UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 2021
| (Exact Name of Registrant as Specified in Its Charter) | ||||||||
| (State or Other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices, Including Zip Code)
(561 ) 570-4644
Registrant’s telephone number, including area code:
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |||||||||||
Emerging growth company | |||||||||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||||||||
Item 2.02 Results of Operations and Financial Condition.
On November 4, 2021, DigitalBridge Group, Inc. (the “Company”) issued a press release announcing its financial position as of September 30, 2021 and its financial results for the quarter ended September 30, 2021. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
On November 4, 2021, the Company made available a Supplemental Financial Disclosure Presentation for the quarter ended September 30, 2021 on the Company’s website at www.digitalbridge.com. A copy of the Supplemental Financial Disclosure Presentation is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
In connection with the earnings call to be held on November 4, 2021 as referenced in the press release, the Company has prepared a presentation, dated November 4, 2021 (the "Earnings Presentation"), a copy of which is attached as Exhibit 99.3 to this Current Report on Form 8-K and incorporated herein by reference.
In addition, the Company has prepared a corporate presentation, dated November 4, 2021 (the "Corporate Presentation"), a copy of which is attached as Exhibit 99.4 to this Current Report on Form 8-K and incorporated herein by reference.
The information included in this Current Report on Form 8-K (including Exhibits 99.1, 99.2, 99.3 and 99.4 hereto) shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Use of Website to Distribute Material Company Information
The Company’s website address is www.digitalbridge.com. The Company uses its website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding the Company, is routinely posted on and accessible on the Shareholders subpage of its website, which is accessible by clicking on the tab labeled “Shareholders” on the website home page. The Company also uses its website to expedite public access to time-critical information regarding the Company in advance of or in lieu of distributing a press release or a filing with the U.S. Securities and Exchange Commission disclosing the same information. Therefore, investors should look to the Shareholders subpage of the Company’s website for important and time-critical information. Visitors to the Company’s website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Shareholders subpage of the website.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished herewith to this Current Report on Form 8-K.
| Exhibit No. | Description | |||||||
| Press Release dated November 4, 2021 | ||||||||
| Supplemental Financial Disclosure Presentation for the quarter ended September 30, 2021 | ||||||||
| Earnings Presentation dated November 4, 2021 | ||||||||
| Corporate Presentation dated November 4, 2021 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: | November 4, 2021 | DIGITALBRIDGE GROUP, INC. | |||||||||
| By: | /s/ Jacky Wu | ||||||||||
| Jacky Wu | |||||||||||
| Executive Vice President and Chief Financial Officer | |||||||||||
 | ||||||||
Exhibit 99.1
DIGITALBRIDGE ANNOUNCES THIRD QUARTER 2021 FINANCIAL RESULTS
Boca Raton, November 4, 2021 - DigitalBridge Group, Inc. (NYSE: DBRG) and subsidiaries (collectively, “DigitalBridge,” or the “Company”) today announced financial results for the third quarter ended September 30, 2021. The Company reported third quarter 2021 total revenues of $252 million, GAAP net income attributable to common stockholders of $41 million, or $0.08 per share, Core FFO of $2.0 million and AFFO of $0.7 million.
“Having successfully rotated more than $70 billion of AUM in less than three years, we’ve transformed DigitalBridge into a leading global digital infrastructure firm. Nearly 100% digital, we’re fully aligned with the powerful secular tailwinds driving opportunities in global connectivity and playing offense by generating growth through new offerings while accelerating operating earnings,” said Marc Ganzi, President and CEO of DigitalBridge. "We are pleased that our second flagship fund, DCP II, reached commitments of $8.1 billion, validating DigitalBridge as the partner of choice to institutional capital looking to build exposure to this resilient, growing asset class."
Q3 2021 HIGHLIGHTS
Digital Transformation - Finish the Mission
•Capital formation momentum - DCP II commitments reached $8.1 billion in October, an increase of over $1.5 billion since our last quarter report and 35% higher than the original $6.0 billion target. Total Digital FEEUM increased to $17.2 billion as of November 4, 2021, exceeding our year-end 2021 guidance a quarter ahead of schedule.
•Rotation to digital - 99% digital AUM, a rotation of $73 billion in AUM in less than three years, proforma for the closing of previously announced sales of legacy businesses, including the Wellness Infrastructure sale announced in September 2021.
•Transforming and scaling of our portfolio companies - Expanded our Digital Operating portfolio in the third quarter, acquiring a 24MW hyperscale data center serving the strategic Santa Clara, CA market, increasing capacity by 14% at the Vantage SDC platform. In Digital IM, DCP II now has 8 platform investments and is nearly 50% invested.
•Reduced corporate debt and lowered cost of capital - Since the second quarter, DBRG has redeemed $150 million in preferred stock, conducted an early exchange of $44 million in convertible notes and issued a $500 million digital investment management fee revenue securitization, effectively lowering its cost of corporate capital and increasing current cash flows.
| Financial Summary | |||||||||||
| ($ in millions, except per share data and where noted) | |||||||||||
| Q3 2021 | Q3 2020 | ||||||||||
| Revenues | |||||||||||
| Property operating income | $195 | $99 | |||||||||
| Fee income | $50 | $20 | |||||||||
| Total revenues | $252 | $123 | |||||||||
| Net income (loss) to common stockholders | $41 | $(206) | |||||||||
| Net income (loss) to common stockholders per share | $0.08 | $(0.44) | |||||||||
| Adjusted EBITDA | $18 | $(6) | |||||||||
| Core FFO | $2 | $(31) | |||||||||
| Core FFO per share | $— | $(0.06) | |||||||||
| AFFO | $1 | N/A(2) | |||||||||
| AFFO per share | $— | N/A(2) | |||||||||
Liquidity (cash & undrawn VFN/RCF)(1) | $774 | $753 | |||||||||
| Digital Investment Management & Operating: | |||||||||||
| Net income to common stockholders | $5 | $(3) | |||||||||
| Adjusted EBITDA | $34 | $13 | |||||||||
| Core FFO | $22 | $8 | |||||||||
| AFFO | $20 | N/A(2) | |||||||||
| Digital AUM (in billions) | $37.8 | $23.3 | |||||||||
________________________________________________
Note: Revenues and Net Income are consolidated while Adjusted EBITDA, Core FFO, AFFO, Liquidity and AUM are DBRG OP share.
(1) Amounts as of September 30, 2021 and September 30, 2020, respectively. Corporate revolving credit facility (RCF) maximum availability was $500 million as of September 30, 2020. In July 2021, the Company terminated and replaced the RCF with $200 million revolving Variable Funding Notes, which were undrawn as of September 30, 2021.
(2) AFFO introduced in Q3 2021 and was not reported in prior periods.
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Digital Earnings - Stabilized Growth
•Digital Adjusted EBITDA increased to $34 million from the second quarter 2021 and by 160% from $13 million in the prior year driven by FEEUM growth and investments in digital operating companies.
•Following the accelerated timetable of DCP II fundraising, full year 2021 Digital IM fee revenue and FRE guidance increased to $165-$170 million from $145-$155 million and $95-$100 million from $90-$95 million, respectively.
•Simplified business strategy with two high-growth digital-focused revenue streams resulted in a decrease in reportable segments to three. Expanded Financial Supplemental Report now includes comparable historical data.
•Introduced Adjusted Funds From Operations (AFFO) metric, to capture recurring property-level capital expenditures, in-line with other digital REIT peers.
Common Stock and Operating Company Units
As of September 30, 2021, the Company had 494.1 million shares of Class A and B common stock outstanding and the Company’s operating partnership had 53.0 million operating company units outstanding and held by members other than the Company.
In October 2021, the Company, pursuant to a privately negotiated exchange agreement, exchanged approximately $44 million of the outstanding principal of the 5.75% exchangeable notes into approximately 20 million shares of the Company's class A common stock, along with accrued but unpaid interest.
Preferred Dividends
On August 4, 2021, the Company’s Board declared cash dividends with respect to each series of the Company’s cumulative redeemable perpetual preferred stock in accordance with the terms of such series, as follows: Series H preferred stock: $0.4453125 per share; Series I preferred stock: $0.446875 per share; and Series J preferred stock: $0.4453125 per share, such dividends were paid on October 15, 2021 to the respective stockholders of record on October 11, 2021.
In August 2021, the Company redeemed all of its outstanding shares of 7.5% Series G Cumulative Redeemable Perpetual Preferred Stock (NYSE: DBRG.PrG) (the “Series G Preferred Shares”) with a total liquidation preference of $86.3 million. Dividends on the Series G Preferred Shares ceased to accrue following the Redemption Date.
On November 3, 2021, the Company’s Board declared cash dividends with respect to each series of the Company’s cumulative redeemable perpetual preferred stock in accordance with the terms of such series, as follows: Series H preferred stock: $0.4453125 per share; Series I preferred stock: $0.446875 per share; and Series J preferred stock: $0.4453125 per share, such dividends will be paid on January 18, 2022 to the respective stockholders of record on January 10, 2022.
In October 2021, the Company announced that it is redeeming 2,560,000 shares, representing approximately 22.3% of the 11,500,000 issued and outstanding shares of 7.125% Series H Cumulative Redeemable Perpetual Preferred Stock (NYSE: DBRG.PrH) (the “Series H Preferred Shares”) with a total liquidation preference of $64 million. The cash redemption price for each Series H Preferred Share is $25, plus any accrued and unpaid dividends (whether or not declared) to, but not including, the redemption date of November 15, 2021 (the “Redemption Date”). Dividends on the partially redeemed Series H Preferred Shares will cease to accrue on the Redemption Date.
Third Quarter 2021 Conference Call
The Company will conduct an earnings presentation and conference call to discuss the financial results on Thursday, November 4, 2021 at 10:00 a.m. ET. The earnings presentation will be broadcast live over the Internet and can be accessed on the Shareholders section of the Company’s website at ir.digitalbridge.com/events. A webcast of the presentation and conference call will be available on the Company’s website. To participate in the event by telephone, please dial (877) 407-4018 ten minutes prior to the start time (to allow time for registration). International callers should dial (201) 689-8471.
For those unable to participate during the live call, a replay will be available starting November 4, 2021, at 1:00 p.m. ET. To access the replay, dial (844) 512-2921 (U.S.), and use passcode 13724351. International callers should dial (412) 317-6671 and enter the same conference ID number.
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Earnings Presentation and Supplemental Financial Report
A Third Quarter 2021 Earnings Presentation and Supplemental Financial Report is available in the Events & Presentations and Financial Information sections, respectively, of the Shareholders tab on the Company’s website at www.digitalbridge.com. This information has also been furnished to the U.S. Securities and Exchange Commission in a Current Report on Form 8-K.
About DigitalBridge Group, Inc.
