income (loss) from continuing operations | 8,434 | | | 3,753 | | | — | | | 12,187 | |
| Income (loss) from discontinued operations | — | | | — | | | (23,833) | | | (23,833) | |
| Net income (loss) | 8,434 | | | 3,753 | | | (23,833) | | | (11,646) | |
| | | | | | | |
| Net income (loss) attributable to noncontrolling interests | $ | 8,434 | | | $ | 3,753 | | | $ | (23,833) | | | $ | (11,646) | |
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 12 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| OP pro rata share by segment | | Amounts
attributable to
noncontrolling interests | | DBRG consolidated as reported |
| ($ in thousands; for the three months ended December 31, 2023; and unaudited) | Investment Management | | Non-IM Segment Adjustments | | Total OP pro rata share | | |
| Net income (loss) attributable to common stockholders | $ | 59,981 | | | $ | 40,626 | | | $ | 100,607 | | | $ | — | | | $ | 100,607 | |
| Net income (loss) attributable to noncontrolling common interests in Operating Company | 4,560 | | | 3,067 | | | 7,627 | | | — | | | 7,627 | |
| Net income (loss) attributable to common interests in Operating Company and common stockholders | 64,541 | | | 43,693 | | | 108,234 | | | — | | | 108,234 | |
| | | | | | | | | |
| Adjustments for Distributable Earnings (DE): | | | | | | | | | |
Transaction-related and restructuring charges(1) | 9,661 | | | 3,882 | | | 13,543 | | | — | | | 13,543 | |
| Unrealized other (gain) loss, net | (662) | | | 7,352 | | | 6,690 | | | (2,753) | | | 3,937 | |
| Unrealized principal investment income | (62) | | | (92,017) | | | (92,079) | | | (1,455) | | | (93,534) | |
| Unrealized carried interest allocation, net of associated compensation expense allocation | (49,683) | | | — | | | (49,683) | | | (7,665) | | | (57,348) | |
| Compensation expense - equity-based | 5,647 | | | 4,148 | | | 9,795 | | | — | | | 9,795 | |
| Depreciation and amortization | 8,809 | | | 295 | | | 9,104 | | | — | | | 9,104 | |
| Straight-line rent revenue and expense | 500 | | | (594) | | | (94) | | | — | | | (94) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Amortization of deferred financing costs, debt premiums and discounts | 334 | | | 306 | | | 640 | | | — | | | 640 | |
| | | | | | | | | |
| | | | | | | | | |
| Adjustments attributable to noncontrolling interests in investment entities | — | | | — | | | — | | | (11,959) | | | (11,959) | |
DE from discontinued operations(2) | — | | | 11,781 | | | 11,781 | | | 23,832 | | | 35,613 | |
| After-tax DE | $ | 39,085 | | | $ | (21,154) | | | $ | 17,931 | | | $ | — | | | $ | 17,931 | |
Notes:
(1) Restructuring charges primarily represent costs and charges incurred as a result of corporate restructuring and reorganization to implement the digital evolution. These costs and charges include severance, retention, relocation, transition, shareholder settlement and other related restructuring costs, which are not reflective of the Company’s core operating performance.
(2) Equity method earnings (loss) from BRSP and the operating results of the portfolio companies previously consolidated in the Operating segment, which qualified as discontinued operations in March 2023 and December 2023, respectively, are included in DE of discontinued operations.
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 13 | |
| | | | | | | | | | | | | | | | | | | | |
| OP pro rata share by segment | |
| ($ in thousands; for the three months ended December 31, 2023; and unaudited) | Investment Management | | Non-IM Segment Adjustments | | Total OP pro rata share | |
| After-tax DE | $ | 39,085 | | | $ | (21,154) | | | $ | 17,931 | | |
| Interest expense included in DE | 2,275 | | | 2,249 | | | 4,524 | | |
| Income tax expense (benefit) included in DE | (864) | | | (3,057) | | | (3,921) | | |
| Preferred dividends | — | | | 14,660 | | | 14,660 | | |
| | | | | | |
| Placement fee expense | 30 | | | — | | | 30 | | |
| Realized carried interest allocation, net of associated compensation expense allocation | (606) | | | — | | | (606) | | |
| IM segment other income and investment-related expense, net, included in DE | (633) | | | — | | | (633) | | |
| Adjusted EBITDA | $ | 39,287 | | | $ | (7,302) | | | $ | 31,985 | | |
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 14 | |
| | |
| IIIa. Capitalization - Debt and Preferred Stock Summary |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands, except per share data; as of December 31, 2023) | | | | | | | | | | | |
| Consolidated & DBRG OP share of debt | Payments due by period(1) | Fixed/Variable | WA Interest Rate | WA Remaining Term |
| 2024 | | 2025 | | 2026 | | 2027 | | 2028 and after | | Total |
| 2021-1, A-1 Variable Funding Notes | — | | | — | | | — | | | — | | | — | | | — | | Variable | n/a | 2.7 |
| 2021-1, Class A-2 Term Notes | — | | | — | | | 300,000 | | | — | | | — | | | 300,000 | | Fixed | 3.9% | 2.7 |
| Convertible/exchangeable senior notes | — | | | 78,422 | | | — | | | — | | | — | | | 78,422 | | Fixed | 5.8% | 1.5 |
| Total debt - DBRG OP share | $ | — | | | $ | 78,422 | | | $ | 300,000 | | | $ | — | | | $ | — | | | $ | 378,422 | | | | |
| | | | | | | | | | | | | | |
| Net corporate debt | | | | | | | | | | | | | | |
| Cash and cash equivalents - consolidated | | | | | | | | | | | $ | 345,335 | | | | |
| less: Noncontrolling interests | | | | | | | | | | | (25,922) | | | | |
| less: Investment level cash - DBRG OP share | | | | | | | | | | | (144,218) | | | | |
| Corporate cash - DBRG OP share | | | | | | | | | | | 175,195 | | | | |
| Corporate debt - DBRG OP share | | | | | | | | | | | (378,422) | | | | |
| Corporate Cash (Debt) Position - DBRG OP share | | | | | | | | | | | $ | (203,227) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Exchangeable debt | | | | | | | | | | | | |
| Description | | Outstanding principal | | Final due date(2) | | Interest rate | | Conversion price (per share of common stock) | | Conversion ratio | | Conversion shares |
| 5.75% Exchangeable senior notes | | $ | 78,422 | | | July 15, 2025 | | 5.75% fixed | | $ | 9.20 | | | 108.6956 | | | 8,524 | |
| Total convertible debt | | $ | 78,422 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Perpetual preferred stock | | | | | | |
| Description | | Liquidation
preference | | Shares outstanding (In thousands) | | Callable period |
| Series H 7.125% cumulative redeemable perpetual preferred stock | | 209,870 | | | 8,395 | | | Callable |
| Series I 7.15% cumulative redeemable perpetual preferred stock | | 321,668 | | | 12,867 | | | Callable |
| Series J 7.125% cumulative redeemable perpetual preferred stock | | 290,361 | | | 11,614 | | | Callable |
| Total preferred stock | | $ | 821,899 | | | 32,876 | | | |
Notes:
(1) Maturity dates are based on initial maturity dates or extended maturity dates, where applicable, the extension option is at the Company’s discretion and if the criteria to extend have been met as of the reporting date.
(2) Callable at principal amount only if DBRG common stock has traded at least 130% of the conversion price for 20 of 30 consecutive trading days on or after July 21, 2023.
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 15 | |
| | |
| IIIb. Capitalization - DBRG Series 2021-1 |
|
| | | | | | | | | | | |
| ($ in thousands, as of December 31, 2023) | | | |
| Class A-2 Term Notes | | | |
| Amount outstanding | | $ | 300,000 | | |
| Interest rate | | 3.933 | % | |
| Anticipated Repayment Date (ARD) | | September 25, 2026 | |
| Kroll Rating | | BBB | |
| | | |
| Class A-1 Variable Funding Notes | | | |
| Maximum Available | | $ | 300,000 | | (1) |
| Amount outstanding | | $ | — | | |
| Interest Rate | | 1M Term SOFR + 3.00% | (1) |
Fully extended Anticipated Repayment Date (ARD)(2) | | September 25, 2026 | |
| | | |
| Financial covenants: | | Covenant level | |
Debt Service Coverage Ratio(3) | | Minimum 1.75x | |
Loan to Value Ratio(4) | | Less than 35.0% | |
Investment Management Expense Ratio(5) | | Less than 60.0% | |
| Company status: As of February 19, 2024, DBRG is meeting all required covenant threshold levels. |
Notes:
(1) Effective April 1, 2022, the maximum principal amount of the Series 2021-1 Class A-1 Variable Funding Notes increased to $300 million and Term SOFR replaced LIBOR as the benchmark for accruing interest on the Series 2021-1 Class A-1 Variable Funding Notes. 1 month term SOFR is adjusted to include 0.11448% as defined in the Amendment No.1 to Class A-1 Note Purchase Agreement.