DigitalBridge (NYSE: DBRG) is a leading global digital infrastructure REIT. With a heritage of over 25 years investing in and operating businesses across the digital ecosystem including towers, data centers, fiber, small cells, and edge infrastructure, the DigitalBridge team manages a $38 billion portfolio of digital infrastructure assets on behalf of its limited partners and shareholders. Headquartered in Boca Raton, DigitalBridge has key offices in Los Angeles, New York, London and Singapore. For more information on DigitalBridge, visit www.digitalbridge.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the federal securities laws, including statements related to our digital transformation. 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, the duration and severity of the current novel coronavirus (COVID-19) pandemic, and its impact on the global market, economic and environmental conditions generally and in the digital and communications technology, wellness infrastructure and hospitality real estate, other commercial real estate equity and debt, and investment management sectors; the effect of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments; whether we will successfully execute our strategic transformation to become a digital infrastructure and real estate focused company within the timeframe contemplated or at all, and the impact of such transformation on the Company's legacy portfolios and assets, including whether such transformation will be consistent with the Company’s REIT status; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the Company's ability to complete anticipated monetizations of non-core assets within the timeframe and on the terms contemplated, if at all, and the impact of the completion of such sales; the impact of completed or anticipated initiatives related to our digital transformation, including the strategic investment by Wafra and the formation of certain other investment management platforms, on our company's growth and earnings profile; whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital IM and Digital Operating segments; our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively; the ability to realize anticipated strategic and financial benefits from terminating the management agreement with Brightspire Capital, Inc. (NYSE:BRSP; formerly, Colony Credit Real Estate, Inc. or CLNC); the impact to our business operations and financial condition of realized or anticipated compensation and administrative savings through cost reduction programs; our ability to redeploy any proceeds received from the sale of our non-digital or other legacy assets within the timeframe and manner contemplated or at all; our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as BRSP) to execute their business strategies; BRSP's trading price and its impact on the carrying value of the Company's investment in BRSP; performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution; our ability to grow our business by raising capital for the companies that we manage; our ability to deploy capital into new investments consistent with our digital business strategies, including the earnings profile of such new investments; the impact of adverse conditions affecting a specific asset class in which we have investments; the availability of, and competition for, attractive investment opportunities; our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products; our ability to satisfy and manage our capital requirements; our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets; the general volatility of the securities markets in which we participate; stability of the capital structure of our wellness infrastructure portfolio and OED portfolio; changes in interest rates and the market value of our assets; interest rate mismatches between our assets and any borrowings used to fund such assets; effects of hedging instruments on our assets; the impact of economic conditions on third parties on which we rely; any litigation and contractual claims against us and our affiliates, including
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potential settlement and litigation of such claims; our levels of leverage; adverse domestic or international economic conditions, including those resulting from the COVID-19 pandemic, and the impact on the commercial real estate or real-estate related sectors; the impact of legislative, regulatory and competitive changes; actions, initiatives and policies of the U.S. and non-U.S. governments and changes to U.S. or non-U.S. government policies and the execution and impact of these actions, initiatives and policies; whether we will maintain our qualification as a real estate investment trust for U.S. federal income tax purposes and our ability to do so; 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 our competition, 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, 2020 and Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30,2021, each 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 press release. The Company is under no duty to update any of these forward-looking statements after the date of this press release, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do so.
Source: DigitalBridge Group, Inc.
Investor Contacts:
Severin White
Managing Director, Head of Public Investor Relations
severin.white@digitalbridge.com
212-547-2777
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Non-GAAP Financial Measures and Definitions
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization
The Company calculates Adjusted EBITDA by adjusting Core FFO to exclude cash interest expense, preferred dividends, tax expense or benefit, earnings from equity method investments, placement fees, realized carried interest and incentive fees and revenues and corresponding costs related to installation services. The Company uses Adjusted EBITDA as a supplemental measure of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. However, because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited.
Assets Under Management (AUM)
Assets owned by the Company’s balance sheet and assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. Balance sheet AUM is based on the undepreciated carrying value of digital investments and the impaired carrying value of non digital investments as of the reporting date. Investment management AUM is based on the cost basis of managed investments as reported by each underlying vehicle as of the reporting date. AUM further includes uncalled capital commitments, but excludes DBRG OP’s share of non wholly-owned real estate investment management platform’s AUM. The Company's calculations of AUM may differ 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.
DigitalBridge Operating Company, LLC (DBRG OP)
DBRG OP is the operating partnership through which the Company conducts all of its activities and holds substantially all of its assets and liabilities. The Company is the sole managing member of, and directly owns approximately 90% of the common units in, DBRG OP. The remaining common units in DBRG OP are held primarily by current and former employees of the Company. Each common unit is redeemable at the election of the holder for cash equal to the then fair value of one share of the Company’s Class A common stock or, at the Company’s option, one share of the Company’s Class A common stock. DBRG OP share excludes noncontrolling interests in investment entities. Throughout this presentation, consolidated figures represent the interest of both the Company (and its subsidiary, the “DBRG OP”) and noncontrolling interests. Figures labeled as DBRG OP share represent the Company’s pro-rata share.
Digital Operating Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDA
The Company calculates EBITDAre in accordance with the standards established by the National Association of Real Estate Investment Trusts, which defines EBITDAre as net income or loss calculated in accordance with GAAP, excluding interest, taxes, depreciation and amortization, gains or losses from the sale of depreciated property, and impairment of depreciated property. The Company calculates Adjusted EBITDA by adjusting EBITDAre for the effects of straight-line rental income/expense adjustments and amortization of acquired above- and below-market lease adjustments to rental income, revenues and corresponding costs related to the delivery of installation services, equity-based compensation expense, restructuring and transaction related costs, the impact of other impairment charges, gains or losses from sales of undepreciated land, gains or losses from foreign currency remeasurements, and gains or losses on early extinguishment of debt and hedging instruments. The Company uses EBITDAre and Adjusted EBITDA as supplemental measures of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. EBITDAre represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which we believe is particularly helpful for generalist investors in REITs. EBITDAre depicts the operating performance of a real estate business independent of its capital structure, leverage and noncash items, which allows for comparability across real estate entities with different capital structure, tax rates and depreciation or amortization policies. Additionally, exclusion of gains on disposition and impairment of depreciated real estate, similar to FFO, also provides a reflection of ongoing operating performance and allows for period-over-period comparability. However, because EBITDAre and Adjusted EBITDA are calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited.
Fee-Earning Equity Under Management (FEEUM)
Equity for which the Company and its affiliates provides investment management services and derives management fees and/or performance allocations. FEEUM generally represents the basis used to derive fees, which may be based on invested equity, stockholders’ equity, or fair value pursuant to the terms of each underlying investment management agreement. The Company's
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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.
Fee Related Earnings (FRE)
The Company calculates FRE for its investment management business within the digital segment as base management fees, other service fee income, and other income inclusive of cost reimbursements, less compensation expense excluding equity-based compensation, carried interest and incentive compensation, administrative expenses (excluding fund raising placement agent fee expenses), and other operating expenses related to the investment management business. The Company uses FRE as a supplemental performance measure as it may provide additional insight into the profitability of the overall digital investment management business.
Funds From Operations (FFO), Core Funds From Operations (Core FFO) and Adjusted Funds From Operations (AFFO)
The Company calculates funds from operations (FFO) in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, which defines FFO as net income or loss calculated in accordance with GAAP, excluding (i) extraordinary items, as defined by GAAP; (ii) gains and losses from sales of depreciable real estate; (iii) impairment write-downs associated with depreciable real estate; (iv) gains and losses from a change in control in connection with interests in depreciable real estate or in-substance real estate, plus (v) real estate-related depreciation and amortization; and (vi) including similar adjustments for equity method investments. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity method investments, as well as equity and debt securities, as applicable.
The Company computes core funds from operations (Core FFO) by adjusting FFO for the following items, including the Company’s share of these items recognized by its unconsolidated partnerships and joint ventures: (i) equity-based compensation expense; (ii) effects of straight-line rent revenue and expense; (iii) amortization of acquired above- and below-market lease values; (iv) debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts; (v) non-real estate depreciation, amortization and impairment; (vi) restructuring and transaction-related charges; (vii) non-real estate loss (gain), fair value loss (gain) on interest rate and foreign currency hedges, and foreign currency remeasurements except realized gain and loss from the Digital Other segment; (viii) net unrealized carried interest; and (ix) tax effect on certain of the foregoing adjustments. The Company’s Core FFO from its interest in BrightSpire Capital, Inc. (NYSE: BRSP) represented the cash dividends declared in the reported period. The Company excluded results from discontinued operations in its calculation of Core FFO and applied this exclusion to prior periods.
The Company computes adjusted funds from operations (AFFO) by adjusting Core FFO for recurring capital expenditures necessary to maintain the operating performance of its properties.
The Company uses FFO, Core FFO and AFFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs, and such a measure is useful to investors as it excludes periodic gains and losses from sales of investments that are not representative of its ongoing operations and assesses the Company's ability to meet distribution requirements. The Company also believes that, as widely recognized measures of the performance of REITs, FFO, Core FFO and AFFO will be used by investors as a basis to compare its operating performance and ability to meet distribution requirements with that of other REITs. However, because FFO, Core FFO and AFFO exclude depreciation and amortization and does not capture changes in the value of the Company’s properties that resulted from use or market conditions, which has real economic effect and could materially impact the Company’s results from operations, the utility of FFO, Core FFO and AFFO as measures of the Company’s performance is limited.
FFO, Core FFO and AFFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO, Core FFO and AFFO should be considered only as supplements to GAAP net income as measures of the Company’s performance and to cash flow from operating activities computed in accordance with GAAP. Additionally, Core FFO and AFFO excludes the impact of certain fair value fluctuations, which, if they were to be realized, could have a material impact on the Company’s operating performance.