(2) Anticipated Repayment Date is September 25, 2026 including two 1-year extension options subject to 1) either rating agency confirmation and consent of VFN noteholders are obtained or DSCR exceeding 1.75x, 2) term notes rating not less than BBB- 3) the payment of a 0.05% extension fee and 4) other customary conditions.
(3) Debt service coverage ratio covenant thresholds: minimum of 1.75x for ability to borrow from the VFN; below 1.75x to 1.50x = 50% cash trap; below 1.50x to 1.20x = 100% cash trap; and below 1.20x = cash sweep.
(4) 100% cash sweep until LTV is less than 35%.
(5) 50% cash sweep until ratio is less than 60%.
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 16 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | | | | | | | | |
| Consolidated amount | | 4Q23 | 3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | 2Q22 | 1Q22 |
| GP affiliated investment in DBP Series | | $ | 406,039 | | $ | 388,169 | | $ | 374,139 | | $ | 345,719 | | $ | 343,137 | | $ | 277,450 | | $ | 284,282 | | $ | 248,663 | |
| GP affiliated investment in GIF Series | | 144,167 | | 134,011 | | 135,857 | | 142,280 | | — | | — | | — | | — | |
| GP affiliated investment in DataBank and Vantage SDC | | 930,654 | | 434,465 | | — | | — | | — | | — | | — | | — | |
| Other GP affiliated investments and warehoused/seed investments (Credit, Core, Liquid, Ventures) | | 232,293 | | 296,914 | | 272,564 | | 346,774 | | 316,299 | | 769,431 | | 906,076 | | 423,467 | |
| Total investments | | $ | 1,713,153 | | $ | 1,253,559 | | $ | 782,560 | | $ | 834,773 | | $ | 659,436 | | $ | 1,046,881 | | $ | 1,190,358 | | $ | 672,130 | |
| | | | | | | | | |
| DBRG OP share of consolidated amount | | | | | | | | | |
| GP affiliated investment in DBP Series | | $ | 316,763 | | $ | 303,127 | | $ | 294,031 | | $ | 272,395 | | $ | 270,400 | | $ | 215,872 | | $ | 217,504 | | $ | 187,247 | |
| GP affiliated investment in GIF Series | | 144,167 | | 134,011 | | 135,857 | | 142,280 | | — | | — | | — | | — | |
| GP affiliated investment in DataBank and Vantage SDC | | 668,587 | | 434,465 | | — | | — | | — | | — | | — | | — | |
| Other GP affiliated investments and warehoused/seed investments (Credit, Core, Liquid, Ventures) | | 197,339 | | 186,444 | | 188,325 | | 184,938 | | 178,379 | | 467,014 | | 591,066 | | 308,578 | |
| Total investments | | $ | 1,326,856 | | $ | 1,058,047 | | $ | 618,213 | | $ | 599,613 | | $ | 448,779 | | $ | 682,886 | | $ | 808,570 | | $ | 495,825 | |
| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 17 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | | | | | | | | |
| | 4Q23 | 3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | 2Q22 | 1Q22 |
| Investment Management Cash G&A | | | | | | | | | |
| Cash and equity-based compensation | | $ | 40,702 | | $ | 39,760 | | $ | 45,798 | | $ | 28,182 | | $ | 30,829 | | $ | 22,566 | | $ | 23,230 | | $ | 24,808 | |
| Administrative expenses | | 13,106 | | 9,410 | | 7,953 | | 6,407 | | 7,958 | | 4,517 | | 4,869 | | 4,171 | |
| Compensation expense—equity-based | | (5,647) | | (7,218) | | (17,099) | | (3,898) | | (7,939) | | (2,654) | | (3,361) | | (3,190) | |
| Administrative expenses—straight-line rent | | (500) | | (511) | | 39 | | (77) | | (66) | | (68) | | (76) | | (159) | |
| Transaction-related and restructuring charges | | (9,405) | | (3,010) | | (2,413) | | (4,490) | | (6,560) | | (1,035) | | (2,143) | | (3,943) | |
| Investment Management Cash G&A | | 38,256 | | 38,431 | | 34,278 | | 26,124 | | 24,222 | | 23,326 | | 22,519 | | 21,687 | |
| | | | | | | | | |
| Corporate & Other Cash G&A | | | | | | | | | |