(FINANCIAL TABLES FOLLOW)
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CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
| September 30, 2021 | December 31, 2020 | |||||||||||||
| (unaudited) | ||||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | 1,277,733 | $ | 703,544 | ||||||||||
Restricted cash | 87,551 | 67,772 | ||||||||||||
Real estate, net | 4,914,813 | 4,451,864 | ||||||||||||
| Loans receivable | 112,252 | 36,798 | ||||||||||||
| Equity and debt investments | 793,065 | 792,996 | ||||||||||||
Goodwill | 761,368 | 761,368 | ||||||||||||
Deferred leasing costs and intangible assets, net | 1,241,042 | 1,340,760 | ||||||||||||
| Assets held for disposition | 5,470,027 | 11,237,319 | ||||||||||||
| Other assets | 739,603 | 784,912 | ||||||||||||
Due from affiliates | 45,527 | 23,227 | ||||||||||||
Total assets | $ | 15,442,981 | $ | 20,200,560 | ||||||||||
Liabilities | ||||||||||||||
| Debt, net | $ | 4,571,210 | $ | 3,930,989 | ||||||||||
| Accrued and other liabilities | 951,882 | 1,034,282 | ||||||||||||
Intangible liabilities, net | 34,759 | 39,788 | ||||||||||||
| Liabilities related to assets held for disposition | 3,831,563 | 7,886,516 | ||||||||||||
| Due to affiliates | 228 | 601 | ||||||||||||
Dividends and distributions payable | 16,899 | 18,516 | ||||||||||||
Total liabilities | 9,406,541 | 12,910,692 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
Redeemable noncontrolling interests | 348,170 | 305,278 | ||||||||||||
Equity | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
| Preferred stock, $0.01 par value per share; $947,500 and $1,033,750 liquidation preference; 250,000 shares authorized; 37,900 and 41,350 shares issued and outstanding | 916,105 | 999,490 | ||||||||||||
| Common stock, $0.01 par value per share | ||||||||||||||
| Class A, 949,000 shares authorized; 493,456 and 483,406 shares issued and outstanding | 4,934 | 4,834 | ||||||||||||
| Class B, 1,000 shares authorized; 666 and 734 shares issued and outstanding | 7 | 7 | ||||||||||||
Additional paid-in capital | 7,625,552 | 7,570,473 | ||||||||||||
Accumulated deficit | (6,557,621) | (6,195,456) | ||||||||||||
Accumulated other comprehensive income | 66,880 | 122,123 | ||||||||||||
Total stockholders’ equity | 2,055,857 | 2,501,471 | ||||||||||||
Noncontrolling interests in investment entities | 3,515,888 | 4,327,372 | ||||||||||||
Noncontrolling interests in Operating Company | 116,525 | 155,747 | ||||||||||||
Total equity | 5,688,270 | 6,984,590 | ||||||||||||
Total liabilities, redeemable noncontrolling interests and equity | $ | 15,442,981 | $ | 20,200,560 | ||||||||||
7
| ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended September 30, | |||||||||||||||||
| 2021 | 2020 | ||||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||
| Revenues | |||||||||||||||||
| Property operating income | $ | 194,854 | $ | 98,522 | |||||||||||||
| Interest income | 3,086 | 1,258 | |||||||||||||||
| Fee income | 50,226 | 19,914 | |||||||||||||||
| Other income | 4,008 | 3,323 | |||||||||||||||
| Total revenues | 252,174 | 123,017 | |||||||||||||||
| Expenses | |||||||||||||||||
| Property operating expense | 80,226 | 37,544 | |||||||||||||||
| Interest expense | 39,895 | 29,999 | |||||||||||||||
| Investment expense | 7,263 | 4,489 | |||||||||||||||
| Transaction-related costs | 936 | 3,311 | |||||||||||||||
| Placement fees | |||||||||||||||||
| Depreciation and amortization | 129,186 | 80,564 | |||||||||||||||
| Impairment loss | — | 3,832 | |||||||||||||||
| Compensation expense | |||||||||||||||||
| Cash and equity-based compensation | 55,933 | 36,400 | |||||||||||||||
| Carried interest and incentive fee compensation | 31,736 | 912 | |||||||||||||||
| Administrative expenses | 28,933 | 16,551 | |||||||||||||||
| Settlement loss | — | — | |||||||||||||||
| Total expenses | 374,108 | 213,602 | |||||||||||||||
| Other income (loss) | |||||||||||||||||
| Gain on sale of real estate assets | — | — | |||||||||||||||
| Other gain (loss), net | 4,657 | 1,339 | |||||||||||||||
| Equity method earnings (losses) | 6,987 | 17,289 | |||||||||||||||
| Equity method earnings (losses) - carried interest | 58,382 | 6,082 | |||||||||||||||
| Income (loss) before income taxes | (51,908) | (65,875) | |||||||||||||||
| Income tax benefit (expense) | 10,973 | 13,226 | |||||||||||||||
| Income (loss) from continuing operations | (40,935) | (52,649) | |||||||||||||||
| Income (loss) from discontinued operations | (10,429) | (308,581) | |||||||||||||||
| Net income (loss) | (51,364) | (361,230) | |||||||||||||||
| Net income (loss) attributable to noncontrolling interests: | |||||||||||||||||
| Redeemable noncontrolling interests | 7,269 | (2,158) | |||||||||||||||
| Investment entities | (124,301) | (149,154) | |||||||||||||||
| Operating Company | 4,311 | (22,651) | |||||||||||||||
| Net income (loss) attributable to DigitalBridge Group, Inc. | 61,357 | (187,267) | |||||||||||||||
| Preferred stock redemption | 2,865 | — | |||||||||||||||
| Preferred stock dividends | 17,456 | 18,517 | |||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 41,036 | $ | (205,784) | |||||||||||||
| Loss per share—basic | |||||||||||||||||
| Loss from continuing operations per share—basic | $ | (0.06) | $ | (0.08) | |||||||||||||
| Net loss attributable to common stockholders per share—basic | $ | 0.08 | $ | (0.44) | |||||||||||||
| Loss per share—diluted | |||||||||||||||||
| Loss from continuing operations per share—diluted | $ | (0.06) | $ | (0.08) | |||||||||||||
| Net loss attributable to common stockholders per share—diluted | $ | 0.08 | $ | (0.44) | |||||||||||||
| Weighted average number of shares | |||||||||||||||||
| Basic | 485,833 | 471,739 | |||||||||||||||
| Diluted | 485,833 | 471,739 | |||||||||||||||
8
| ||||||||
FUNDS FROM OPERATIONS, CORE FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(In thousands, except per share data, unaudited)
| Three Months Ended | ||||||||||||||
| September 30, 2021 | September 30, 2020 | |||||||||||||
| Net loss attributable to common stockholders | $ | 41,036 | $ | (205,784) | ||||||||||
| Adjustments for FFO attributable to common interests in Operating Company and common stockholders: | ||||||||||||||
| Net loss attributable to noncontrolling common interests in Operating Company | 4,311 | (22,651) | ||||||||||||
| Real estate depreciation and amortization | 126,494 | 162,705 | ||||||||||||
| Impairment of real estate | (8,210) | 142,767 | ||||||||||||
| Loss (gain) from sales of real estate | (514) | (12,332) | ||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | (95,512) | (146,905) | ||||||||||||
| FFO attributable to common interests in Operating Company and common stockholders | 67,605 | (82,200) | ||||||||||||
| Additional adjustments for Core FFO attributable to common interests in Operating Company and common stockholders: | ||||||||||||||
| Adjustment to BRSP cash dividend | 9,478 | (18,207) | ||||||||||||
| Equity-based compensation expense | 9,038 | 7,879 | ||||||||||||
| Straight-line rent revenue and expense | (1,925) | (6,281) | ||||||||||||
| Amortization of acquired above- and below-market lease values, net | (172) | (1,440) | ||||||||||||
| Debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts | 7,651 | 4,296 | ||||||||||||
| Non-real estate fixed asset depreciation, amortization and impairment | 13,616 | 12,754 | ||||||||||||
Restructuring and transaction-related charges(1) | 19,501 | 13,044 | ||||||||||||
| Non-real estate (gains) losses, excluding realized gains or losses within the Digital Other segment | 11,319 | 84,995 | ||||||||||||
| Net unrealized carried interest | (27,953) | (5,170) | ||||||||||||
| Preferred share redemption loss | 2,865 | — | ||||||||||||
| Deferred taxes and tax effect on certain of the foregoing adjustments | 1,663 | (7,917) | ||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | 12,438 | (38,042) | ||||||||||||
| Less: Core FFO from discontinued operations | (123,075) | 5,579 | ||||||||||||
| Core FFO attributable to common interests in Operating Company and common stockholders | $ | 2,049 | $ | (30,710) | ||||||||||
| Additional adjustments for AFFO attributable to common interests in Operating Company and common stockholders: | ||||||||||||||
| Less: recurring capital expenditures | (1,349) | N/A(4) | ||||||||||||
| AFFO attributable to common interests in Operating Company and common stockholders | $ | 700 | N/A(4) | |||||||||||
Core FFO per common share / common OP unit(2) | $ | — | $ | (0.06) | ||||||||||
Core FFO per common share / common OP unit—diluted(2)(3) | $ | — | $ | (0.06) | ||||||||||
AFFO per common share / common OP unit(2) | $ | — | N/A(4) | |||||||||||
AFFO per common share / common OP unit—diluted(2)(3) | $ | — | N/A(4) | |||||||||||
Weighted average number of common OP units outstanding used for Core FFO per common share and OP unit(2) | 546,677 | 536,516 | ||||||||||||
Weighted average number of common OP units outstanding used for Core FFO per common share and OP unit—diluted (2)(3) | 546,677 | 536,516 | ||||||||||||
__________
(1) Transaction-related costs 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) Calculated based on weighted average shares outstanding including participating securities and assuming the exchange of all common OP units outstanding for common shares.
(3) For the three months ended September 30, 2021 and September 30, 2020, excluded from the calculations of diluted Core FFO per share and diluted AFFO per share are Class A common stock or OP units issuable in connection with performance stock units, performance based restricted stock units and Wafra’s warrants, of which the issuance and/or vesting are subject to the performance of the Company's stock price or the achievement of certain Company specific metrics, and the effect of adding back interest expense associated with convertible senior notes and weighted average dilutive common share equivalents for the assumed conversion of the convertible senior notes as the effect of including such interest expense and common share equivalents would be antidilutive.
(4) AFFO introduced in Q3 2021 and was not reported in prior periods.
9
| ||||||||
ADJUSTED EBITDA
(In thousands, unaudited)
| Three Months Ended September 30, 2021 | |||||
| Core FFO attributable to common interests in Operating Company and common stockholders | $ | 2,049 | |||
| Adjustments: | |||||
| Less: Earnings of equity method investments | (5,784) | ||||
| Plus: Preferred dividends | 17,456 | ||||
Plus: Core interest expense(1) | 14,160 | ||||
Plus: Core tax expense(1) | (12,638) | ||||
| Plus: Non pro-rata allocation of income (loss) to NCI | 231 | ||||
| Plus: Placement fees | 2,102 | ||||
| Less: Net realized carried interest, incentive fees, and other adjustments to Fee Related Earnings | (7) | ||||
| Plus: Installation services | 53 | ||||
| Adjusted EBITDA (DBRG OP Share) | $ | 17,622 | |||
__________
(1) Excludes components that are included in adjustments for Core FFO.
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BY SEGMENT
| (In thousands) | Three Months Ended September 30, 2021 | ||||||||||
| Digital Investment Management | $ | 39,272 | |||||||||
| Digital Operating | (71,822) | ||||||||||
| Corporate and Other | (8,385) | ||||||||||
| Total Consolidated | $ | (40,935) | |||||||||
RECONCILIATION OF DIGITAL OPERATING NET INCOME (LOSS) TO ADJUSTED EBITDA
| (In thousands) | Three Months Ended September 30, 2021 | |||||||
| Digital Operating Net income (loss) from continuing operations | $ | (71,822) | ||||||
| Adjustments: | ||||||||
| Interest expense | 29,839 | |||||||
| Income tax (benefit) expense | 1,922 | |||||||
| Depreciation and amortization | 120,458 | |||||||
| Digital Operating EBITDAre | 80,397 | |||||||
| Straight-line rent expenses and amortization of above- and below-market lease intangibles | 482 | |||||||
| Compensation expense—equity-based | 308 | |||||||
| Installation services | (4,058) | |||||||
| Transaction, restructuring & integration costs | 4,042 | |||||||
| Other (gain) loss, net | (285) | |||||||
| Digital Operating Adjusted EBITDA | $ | 80,886 | ||||||
| DBRG OP Share of Digital Operating Adjusted EBITDA | $ | 13,637 | (1) | |||||
__________
(1) Represents the Company 20% interest in DataBank, including zColo, and 13% interest in Vantage SDC.
10
| ||||||||
RECONCILIATION OF DIGITAL INVESTMENT MANAGEMENT NET INCOME (LOSS) TO FRE / ADJUSTED EBITDA
| (In thousands) | Three Months Ended September 30, 2021 | |||||||
| Digital Investment Management net income (loss) | 39,272 | |||||||
| Adjustments: | ||||||||
| Interest income | 2,250 | |||||||
| Depreciation and amortization | 8,242 | |||||||
| Compensation expense—equity-based | 4,673 | |||||||
| Compensation expense—carried interest and incentive | 31,736 | |||||||
| Administrative expenses—straight-line rent | 74 | |||||||
| Administrative expenses—placement agent fee | 3,069 | |||||||
| Incentive/performance fee income | (1,313) | |||||||
| Equity method (earnings) losses | (59,196) | |||||||
| Other (gain) loss, net | (461) | |||||||
| Income tax (benefit) expense | 3,089 | |||||||
| Digital Investment Management FRE / Adjusted EBITDA | $ | 31,435 | ||||||
| Digital Investment Management FRE / Adjusted EBITDA (DBRG share) | $ | 20,736 | (1) | |||||
__________
(1) Represents the Company interest after deducting Wafra's 31.5% interest.
11
| Cautionary Statement Regarding Forward-Looking Statements | ||
This presentation may contain forward-looking statements within the meaning of the federal securities laws, including statements related to our digital transformation. 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, the duration and severity of the current novel coronavirus (COVID-19) pandemic, and its impact on the global market, economic and environmental conditions generally and in the digital and communications technology, wellness infrastructure and hospitality real estate, other commercial real estate equity and debt, and investment management sectors; the effect of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments; whether we will successfully execute our strategic transformation to become a digital infrastructure and real estate focused company within the timeframe contemplated or at all, and the impact of such transformation on the Company's legacy portfolios and assets, including whether such transformation will be consistent with the Company’s REIT status; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the Company's ability to complete anticipated monetizations of non-core assets within the timeframe and on the terms contemplated, if at all, and the impact of the completion of such sales; the impact of completed or anticipated initiatives related to our digital transformation, including the strategic investment by Wafra and the formation of certain other investment management platforms, on our company's growth and earnings profile; whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital IM and Digital Operating segments; our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively; the ability to realize anticipated strategic and financial benefits from terminating the management agreement with Brightspire Capital, Inc. (NYSE:BRSP; formerly, Colony Credit Real Estate, Inc. or CLNC); the impact to our business operations and financial condition of realized or anticipated compensation and administrative savings through cost reduction programs; our ability to redeploy any proceeds received from the sale of our non-digital or other legacy assets within the timeframe and manner contemplated or at all; our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as BRSP) to execute their business strategies; BRSP's trading price and its impact on the carrying value of the Company's investment in BRSP; performance of our investments relative to our expectations and the impact on our actual return on invested equity, as well as the cash provided by these investments and available for distribution; our ability to grow our business by raising capital for the companies that we manage; our ability to deploy capital into new investments consistent with our digital business strategies, including the earnings profile of such new investments; the impact of adverse conditions affecting a specific asset class in which we have investments; the availability of, and competition for, attractive investment opportunities; our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products; our ability to satisfy and manage our capital requirements; our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets; the general volatility of the securities markets in which we participate; stability of the capital structure of our wellness infrastructure portfolio and OED portfolio; changes in interest rates and the market value of our assets; interest rate mismatches between our assets and any borrowings used to fund such assets; effects of hedging instruments on our assets; the impact of economic conditions on third parties on which we rely; any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims; our levels of leverage; adverse domestic or international economic conditions, including those resulting from the COVID-19 pandemic, and the impact on the commercial real estate or real-estate related sectors; the impact of legislative, regulatory and competitive changes; actions, initiatives and policies of the U.S. and non-U.S. governments and changes to U.S. or non-U.S. government policies and the execution and impact of these actions, initiatives and policies; whether we will maintain our qualification as a real estate investment trust for U.S. federal income tax purposes and our ability to do so; 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 our competition, 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, 2020 and Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30,2021, each 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 press release. 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 information that is material to an understanding of this presentation and you should read this presentation only with and in context of the appendices.
DigitalBridge | Supplemental Financial Report | ||||||||
| Important Note Regarding Non-GAAP Financial Measures | ||
This supplemental package includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles, or GAAP, including the financial metrics defined below, of which the calculations may differ from methodologies utilized by other REITs for similar performance measurements, and accordingly, may not be comparable to those of other REITs.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): The Company calculates Adjusted EBITDA by adjusting Core FFO to exclude cash interest expense, preferred dividends, tax expense or benefit, earnings from equity method investments, placement fees, realized carried interest and incentive fees and revenues and corresponding costs related to installation services. The Company uses Adjusted EBITDA as a supplemental measure of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. However, because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited.
FFO, Core FFO and AFFO:
The Company calculates funds from operations (FFO) in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, which defines FFO as net income or loss calculated in accordance with GAAP, excluding (i) extraordinary items, as defined by GAAP; (ii) gains and losses from sales of depreciable real estate; (iii) impairment write-downs associated with depreciable real estate; (iv) gains and losses from a change in control in connection with interests in depreciable real estate or in-substance real estate, plus (v) real estate-related depreciation and amortization; and (vi) including similar adjustments for equity method investments. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity method investments, as well as equity and debt securities, as applicable.
The Company computes core funds from operations (Core FFO) by adjusting FFO for the following items, including the Company’s share of these items recognized by its unconsolidated partnerships and joint ventures: (i) equity-based compensation expense; (ii) effects of straight-line rent revenue and expense; (iii) amortization of acquired above- and below-market lease values; (iv) debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts; (v) non-real estate depreciation, amortization and impairment; (vi) restructuring and transaction-related charges; (vii) non-real estate loss (gain), fair value loss (gain) on interest rate and foreign currency hedges, and foreign currency remeasurements except realized gain and loss from the Digital Other segment; (viii) net unrealized carried interest; and (ix) tax effect on certain of the foregoing adjustments. The Company’s Core FFO from its interest in BrightSpire Capital, Inc. (NYSE: BRSP) represented the cash dividends declared in the reported period. The Company excluded results from discontinued operations in its calculation of Core FFO and applied this exclusion to prior periods.
The Company computes adjusted funds from operations (AFFO) by adjusting Core FFO for recurring capital expenditures necessary to maintain the operating performance of its properties.
The Company uses FFO, Core FFO and AFFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs, and such a measure is useful to investors as it excludes periodic gains and losses from sales of investments that are not representative of its ongoing operations and assesses the Company's ability to meet distribution requirements. The Company also believes that, as widely recognized measures of the performance of REITs, FFO, Core FFO and AFFO will be used by investors as a basis to compare its operating performance and ability to meet distribution requirements with that of other REITs. However, because FFO, Core FFO and AFFO exclude depreciation and amortization and does not capture changes in the value of the Company’s properties that resulted from use or market conditions, which has real economic effect and could materially impact the Company’s results from operations, the utility of FFO, Core FFO and AFFO as measures of the Company’s performance is limited.
FFO, Core FFO and AFFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO, Core FFO and AFFO should be considered only as supplements to GAAP net income as measures of the Company’s performance and to cash flow from operating activities computed in accordance with GAAP. Additionally, Core FFO and AFFO excludes the impact of certain fair value fluctuations, which, if they were to be realized, could have a material impact on the Company’s operating performance.
DigitalBridge | Supplemental Financial Report | ||||||||
| Important Note Regarding Non-GAAP Financial Measures | ||
Digital Operating Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDA: The Company calculates EBITDAre in accordance with the standards established by the National Association of Real Estate Investment Trusts, which defines EBITDAre as net income or loss calculated in accordance with GAAP, excluding interest, taxes, depreciation and amortization, gains or losses from the sale of depreciated property, and impairment of depreciated property. The Company calculates Adjusted EBITDA by adjusting EBITDAre for the effects of straight-line rental income/expense adjustments and amortization of acquired above- and below-market lease adjustments to rental income, revenues and corresponding costs related to the delivery of installation services, equity-based compensation expense, restructuring and transaction related costs, the impact of other impairment charges, gains or losses from sales of undepreciated land, gains or losses from foreign currency remeasurements, and gains or losses on early extinguishment of debt and hedging instruments. The Company uses EBITDAre and Adjusted EBITDA as supplemental measures of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. EBITDAre represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which we believe is particularly helpful for generalist investors in REITs. EBITDAre depicts the operating performance of a real estate business independent of its capital structure, leverage and noncash items, which allows for comparability across real estate entities with different capital structure, tax rates and depreciation or amortization policies. Additionally, exclusion of gains on disposition and impairment of depreciated real estate, similar to FFO, also provides a reflection of ongoing operating performance and allows for period-over-period comparability. However, because EBITDAre and Adjusted EBITDA are calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited.
Digital Investment Management Fee Related Earnings (FRE): The Company calculates FRE for its investment management business within the digital segment as base management fees, other service fee income, and other income inclusive of cost reimbursements, less compensation expense excluding equity-based compensation, carried interest and incentive compensation, administrative expenses (excluding fund raising placement agent fee expenses), and other operating expenses related to the investment management business. The Company uses FRE as a supplemental performance measure as it may provide additional insight into the profitability of the overall digital investment management business.
In evaluating the information presented throughout this financial supplemental report see the appendices to this presentation for definitions and reconciliations of non-GAAP financial measures to GAAP measures. For purposes of comparability, historical data in this presentation may include certain adjustments from prior reported data at the historical period.
DigitalBridge | Supplemental Financial Report | ||||||||
| Note Regarding DBRG Reportable Segments / Consolidated and OP Share of Consolidated Amounts | ||
This presentation includes supplemental financial information for the following segments:
Digital Investment Management (Digital IM)
This business encompasses the investment and stewardship of third party capital in digital infrastructure and real estate. The Company's flagship opportunistic strategy is conducted through DCP I, DCP II and separately capitalized vehicles while other strategies, including digital credit and public equities, will be or are conducted through other investment vehicles. The Company earns management fees, generally based on the amount of assets or capital managed in investment vehicles, and has the potential to earn carried interest and incentive fees based on the performance of such investment vehicles subject to achievement of minimum return hurdles.
Digital Operating
This business is composed of balance sheet equity interests in digital infrastructure and real estate operating companies, which generally earns rental income from providing use of space and/or capacity in or on digital assets through leases, services and other agreements. The Company currently owns interests in two companies, DataBank's enterprise data centers, including zColo, and Vantage stabilized hyperscale data centers, which are also portfolio companies under Digital IM for the equity interests owned by third party capital.