| Cash and equity-based compensation | | 9,046 | | 13,356 | | 10,759 | | 19,289 | | 10,804 | | 12,404 | | 9,333 | | 20,778 | |
| Administrative expenses | | 12,830 | | 7,142 | | 8,969 | | 12,859 | | 23,373 | | 17,992 | | 12,574 | | 16,815 | |
| Compensation expense—equity-based | | (4,148) | | (7,122) | | (3,593) | | (6,872) | | 329 | | (5,171) | | (4,840) | | (5,878) | |
| Administrative expenses—straight-line rent | | 594 | | 579 | | 532 | | 352 | | 485 | | 660 | | 741 | | 856 | |
| Administrative expenses—noncontrolling interests | | (247) | | (337) | | (170) | | (289) | | (248) | | (338) | | (327) | | (302) | |
| Transaction-related and restructuring charges | | (4,595) | | (2,950) | | (4,282) | | (6,273) | | (18,443) | | (10,549) | | (2,828) | | (14,352) | |
| Corporate & Other Cash G&A | | 13,480 | | 10,668 | | 12,215 | | 19,066 | | 16,300 | | 14,998 | | 14,653 | | 17,917 | |
| | | | | | | | | |
| DBRG Cash G&A excluding Portfolio Company G&A | | $ | 51,736 | | $ | 49,099 | | $ | 46,493 | | $ | 45,190 | | $ | 40,522 | | $ | 38,324 | | $ | 37,172 | | $ | 39,604 | |
| | | | | | | | | |
| Corporate & Other Adjusted EBITDA | | | | | | | | | |
| EBITDA, excluding Cash G&A | | $ | 6,179 | | $ | 7,056 | | $ | 11,022 | | $ | 569 | | $ | 11,694 | | $ | 11,285 | | $ | 10,925 | | $ | 9,611 | |
| Cash G&A | | (13,480) | | (10,668) | | (12,215) | | (19,066) | | (16,300) | | (14,998) | | (14,653) | | (17,917) | |
| Corporate & Other Adjusted EBITDA | | $ | (7,301) | | $ | (3,612) | | $ | (1,193) | | $ | (18,497) | | $ | (4,606) | | $ | (3,713) | | $ | (3,728) | | $ | (8,306) | |
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DigitalBridge | Supplemental Financial Report | | 18 | |
Appendices
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DigitalBridge | Supplemental Financial Report | | 19 | |
| | |
| Reconciliation of IM FRE to Net Income (Loss) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | 4Q23 | 3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | 2Q22 | 1Q22 |
| IM net income (loss) | | 72,975 | | 100,014 | | 35,177 | | (2,804) | | 81,167 | | 46,065 | | 67,995 | | (9,143) | |
| Adjustments: | | | | | | | | | |
| Interest expense (income) | | 2,027 | | 2,128 | | 2,268 | | 2,411 | | 2,200 | | 2,906 | | 2,771 | | 2,500 | |
| Investment-related expense, net of reimbursement | | (32) | | 97 | | — | | 51 | | 156 | | 230 | | (200) | | 138 | |
| Depreciation and amortization | | 8,809 | | 9,003 | | 11,039 | | 6,409 | | 6,135 | | 5,369 | | 5,375 | | 5,276 | |
| Compensation expense—equity-based | | 5,647 | | 7,218 | | 17,099 | | 3,898 | | 6,639 | | 2,654 | | 3,361 | | 3,191 | |
| Compensation expense—carried interest and incentive | | (57,954) | | (96,026) | | (43,349) | | 17,056 | | (84,206) | | (40,867) | | (61,710) | | 10,767 | |
| Administrative expenses—straight-line rent | | 500 | | 511 | | (39) | | 77 | | 1,541 | | 68 | | 76 | | 159 | |
| Administrative expenses—placement agent fee | | 30 | | 15 | | 3,653 | | — | | — | | — | | — | | — | |
| Transaction-related and restructuring charges | | 9,661 | | 3,891 | | 3,025 | | 9,682 | | 8,101 | | 2,317 | | 4,042 | | 3,942 | |
| | | | | | | | | |
| Principal investment income (loss) | | (850) | | (1,451) | | (1,604) | | (318) | | (2,072) | | (1,016) | | (1,016) | | (17) | |
| Other (gain) loss, net | | (662) | | 2,662 | | 3,608 | | (3,082) | | (248) | | 110 | | 424 | | 3,055 | |
| Income tax (benefit) expense | | (864) | | (15) | | 2,356 | | 217 | | 2,172 | | 1,263 | | 2,006 | | 2,374 | |
| IM Adjusted EBITDA | | $ | 39,287 | | $ | 28,047 | | $ | 33,233 | | $ | 33,597 | | $ | 21,585 | | $ | 19,099 | | $ | 23,124 | | $ | 22,242 | |