Corporate and Other
This segment is composed of the Company's remaining non-core activities and corporate level activities.
Non-core activities are composed of the Company's equity interests in: (i) digital investment vehicles, the largest of which is the Company’s investments and commitments to DCP flagship funds, and seed investments in various strategies such as digital liquid and digital credit; and (ii) remaining non-digital investments, primarily the Company’s interest in BrightSpire Capital, Inc. (BRSP), that are not substantially available for immediate sale and are expected to be monetized over an extended period beyond the near term. These non-core activities generate largely equity method earnings or losses and to a lesser extent, revenues in the form of interest income or dividend income from warehoused investments and consolidated investment vehicles. Effective the third quarter of 2021, non-core activities are no longer presented separately as the Digital Other and Other segments, which is consistent with and reflects management's focus on its core digital operations and overall simplification of the Company's business.
Corporate level activities include corporate level cash and corresponding interest income, corporate level financing and related interest expense and preferred dividends, corporate level transaction costs, costs in connection with unconsummated investments, costs incurred as manager of the Company's investment vehicles and income for reimbursement of these costs, fixed assets for administrative use, compensation expense not directly attributable to reportable segments, corporate level administrative and overhead costs, and adjustments to eliminate intercompany fees. Costs which are directly attributable, or otherwise can be subjected to a reasonable and systematic allocation, have been allocated to each of the reportable segments. Elimination adjustment pertains to fee income earned by the Digital Investment Management segment from third party capital in investment vehicles managed by the Company and consolidated within the Digital Operating segment and in Corporate and Other.
Discontinued Operations
Following the successful exit of its hotel business, the Company is now in the final stages of monetizing the remainder of its non-digital businesses to complete its digital transformation. This includes the Company's Wellness Infrastructure business, and a substantial majority of the Company's other equity and debt investments and its non-digital investment management business, both of which resided in the Other segment. The completed and pending dispositions of the Company’s hotel business, other equity and debt investments, other IM business, and Wellness Infrastructure represent strategic shifts in the Company's business that have or are expected to have a significant effect on the Company’s operations and financial results, and accordingly, have met the criteria as discontinued operations. For all current and prior periods presented, the related assets and liabilities, to the extent they have not been disposed at the respective balance sheet dates, are presented as assets and liabilities held for disposition on the consolidated balance sheets and the related operating results are presented as income (loss) from discontinued operations on the consolidated statements of operations.
Throughout this presentation, consolidated figures represent the interest of both the Company (and its subsidiary DigitalBridge Operating Company, LLC or the “DBRG OP”) and noncontrolling interests. Figures labeled as DBRG OP share represent the Company’s pro-rata share.
DigitalBridge | Supplemental Financial Report | ||||||||
| Table of Contents | ||
Page | |||||||||||
| I. | Financial Overview | ||||||||||
a. | 6 | ||||||||||
| II. | Financial Results | ||||||||||
a. | Balance Sheet Consolidated & Noncontrolling Interests’ Share | 7 | |||||||||
b. | 8 | ||||||||||
c. | 9 | ||||||||||
d. | 10-11 | ||||||||||
| III. | Capitalization | ||||||||||
a. | Debt Summary | 12 | |||||||||
b. | Secured Fund Fee Revenue Notes and Variable Funding Notes | 13 | |||||||||
c. | Convertible/Exchangeable Notes & Perpetual Preferred Stock | 14 | |||||||||
d. | Organization Structure | 15 | |||||||||
| IV. | Assets Under Management | 16 | |||||||||
| V. | Digital Investment Management | 17 | |||||||||
| VI. | Digital Operating | 18-20 | |||||||||
| VII. | Corporate and Other | 21 | |||||||||
| Appendices | |||||||||||
| Reconciliations of Digital IM FRE/Adjusted EBITDA and Digital Operating Adjusted EBITDA to Net Income (Loss) | 23 | ||||||||||
| Reconciliations of Core FFO and Adjusted EBITDA to Net Income (Loss) | 24-25 | ||||||||||
| Definitions | 26 | ||||||||||
DigitalBridge | Supplemental Financial Report | 5 | ||||||||||
| Ia. Financial Overview - Summary Metrics | ||
| ($ and shares in thousands, except per share data and as noted) (Unaudited) | |||||||||||||||||||||||
| 9/30/2021 - 3Q21 | 6/30/2021 - 2Q21 | 3/31/2021 - 1Q21 | 12/31/2020 - 4Q20 | 9/30/2020- 3Q20 | 6/30/2020 - 2Q20 | 3/31/2020 - 1Q20 | |||||||||||||||||
| Financial Data | |||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 41,036 | $ | (141,260) | $ | (264,806) | $ | (140,575) | $ | (205,784) | $ | (2,042,790) | $ | (361,633) | |||||||||
| Net income (loss) attributable to common stockholders per basic share | 0.08 | (0.29) | (0.56) | (0.30) | (0.44) | (4.33) | (0.76) | ||||||||||||||||
| Core FFO | 2,049 | (4,814) | (9,987) | (25,140) | (30,710) | (29,250) | (31,679) | ||||||||||||||||
| Core FFO per basic share | — | (0.01) | (0.02) | (0.05) | (0.06) | (0.05) | (0.06) | ||||||||||||||||
| AFFO | 700 | (1) | (1) | (1) | (1) | (1) | (1) | ||||||||||||||||
| AFFO per basic share | — | (1) | (1) | (1) | (1) | (1) | (1) | ||||||||||||||||
| Adjusted EBITDA | 17,622 | 15,377 | 12,538 | (2,444) | (5,519) | (5,236) | (14,588) | ||||||||||||||||
| Balance Sheet, Capitalization and Trading Statistics | |||||||||||||||||||||||
| Total consolidated assets | $ | 15,442,981 | $ | 15,921,346 | $ | 16,625,250 | $ | 20,200,560 | $ | 19,043,050 | $ | 16,183,534 | $ | 19,160,062 | |||||||||
| DBRG OP share of consolidated assets | 6,086,259 | 6,929,390 | 7,324,784 | 10,119,834 | 10,087,808 | 10,622,322 | 13,149,318 | ||||||||||||||||
Total consolidated debt(2)(4) | 4,621,240 | 3,919,255 | 7,023,226 | 7,931,458 | 7,165,859 | 9,612,525 | 9,862,223 | ||||||||||||||||
DBRG OP share of consolidated debt(3)(4) | 1,391,943 | 1,073,609 | 3,392,620 | 3,853,642 | 3,683,660 | 7,147,356 | 7,365,939 | ||||||||||||||||
Basic shares and OP units outstanding(3)(4) | 547,162 | 545,815 | 538,908 | 535,217 | 535,473 | 535,201 | 534,113 | ||||||||||||||||
Liquidation preference of perpetual preferred equity(5) | 947,500 | 1,033,750 | 1,033,750 | 1,033,750 | 1,033,750 | 1,033,750 | 1,033,750 | ||||||||||||||||
| Insider ownership of shares and OP units | 4.0% | 4.0% | 9.4% | 9.4% | 10.0% | 9.9% | 9.6% | ||||||||||||||||
| Digital Assets Under Management ("AUM") (in billions) | $ | 37.8 | $ | 34.9 | $ | 32.0 | $ | 30.0 | $ | 23.3 | $ | 21.6 | $ | 20.6 | |||||||||
| % of total company AUM | 76.6% | 72.1% | 69.4% | 57.8% | 49.7% | 47.2% | 42.9% | ||||||||||||||||
| Digital Fee Earning Equity Under Management ("FEEUM") (in billions) | $ | 16.5 | $ | 14.5 | $ | 12.9 | $ | 12.8 | $ | 8.6 | $ | 7.7 | $ | 7.7 | |||||||||
| % of total company FEEUM | 78.6% | 73.9% | 71.6% | 64.2% | 49.2% | 47.6% | 46.0% | ||||||||||||||||
(1) AFFO introduced in Q3 2021 and was not reported in prior periods.
(2) Represents principal balance and excludes debt issuance costs, discounts and premiums.
(3) Represents common shares and OP units outstanding including all vested and unvested restricted stock and vested director share units. Excluded are Class A common stock or OP units issuable in connection with Wafra’s warrants, 30.7 million unvested shares related to LTIP units, performance stock units, and performance based restricted stock units, which the issuance and/or vesting are subject to the performance of the Company's stock price or the achievement of certain Company-specific metrics.
(4) In October 2021, DBRG, pursuant to a privately negotiated exchange agreement, exchanged $44 million of the outstanding principal of the 5.75% exchangeable notes into 20 million shares of the Company's class A common stock.
(5) In November 2021, the Company will redeem 2,560,000 shares, representing approximately 22.3% of the 11,500,000 issued and outstanding shares of 7.125% Series H Cumulative Redeemable Perpetual Preferred Stock with a total liquidation preference of $64 million.
DigitalBridge | Supplemental Financial Report | 6 | ||||||||||
| IIa. Financial Results - Balance Sheet | ||
| ($ in thousands, except per share data) (unaudited) | As of September 30, 2021 | |||||||||||||
| Consolidated | Non Controlling Interests' Share | |||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 1,277,733 | $ | 333,527 | ||||||||||
| Restricted cash | 87,551 | 69,149 | ||||||||||||
| Real estate, net | 4,914,813 | 4,138,283 | ||||||||||||
| Loans receivable | 112,252 | 4,273 | ||||||||||||
| Equity and debt investments | 793,065 | 256,179 | ||||||||||||
| Goodwill | 761,368 | 456,477 | ||||||||||||
| Deferred leasing costs and intangible assets, net | 1,241,042 | 1,065,645 | ||||||||||||
| Assets held for disposition | 5,470,027 | 2,191,949 | ||||||||||||
| Other assets | 739,603 | 826,900 | ||||||||||||
| Due from affiliates | 45,527 | 14,340 | ||||||||||||
| Total assets | $ | 15,442,981 | $ | 9,356,722 | ||||||||||
| Liabilities | ||||||||||||||
| Debt, net | $ | 4,571,210 | $ | 3,495,031 | ||||||||||
| Accrued and other liabilities | 951,882 | 659,596 | ||||||||||||
| Intangible liabilities, net | 34,759 | 29,492 | ||||||||||||
| Liabilities related to assets held for disposition | 3,831,563 | 1,308,545 | ||||||||||||
| Due to affiliates | 228 | — | ||||||||||||
| Dividends and distributions payable | 16,899 | — | ||||||||||||
| Total liabilities | 9,406,541 | 5,492,664 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Redeemable noncontrolling interests | 348,170 | 348,170 | ||||||||||||
| Equity | ||||||||||||||
| Stockholders’ equity: | ||||||||||||||
| Preferred stock, $0.01 par value per share; $947,500 liquidation preference; 250,000 shares authorized; 37,900 shares issued and outstanding | 916,105 | — | ||||||||||||
| Common stock, $0.01 par value per share | ||||||||||||||
| Class A, 949,000 shares authorized; 493,456 shares issued and outstanding | 4,934 | — | ||||||||||||
| Class B, 1,000 shares authorized; 666 shares issued and outstanding | 7 | — | ||||||||||||
| Additional paid-in capital | 7,625,552 | — | ||||||||||||
| Accumulated deficit | (6,557,621) | — | ||||||||||||
| Accumulated other comprehensive income | 66,880 | — | ||||||||||||
| Total stockholders’ equity | 2,055,857 | — | ||||||||||||
| Noncontrolling interests in investment entities | 3,515,888 | 3,515,888 | ||||||||||||
| Noncontrolling interests in Operating Company | 116,525 | — | ||||||||||||
| Total equity | 5,688,270 | 3,515,888 | ||||||||||||
| Total liabilities, redeemable noncontrolling interests and equity | $ | 15,442,981 | $ | 9,356,722 | ||||||||||
DigitalBridge | Supplemental Financial Report | 7 | ||||||||||
| IIb. Financial Results - Consolidated Segment Operating Results | ||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| ($ in thousands) (unaudited) | Digital Investment Management | Digital Operating | Corporate and Other | Discontinued Operations | Total | ||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Property operating income | $ | — | $ | 194,854 | $ | — | $ | — | $ | 194,854 | |||||||||||||||||||
| Interest income | 1 | 93 | 2,992 | — | 3,086 | ||||||||||||||||||||||||
Fee income(1) | 51,873 | — | (1,647) | — | 50,226 | ||||||||||||||||||||||||
| Other income | 1,922 | 19 | 2,067 | — | 4,008 | ||||||||||||||||||||||||
| Total revenues | 53,796 | 194,966 | 3,412 | — | 252,174 | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Property operating expense | — | 80,226 | — | — | 80,226 | ||||||||||||||||||||||||
| Interest expense | 2,250 | 29,839 | 7,806 | — | 39,895 | ||||||||||||||||||||||||
| Investment expense | 1,438 | 4,663 | 1,162 | — | 7,263 | ||||||||||||||||||||||||
| Transaction-related costs | — | 199 | 737 | — | 936 | ||||||||||||||||||||||||
| Depreciation and amortization | 8,242 | 120,458 | 486 | — | 129,186 | ||||||||||||||||||||||||
| Compensation expense | |||||||||||||||||||||||||||||
| Cash and equity-based compensation | 21,606 | 19,127 | 15,200 | — | 55,933 | ||||||||||||||||||||||||
| Carried interest and incentive fee compensation | 31,736 | — | — | — | 31,736 | ||||||||||||||||||||||||
| Administrative expenses | 5,820 | 10,639 | 12,474 | — | 28,933 | ||||||||||||||||||||||||
| Total expenses | 71,092 | 265,151 | 37,865 | — | 374,108 | ||||||||||||||||||||||||
| Other income (loss) | |||||||||||||||||||||||||||||
| Other gain (loss), net | 461 | 285 | 3,911 | — | 4,657 | ||||||||||||||||||||||||
| Equity method earnings (loss) | 814 | — | 6,173 | — | 6,987 | ||||||||||||||||||||||||
| Equity method earnings (loss) - carried interest | 58,382 | — | — | — | 58,382 | ||||||||||||||||||||||||
| Income (loss) before income taxes | 42,361 | (69,900) | (24,369) | — | (51,908) | ||||||||||||||||||||||||
| Income tax benefit (expense) | (3,089) | (1,922) | 15,984 | — | 10,973 | ||||||||||||||||||||||||
| Income (loss) from continuing operations | 39,272 | (71,822) | (8,385) | — | (40,935) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations | — | — | — | (10,429) | (10,429) | ||||||||||||||||||||||||
| Net income (loss) | 39,272 | (71,822) | (8,385) | (10,429) | (51,364) | ||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests: | |||||||||||||||||||||||||||||
| Redeemable noncontrolling interests | 3,903 | — | 3,366 | — | 7,269 | ||||||||||||||||||||||||
| Investment entities | 16,721 | (58,401) | 3,120 | (85,741) | (124,301) | ||||||||||||||||||||||||
| Operating Company | 1,778 | (1,279) | (3,365) | 7,177 | 4,311 | ||||||||||||||||||||||||
| Net income (loss) attributable to DigitalBridge Group, Inc. | 16,870 | (12,142) | (11,506) | 68,135 | 61,357 | ||||||||||||||||||||||||
| Preferred stock redemption | — | — | 2,865 | — | 2,865 | ||||||||||||||||||||||||
| Preferred stock dividends | — | — | 17,456 | — | 17,456 | ||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 16,870 | $ | (12,142) | $ | (31,827) | $ | 68,135 | $ | 41,036 | |||||||||||||||||||
DigitalBridge | Supplemental Financial Report | 8 | ||||||||||
| IIc. Financial Results - Noncontrolling Interests’ Share Segment Operating Results | ||
| Three Months Ended September 30, 2021 | |||||||||||||||||||||||||||||
| ($ in thousands) (unaudited) | Digital Investment Management | Digital Operating | Corporate and Other | Discontinued Operations | Total | ||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Property operating income | $ | — | $ | 161,106 | $ | — | $ | — | $ | 161,106 | |||||||||||||||||||
| Interest income | — | 74 | 19 | — | 93 | ||||||||||||||||||||||||
| Fee income | 16,149 | — | — | — | 16,149 | ||||||||||||||||||||||||
| Other income | 603 | 15 | 627 | — | 1,245 | ||||||||||||||||||||||||
| Total revenues | 16,752 | 161,195 | 646 | — | 178,593 | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Property operating expense | — | 66,111 | — | — | 66,111 | ||||||||||||||||||||||||
| Interest expense | — | 24,139 | — | — | 24,139 | ||||||||||||||||||||||||
| Investment expense | 453 | 3,956 | 112 | — | 4,521 | ||||||||||||||||||||||||
| Transaction-related costs | — | 15 | — | — | 15 | ||||||||||||||||||||||||
| Depreciation and amortization | 2,593 | 100,018 | — | — | 102,611 | ||||||||||||||||||||||||
| Compensation expense | |||||||||||||||||||||||||||||
| Cash and equity-based compensation | 5,045 | 15,300 | — | — | 20,345 | ||||||||||||||||||||||||
| Carried interest and incentive fee compensation | 23,940 | — | — | — | 23,940 | ||||||||||||||||||||||||
| Administrative expenses | 836 | 8,393 | 332 | — | 9,561 | ||||||||||||||||||||||||
| Total expenses | 32,867 | 217,932 | 444 | — | 251,243 | ||||||||||||||||||||||||
| Other income (loss) | |||||||||||||||||||||||||||||
| Gain on sale of real estate assets | — | ||||||||||||||||||||||||||||
| Other gain (loss), net | 105 | 224 | 3,164 | — | 3,493 | ||||||||||||||||||||||||
| Equity method earnings (loss) | 715 | — | 3,119 | — | 3,834 | ||||||||||||||||||||||||
| Equity method earnings (loss) - carried interest | 35,497 | — | — | — | 35,497 | ||||||||||||||||||||||||
| Income (loss) before income taxes | 20,202 | (56,513) | 6,485 | — | (29,826) | ||||||||||||||||||||||||
| Income tax benefit (expense) | (2) | (1,537) | — | — | (1,539) | ||||||||||||||||||||||||
| Net income (loss) | 20,200 | (58,050) | 6,485 | — | (31,365) | ||||||||||||||||||||||||
| Income (loss) from discontinued operations | — | — | — | (85,740) | (85,740) | ||||||||||||||||||||||||
| Non-pro rata allocation of income (loss) to NCI | 424 | (351) | — | — | 73 | ||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling interests | $ | 20,624 | $ | (58,401) | $ | 6,485 | $ | (85,740) | $ | (117,032) | |||||||||||||||||||
DigitalBridge | Supplemental Financial Report | 9 | ||||||||||
IId. Financial Results - Segment Reconciliation of Net Income to FFO, Core FFO, AFFO and Adjusted EBITDA | ||
| OP pro rata share by segment | Amounts attributable to noncontrolling interests | DBRG consolidated as reported | |||||||||||||||||||||||||||||||||||||||
| ($ in thousands; for the three months ended September 30, 2021; and unaudited) | Digital IM | Digital Operating | Corporate and Other | Discontinued Operations | Total OP pro rata share | ||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 16,870 | $ | (12,142) | $ | (31,827) | $ | 68,135 | $ | 41,036 | $ | — | $ | 41,036 | |||||||||||||||||||||||||||
| Net income (loss) attributable to noncontrolling common interests in Operating Company | 1,778 | (1,279) | (3,365) | 7,177 | 4,311 | — | 4,311 | ||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to common interests in Operating Company and common stockholders | 18,648 | (13,421) | (35,192) | 75,312 | 45,347 | — | 45,347 | ||||||||||||||||||||||||||||||||||
| Adjustments for FFO: | |||||||||||||||||||||||||||||||||||||||||
| Real estate depreciation and amortization | — | 19,787 | 2,508 | 2,664 | 24,959 | 101,535 | 126,494 | ||||||||||||||||||||||||||||||||||
| Impairment of real estate | — | — | — | (2,211) | (2,211) | (5,999) | (8,210) | ||||||||||||||||||||||||||||||||||
| Gain from sales of real estate | — | — | — | (490) | (490) | (24) | (514) | ||||||||||||||||||||||||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | — | — | — | — | — | (95,512) | (95,512) | ||||||||||||||||||||||||||||||||||
| FFO | $ | 18,648 | $ | 6,366 | $ | (32,684) | $ | 75,275 | $ | 67,605 | $ | — | $ | 67,605 | |||||||||||||||||||||||||||
| Additional adjustments for Core FFO: | |||||||||||||||||||||||||||||||||||||||||
| Adjustment to BRSP cash dividend | — | — | 7,201 | 2,277 | 9,478 | — | 9,478 | ||||||||||||||||||||||||||||||||||
| Equity-based compensation expense | 1,726 | 62 | 4,651 | 2,033 | 8,472 | 566 | 9,038 | ||||||||||||||||||||||||||||||||||
| Straight-line rent revenue and expense | 50 | 207 | (602) | (765) | (1,110) | (815) | (1,925) | ||||||||||||||||||||||||||||||||||
| Amortization of acquired above- and below-market lease values, net | — | 87 | — | (620) | (533) | 361 | (172) | ||||||||||||||||||||||||||||||||||
| Debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts | 281 | 641 | 679 | 596 | 2,197 | 5,454 | 7,651 | ||||||||||||||||||||||||||||||||||
| Non-real estate fixed asset depreciation, amortization and impairment | 41 | 653 | 486 | 1,578 | 2,758 | 10,858 | 13,616 | ||||||||||||||||||||||||||||||||||
Restructuring and transaction-related charges(1) | 2,440 | 184 | 5,763 | 10,913 | 19,300 | 201 | 19,501 | ||||||||||||||||||||||||||||||||||
| Non-real estate (gains) losses, excluding realized gains or losses within the Digital Other segment | (425) | (60) | (7,956) | 32,035 | 23,594 | (12,275) | 11,319 | ||||||||||||||||||||||||||||||||||
| Net unrealized carried interest | (9,381) | — | — | (251) | (9,632) | (18,321) | (27,953) | ||||||||||||||||||||||||||||||||||
| Preferred share redemption loss | — | — | 2,865 | — | 2,865 | — | 2,865 | ||||||||||||||||||||||||||||||||||
| Deferred taxes and tax effect on certain of the foregoing adjustments | (259) | 385 | — | — | 126 | 1,537 | 1,663 | ||||||||||||||||||||||||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | — | — | — | — | — | 12,438 | 12,438 | ||||||||||||||||||||||||||||||||||
| Less: Core FFO from discontinued operations | — | — | — | (123,071) | (123,071) | (4) | (123,075) | ||||||||||||||||||||||||||||||||||
| Core FFO | $ | 13,121 | $ | 8,525 | $ | (19,597) | $ | — | $ | 2,049 | $ | — | $ | 2,049 | |||||||||||||||||||||||||||
| Additional adjustments for AFFO: | |||||||||||||||||||||||||||||||||||||||||
| Recurring capital expenditures | — | (1,349) | — | — | (1,349) | — | (1,349) | ||||||||||||||||||||||||||||||||||
| AFFO | $ | 13,121 | $ | 7,176 | $ | (19,597) | $ | — | $ | 700 | $ | — | $ | 700 | |||||||||||||||||||||||||||
Notes:
(1) Restructuring and non-recurring items 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. Includes $2 million of compensation expense related to the additional consideration Wafra paid for the Digital Investment Management business, which was paid on behalf of certain employees to fund their share of GP interests.