| Exclude: Start-up FRE of certain new strategies | | 516 | | 1,155 | | 1,165 | | 915 | | 2,643 | | 2,399 | | 2,335 | | 2,362 | |
| IM FRE | | $ | 39,803 | | $ | 29,202 | | $ | 34,398 | | $ | 34,512 | | $ | 24,228 | | $ | 21,498 | | $ | 25,459 | | $ | 24,604 | |
| Wafra’s 31.5% ownership | | — | | — | | — | | — | | — | | — | | (4,700) | | (7,615) | |
| DBRG OP share of IM FRE | | $ | 39,803 | | $ | 29,202 | | $ | 34,398 | | $ | 34,512 | | $ | 24,228 | | $ | 21,498 | | $ | 20,759 | | $ | 16,989 | |
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| | | | | | | | | | | |
DigitalBridge | Supplemental Financial Report | | 20 | |
| | |
| Reconciliations of DE and Adjusted EBITDA to Net Income (Loss) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | 4Q23 | 3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | 2Q22 | 1Q22 |
| Net income (loss) attributable to common stockholders | | $ | 100,607 | | $ | 261,828 | | $ | (22,411) | | $ | (212,473) | | $ | (19,356) | | $ | (63,273) | | $ | (37,321) | | $ | (262,316) | |
| Net income (loss) attributable to noncontrolling common interests in Operating Company | | 7,627 | | 19,918 | | (1,745) | | (16,662) | | (1,583) | | (4,834) | | (3,090) | | (22,862) | |
| Net income (loss) attributable to common interests in Operating Company and common stockholders | | 108,234 | | 281,746 | | (24,156) | | (229,135) | | (20,939) | | (68,107) | | (40,411) | | (285,178) | |
| | | | | | | | | |
| Adjustments for Distributable Earnings (DE): | | | | | | | | | |
| Transaction-related and restructuring charges | | 13,543 | | 6,583 | | 7,182 | | 18,552 | | 22,536 | | 14,062 | | 6,739 | | 20,997 | |
| Unrealized other (gain) loss, net | | 3,937 | | (256,439) | | 11,881 | | 150,921 | | 3,514 | | (30,326) | | 45,722 | | 143,071 | |
| Unrealized principal investment income | | (93,534) | | (17,943) | | (30,409) | | (3,562) | | (22,302) | | 2,669 | | (16,444) | | (6,454) | |
| Unrealized carried interest allocation, net of associated compensation expense | | (57,348) | | (68,099) | | (43,791) | | 18,240 | | (70,541) | | 2,652 | | (61,710) | | 9,176 | |
| Compensation expense - equity-based | | 9,795 | | 14,340 | | 20,691 | | 10,770 | | 7,610 | | 7,824 | | 8,168 | | 8,979 | |
| Depreciation and amortization | | 9,104 | | 9,319 | | 11,353 | | 6,875 | | 14,129 | | 14,931 | | 9,535 | | 5,676 | |
| Straight-line rent revenue and expense | | (94) | | (68) | | (571) | | (275) | | (5,036) | | (5,933) | | (2,355) | | (701) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Amortization of deferred financing costs, debt premiums and discounts | | 640 | | 660 | | 690 | | 794 | | 1,242 | | 1,288 | | 1,083 | | 924 | |
| Preferred share redemption (gain) loss | | — | | — | | (927) | | — | | — | | — | | — | | — | |
| Income tax effect on certain of the foregoing adjustments | | — | | — | | — | | — | | — | | — | | — | | (328) | |
| Adjustments attributable to noncontrolling interests in investment entities | | (11,959) | | (20,330) | | (43,997) | | (93,273) | | (27,201) | | (96,848) | | (46,823) | | (77,161) | |
DE from discontinued operations (1) | | 35,613 | | 82,849 | | 97,557 | | 112,663 | | 74,683 | | 184,492 | | 89,744 | | 169,352 | |
| After-tax DE | | $ | 17,931 | | $ | 32,618 | | $ | 5,503 | | $ | (7,430) | | $ | (22,305) | | $ | 26,704 | | $ | (6,752) | | $ | (11,647) | |
Notes:
(1) Equity method earnings (loss) from BRSP and the operating results of the portfolio companies previously consolidated in the Operating segment, which qualified as discontinued operations in March 2023 and December 2023, respectively, are included in DE of discontinued operations for all periods presented.