DigitalBridge | Supplemental Financial Report | 10 | ||||||||||
IId. Financial Results - Segment Reconciliation of Net Income to FFO, Core FFO, AFFO and Adjusted EBITDA | ||
| OP pro rata share by segment | ||||||||||||||||||||||||||||||||
| ($ in thousands; for the three months ended September 30, 2021; and unaudited) | Digital IM | Digital Operating | Corporate and Other | Discontinued Operations | Total OP pro rata share | |||||||||||||||||||||||||||
| Core FFO | $ | 13,121 | $ | 8,525 | $ | (19,597) | $ | — | $ | 2,049 | ||||||||||||||||||||||
| Less: Earnings of equity method investments | (30) | — | (5,754) | — | (5,784) | |||||||||||||||||||||||||||
| Plus: Preferred dividends | — | — | 17,456 | — | 17,456 | |||||||||||||||||||||||||||
Plus: Core interest expense(1) | 1,973 | 5,059 | 7,128 | — | 14,160 | |||||||||||||||||||||||||||
Plus: Core tax expense(1) | 3,346 | — | (15,984) | — | (12,638) | |||||||||||||||||||||||||||
| Plus: Non pro-rata allocation of income (loss) to NCI | 231 | — | — | 231 | ||||||||||||||||||||||||||||
| Plus: Placement fees | 2,102 | — | — | — | 2,102 | |||||||||||||||||||||||||||
| Less: Net realized carried interest, incentive fees, and other adjustments to Fee Related Earnings | (7) | — | — | — | (7) | |||||||||||||||||||||||||||
| Plus: Digital Operating installation services, transaction, investment and servicing costs | — | 53 | — | — | 53 | |||||||||||||||||||||||||||
| Adjusted EBITDA (DBRG OP Share) | $ | 20,736 | $ | 13,637 | $ | (16,751) | $ | — | $ | 17,622 | ||||||||||||||||||||||
Notes:
(1) Excludes components that are included in adjustments for Core FFO.
DigitalBridge | Supplemental Financial Report | 11 | ||||||||||
| IIIa. Capitalization - Debt Summary | ||
| ($ in thousands; as of September 30, 2021) | ||||||||||||||||||||||||||||||||||||||||||||
| Consolidated debt | Payments due by period(1) | |||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2022 | 2023 | 2024 | 2025 and after | Total | |||||||||||||||||||||||||||||||||||||||
| Investment-level debt: | ||||||||||||||||||||||||||||||||||||||||||||
| Digital Operating - Fixed | $ | 1,558 | $ | 6,230 | $ | 219,793 | $ | 600,753 | $ | 1,957,889 | $ | 2,786,223 | ||||||||||||||||||||||||||||||||
| Digital Operating - Variable | 50 | 430,600 | 38,350 | 15,750 | 546,267 | $ | 1,031,017 | |||||||||||||||||||||||||||||||||||||
| Total Digital Operating | 1,608 | 436,830 | 258,143 | 616,503 | 2,504,156 | 3,817,240 | ||||||||||||||||||||||||||||||||||||||
| Corporate and Other debt: | ||||||||||||||||||||||||||||||||||||||||||||
| 2021-1, A-1 Variable Funding Notes | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
| 2021-1, Class A-2 Term Notes | — | — | — | — | 300,000 | 300,000 | ||||||||||||||||||||||||||||||||||||||
Other (2) | — | — | 4,000 | — | — | 4,000 | ||||||||||||||||||||||||||||||||||||||
| Convertible/exchangeable senior notes | — | — | 200,000 | — | 300,000 | 500,000 | ||||||||||||||||||||||||||||||||||||||
Total consolidated debt (3) | $ | 1,608 | $ | 436,830 | $ | 462,143 | $ | 616,503 | $ | 3,104,156 | $ | 4,621,240 | ||||||||||||||||||||||||||||||||
| Fixed/Variable | WA Interest Rate | WA Remaining Term | ||||||||||||||||||||||||||||||||||||||||||
| DBRG OP share of debt | Payments due by period(1) | |||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2022 | 2023 | 2024 | 2025 and after | Total | |||||||||||||||||||||||||||||||||||||||
| Investment-level debt: | ||||||||||||||||||||||||||||||||||||||||||||
| Digital Operating - Fixed | $ | 205 | $ | 818 | $ | 28,859 | $ | 78,879 | $ | 302,399 | $ | 411,160 | Fixed | 2.5% | 4.2 | |||||||||||||||||||||||||||||
| Digital Operating - Variable | 10 | 56,579 | 7,678 | 3,153 | 109,363 | $ | 176,783 | Variable | 4.4% | 3.1 | ||||||||||||||||||||||||||||||||||
| Total Digital Operating | 215 | 57,397 | 36,537 | 82,032 | 411,762 | 587,943 | 3.1% | 3.9 | ||||||||||||||||||||||||||||||||||||
| Corporate and Other debt: | ||||||||||||||||||||||||||||||||||||||||||||
| 2021-1, A-1 Variable Funding Notes | — | — | — | — | — | — | Variable | N/A | 5.0 | |||||||||||||||||||||||||||||||||||
| 2021-1, Class A-2 Term Notes | — | — | — | — | 300,000 | 300,000 | Fixed | 3.9% | 5.0 | |||||||||||||||||||||||||||||||||||
Other (2) | — | — | 4,000 | — | — | 4,000 | Variable | 1.2% | 1.8 | |||||||||||||||||||||||||||||||||||
| Convertible/exchangeable senior notes | — | — | 200,000 | — | 300,000 | 500,000 | Fixed | 5.5% | 2.9 | |||||||||||||||||||||||||||||||||||
Total DBRG share of debt (3) | $ | 215 | $ | 57,397 | $ | 240,537 | $ | 82,032 | $ | 1,011,762 | $ | 1,391,943 | ||||||||||||||||||||||||||||||||
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) In the third quarter of 2021, the Company entered into a $50 million credit facility to fund the acquisition of loans that are warehoused for a future securitization vehicle.
(3) Excluded from above presentation is debt of assets which are presented under discontinued operations for the third quarter 2021, including, certain Other Equity and Debt assets and the Wellness Infrastructure business along with other non-core assets, all of which are held by the Company's subsidiary, NRF Holdco, LLC, who acts as guarantor, including 5.375% exchangeable senior notes, trust preferred securities and corresponding junior subordinated debt.
DigitalBridge | Supplemental Financial Report | 12 | ||||||||||
IIIb. Capitalization - DBRG Series 2021-1(1) | ||
| ($ in thousands, as of September 30, 2021) | ||||||||
| 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 | $ | 200,000 | ||||||
| Amount outstanding | $ | — | ||||||
| Interest Rate | 3M LIBOR + 3.00% | |||||||
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 November 3, 2021, DBRG is meeting all required covenant threshold levels. | ||||||||
Notes:
(1) In July 2021, the Company completed a first of its kind secured fund fee revenue term note and variable funding note (VFN) issuance totaling $500 million, DBRG Series 2021-1. The Company fully repaid and terminated its revolving credit facility in July 2021.
(2) Anticipated Repayment Date is September 25, 2026 including two 1-year extension options subject to 1) either rating agency confirmation and consent of VFN noteholders are obtained or DSCR exceeding 1.75x, 2) term notes rating not less than BBB- 3) the payment of a 0.05% extension fee and 4) other customary conditions.
(3) Debt service coverage ratio covenant thresholds: minimum of 1.75x for ability to borrow from the VFN; below 1.75x to 1.50x = 50% cash trap; below 1.50x to 1.20x = 100% cash trap; and below 1.20x = cash sweep.
(4) 100% cash sweep until LTV is less than 35%.
(5) 50% cash sweep until ratio is less than 60%.
DigitalBridge | Supplemental Financial Report | 13 | ||||||||||
| IIIc. Capitalization - Convertible/Exchangeable Notes & Perpetual Preferred Stock | ||
| ($ in thousands; except per share data; as of September 30, 2021) | ||||||||||||||||||||||||||||||||||||||
| Convertible/exchangeable debt | ||||||||||||||||||||||||||||||||||||||
| Description | Outstanding principal | Final due date(1) | Interest rate | Conversion price (per share of common stock) | Conversion ratio | Conversion shares | ||||||||||||||||||||||||||||||||
| 5.75% Exchangeable senior notes | $ | 300,000 | (2) | July 15, 2025 | 5.75% fixed | $ | 2.30 | 434.7826 | 130,435 | |||||||||||||||||||||||||||||
| 5.0% Convertible senior notes | 200,000 | April 15, 2023 | 5.00% fixed | 15.76 | 63.4700 | 12,694 | ||||||||||||||||||||||||||||||||
| Total convertible debt | $ | 500,000 | ||||||||||||||||||||||||||||||||||||
| Perpetual preferred stock | ||||||||||||||||||||
| Description | Liquidation preference | Shares outstanding (In thousands) | Callable period | |||||||||||||||||
Series H 7.125% cumulative redeemable perpetual preferred stock (3) | 287,500 | 11,500 | Callable | |||||||||||||||||
| Series I 7.15% cumulative redeemable perpetual preferred stock | 345,000 | 13,800 | On or after June 5, 2022 | |||||||||||||||||
| Series J 7.125% cumulative redeemable perpetual preferred stock | 315,000 | 12,600 | On or after September 22, 2022 | |||||||||||||||||
| Total preferred stock | $ | 947,500 | 37,900 | |||||||||||||||||
Notes:
(1) 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, for the 5.75% exchangeable senior notes and on or after April 22, 2020, for the 5.0% convertible senior notes.