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DigitalBridge | Supplemental Financial Report | | 21 | |
| | |
| Reconciliations of DE and Adjusted EBITDA to Net Income (Loss) |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | 4Q23 | 3Q23 | 2Q23 | 1Q23 | 4Q22 | 3Q22 | 2Q22 | 1Q22 |
| After-tax DE | | $ | 17,931 | | $ | 32,618 | | $ | 5,503 | | $ | (7,430) | | $ | (22,305) | | $ | 26,704 | | $ | (6,752) | | $ | (11,647) | |
| Interest expense included in DE | | 4,524 | | 4,616 | | 4,916 | | 7,272 | | 8,487 | | 10,620 | | 8,674 | | 7,838 | |
| Income tax expense (benefit) included in DE | | (3,921) | | 59 | | 2,770 | | 1,098 | | 30,561 | | (7,838) | | (2,694) | | (6,849) | |
| Preferred dividends | | 14,660 | | 14,645 | | 14,675 | | 14,676 | | 14,765 | | 15,283 | | 15,759 | | 15,759 | |
| Principal Investment Income (Loss) | | — | | — | | — | | (277) | | (1,860) | | (9,303) | | — | | (58) | |
| Placement fee expense | | 30 | | 15 | | 3,653 | | — | | — | | — | | — | | — | |
| Realized carried interest (allocation) reversal, net of associated compensation (expense) reversal | | (606) | | (27,927) | | 883 | | (243) | | (12,377) | | (20,258) | | — | | 1,172 | |
| IM segment other income and investment-related expense, net, included in DE | | (633) | | 409 | | (360) | | 4 | | (292) | | 177 | | (201) | | — | |
| Non pro-rata allocation of income (loss) to noncontrolling interests | | — | | — | | — | | — | | — | | — | | — | | 231 | |
| Adjusted EBITDA | | $ | 31,985 | | $ | 24,435 | | $ | 32,040 | | $ | 15,100 | | $ | 16,979 | | $ | 15,385 | | $ | 14,786 | | $ | 6,446 | |
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DigitalBridge | Supplemental Financial Report | | 22 | |
Assets Under Management (“AUM”)
AUM represents the total capital for which we provide investment management services. AUM is generally composed of (a) third party capital managed by the Company and its affiliates, including capital that is not yet fee earning, or not subject to fees and/or carried interest; and (b) assets invested using the Company's own balance sheet capital and managed on behalf of the Company's stockholders (composed of the Company's fund investments as GP affiliate, warehoused investments, and as of December 31, 2023, the Company's interest in portfolio companies previously in the Operating segment). Third party AUM is based upon invested capital as of the reporting date, including capital funded through third party financing, and committed capital for funds in their commitment stage. Balance sheet AUM is based upon the carrying value of the Company's balance sheet investments as of the reporting date (at December 31, 2022 prior to deconsolidation, on an undepreciated basis as it relates to the Company's interest in portfolio companies previously consolidated in the Operating segment).
Fee-Earning Equity Under Management (“FEEUM”)
FEEUM represents the total capital managed by the Company and its affiliates which earns management fees and/or incentive fees or carried interest. FEEUM may be based upon committed capital, invested capital, net asset value ("NAV") or gross asset value ("GAV"), pursuant to the terms of each underlying investment management agreement.The Company's calculations of FEEUM may differ materially from the calculations of other asset managers, and as a result, this measure may not be comparable to similar measures presented by other asset managers.
IM Fee Related Earnings Margin % ("IM FRE Margin %")
IM FRE Margin % represents IM FRE divided by management fee revenues, excluding one-time catch-up fees and/or incentives fees.
Operating Company ("DBRG OP")
DigitalBridge Operating Company, LLC, the operating partnership through which the Company conducts all of its activities and holds substantially all of its assets and liabilities. DBRG OP share excludes noncontrolling interests in investment entities.
UPB: Unpaid Principal Balance
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DigitalBridge | Supplemental Financial Report | | 23 | |