(2) In October 2021, DBRG pursuant to a privately negotiated exchange agreement, exchanged $44 million of the outstanding principal of the 5.75% exchangeable notes into 20 million shares of the Company's class A common stock.
(3) In November 2021, the Company will redeem 2,560,000 shares, representing approximately 22.3% of the 11,500,000 issued and outstanding shares of 7.125% Series H Cumulative Redeemable Perpetual Preferred Stock with a total liquidation preference of $64 million.
DigitalBridge | Supplemental Financial Report | 14 | ||||||||||
| IIId. Capitalization - Organization Structure | ||
DigitalBridge | Supplemental Financial Report | 15 | ||||||||||
| IV. Assets Under Management | ||
| ($ in millions) | DBRG OP Share | |||||||||||||||||||||||||
| Segment | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | |||||||||||||||||||
Digital Investment Management(1) | $ | 36,337 | $ | 33,551 | $ | 30,711 | $ | 28,577 | $ | 22,237 | $ | 21,015 | $ | 20,107 | ||||||||||||
| Digital Operating | 1,157 | 1,093 | 1,073 | 1,087 | 724 | 300 | 290 | |||||||||||||||||||
Corporate and Other Assets(2) | 11,880 | 13,790 | 14,397 | 22,300 | 23,853 | 24,392 | 27,715 | |||||||||||||||||||
| Total AUM | $ | 49,374 | $ | 48,434 | $ | 46,181 | $ | 51,964 | $ | 46,814 | $ | 45,707 | $ | 48,112 | ||||||||||||
Notes:
(1) In October 2021, funds affiliated with the Company’s investment management platform acquired a controlling stake in Vertical Bridge Holdings, LLC, resulting in a net increase of approximately $2 billion to AUM.
(2) September 30, 2021 includes $11.2 billion of assets held for disposition on the consolidated balance sheet with related operating results presented as income (loss) from discontinued operations on the consolidated statement of operations of the Company.
DigitalBridge | Supplemental Financial Report | 16 | ||||||||||
| V. Digital Investment Management | ||
| ($ in millions) | |||||||||||||||||||||||||||||
| AUM DBRG OP Share | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | ||||||||||||||||||||||
| Digital Colony Partners I | $ | 6,180 | $ | 6,003 | $ | 5,931 | $ | 6,089 | $ | 5,686 | $ | 5,665 | $ | 5,526 | |||||||||||||||
| Digital Colony Partners II | 8,005 | 6,431 | 4,775 | 3,241 | — | — | — | ||||||||||||||||||||||
| Separately Capitalized Portfolio Companies | 10,147 | 10,254 | 9,893 | 8,947 | 8,273 | 9,556 | 8,990 | ||||||||||||||||||||||
| Co-Investment (Sidecar) Capital | 11,417 | 10,273 | 9,591 | 9,857 | 8,181 | 5,692 | 5,477 | ||||||||||||||||||||||
| Liquid Strategies | 588 | 590 | 521 | 443 | 97 | 102 | 114 | ||||||||||||||||||||||
Digital IM AUM (1) | $ | 36,337 | $ | 33,551 | $ | 30,711 | $ | 28,577 | $ | 22,237 | $ | 21,015 | $ | 20,107 | |||||||||||||||
| FEEUM DBRG OP Share | Fee Rate 9/30/21 | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | |||||||||||||||||||||
| Digital Colony Partners I | 1.1% | $ | 3,040 | $ | 3,081 | $ | 3,179 | $ | 3,756 | $ | 3,756 | $ | 3,756 | $ | 3,756 | ||||||||||||||
| Digital Colony Partners II | 1.1% | 7,146 | 5,519 | 3,964 | 3,217 | — | — | — | |||||||||||||||||||||
| Separately Capitalized Portfolio Companies | 0.8% | 2,576 | 2,576 | 2,534 | 2,777 | 2,603 | 3,019 | 3,017 | |||||||||||||||||||||
| Co-Investment (Sidecar) Capital | 0.5% | 3,184 | 2,817 | 2,744 | 2,655 | 2,042 | 841 | 841 | |||||||||||||||||||||
| Liquid Strategies | 0.5% | 510 | 512 | 432 | 437 | 153 | 127 | 128 | |||||||||||||||||||||
Digital IM FEEUM (1) | 0.9% | $ | 16,456 | $ | 14,505 | $ | 12,853 | $ | 12,842 | $ | 8,554 | $ | 7,743 | $ | 7,742 | ||||||||||||||
| ($ in thousands) | |||||||||||||||||||||||||||||
| Digital IM FRE / Adjusted EBITDA | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q20 | ||||||||||||||||||||||
| Fee income | $ | 37,751 | $ | 33,304 | $ | 28,917 | $ | 24,191 | $ | 19,172 | $ | 18,987 | $ | 18,068 | |||||||||||||||
Fee income, other (2) | 12,809 | 8,996 | 2,148 | 862 | 876 | 1,306 | 876 | ||||||||||||||||||||||
| Other income | 483 | 84 | 54 | 183 | 87 | 552 | 197 | ||||||||||||||||||||||
| Compensation expense—cash | (16,933) | (14,426) | (10,852) | (18,353) | (9,414) | (9,208) | (6,964) | ||||||||||||||||||||||
| Administrative expenses | (2,675) | (2,337) | (2,067) | (2,310) | (1,832) | (2,330) | (2,127) | ||||||||||||||||||||||
Digital IM FRE / Adjusted EBITDA (3) | $ | 31,435 | $ | 25,621 | $ | 18,200 | $ | 4,573 | $ | 8,889 | $ | 9,307 | $ | 10,050 | |||||||||||||||
DBRG OP share of Digital IM FRE / Adjusted EBITDA(4) | $ | 20,736 | $ | 17,449 | $ | 11,645 | $ | 2,051 | $ | 6,306 | $ | 9,307 | $ | 10,050 | |||||||||||||||
Notes:
(1) In October 2021, funds affiliated with the Company’s investment management platform acquired a controlling stake in Vertical Bridge Holdings, LLC, resulting in a net increase of approximately $2 billion to AUM. FEEUM is not expected to change significantly through new co-investments in Vertical Bridge.
(2) Includes service fee income and one time catch-up fees earned, which are customary fees paid on newly raised 3rd party capital as if it were raised on the first closing date.
(3) For reconciliations of net income/(loss) to FRE / Adjusted EBITDA, please refer to the Appendices section of this presentation.
(4) In July 2020, the Company closed on a strategic investment from Wafra for a 31.5% ownership stake in the Digital Investment Management business. Represents the Company interest after deducting Wafra's 31.5% interest.
DigitalBridge | Supplemental Financial Report | 17 | ||||||||||
| VI. Digital Operating | ||
| ($ in millions, unless otherwise noted) | ||||||||||||||||||||||||||
| Portfolio Overview | 9/30/21 | 6/30/21 | 3/31/21 | 12/31/20 | 9/30/20 | 6/30/20 | 3/31/20 | |||||||||||||||||||
| Consolidated amount | ||||||||||||||||||||||||||
Asset(1) | $ | 7,211,293 | $ | 6,735,683 | $ | 6,633,245 | $ | 6,248,162 | $ | 4,925,383 | $ | 1,496,460 | $ | 1,448,249 | ||||||||||||
Debt(2)(3) | (3,817,240) | (3,374,255) | (3,369,338) | (3,226,843) | (2,546,359) | (515,007) | (515,832) | |||||||||||||||||||
| Net Carrying Value - Consolidated | $ | 3,394,053 | $ | 3,361,428 | $ | 3,263,907 | $ | 3,021,319 | $ | 2,379,024 | $ | 981,453 | $ | 932,417 | ||||||||||||
| DBRG OP share of consolidated amount | ||||||||||||||||||||||||||
Asset(1) | $ | 1,157,098 | $ | 1,092,632 | $ | 1,073,366 | $ | 1,086,573 | $ | 724,234 | $ | 299,591 | $ | 289,939 | ||||||||||||
Debt(2)(3) | (587,943) | (528,609) | (527,520) | (536,231) | (355,263) | (103,104) | (103,270) | |||||||||||||||||||
| Net Carrying Value - DBRG OP share | $ | 569,155 | $ | 564,023 | $ | 545,846 | $ | 550,342 | $ | 368,971 | $ | 196,487 | $ | 186,669 | ||||||||||||
| DBRG net carrying value % interest | 17 | % | 17 | % | 17 | % | 18 | % | 16 | % | 20 | % | 20 | % | ||||||||||||
| ($ in millions, unless otherwise noted) | ||||||||||||||||||||||||||
Operating Metrics (4) | 9/30/2021 - 3Q21 (5) | 6/30/2021 - 2Q21 | 3/31/2021 - 1Q21 | 12/31/2020 - 4Q20 | 9/30/2020- 3Q20 | 6/30/2020 - 2Q20 | 3/31/2020 - 1Q20 | |||||||||||||||||||
| Number of Data Centers | 76 | 76 | 76 | 32 | 32 | 20 | 19 | |||||||||||||||||||
| Max Critical I.T. Square Feet | 1,819,946 | 1,809,943 | 1,791,781 | 1,138,048 | 1,137,866 | 456,649 | 410,974 | |||||||||||||||||||
| Leased Square Feet | 1,467,420 | 1,439,291 | 1,423,322 | 967,879 | 945,640 | 316,697 | 301,791 | |||||||||||||||||||
| % Utilization Rate | 80.6% | 79.5% | 79.4% | 85.0% | 83.1% | 69.4% | 73.4% | |||||||||||||||||||
| MRR (Annualized) | $ | 773.1 | $ | 750.2 | $ | 743.0 | $ | 442.0 | $ | 374.0 | $ | 171.4 | $ | 171.2 | ||||||||||||
| Bookings (Annualized) | $ | 16.6 | $ | 16.4 | $ | 23.0 | $ | 6.0 | $ | 9.4 | $ | 6.6 | $ | 7.4 | ||||||||||||
| Quarterly Churn (% of Prior Quarter MRR) | 1.3% | 1.3% | 1.3% | .8% | .8% | 1.7% | 2.7% | |||||||||||||||||||
Notes:
(1) Includes all components related to real estate assets, including tangible real estate and lease-related intangibles and cash.
(2) Represents unpaid principal balance.
(3) For the third quarter 2021, in addition to debt presented, the Digital operating segment has $144 million consolidated, or $29 million DBRG OP share, of finance lease obligations, which represents the present value of payments on leases classified as finance leases, in the Other Liabilities line item on the Company’s Balance Sheet.
(4) Operating metrics presented include assets owned entirely during the presented period. Data of assets acquired within a quarter are included in the following quarter.
(5) In September 2021, the Company acquired a data center serving the Santa Clara, CA market with 95,712 max square feet and 71,784 leased square feet.
DigitalBridge | Supplemental Financial Report | 18 | ||||||||||
| VI. Digital Operating | ||
| ($ in thousands) | ||||||||||||||||||||||||||
| Digital Operating Adjusted EBITDA | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q20 | |||||||||||||||||||
| Consolidated amount | ||||||||||||||||||||||||||
| Total revenues | $ | 194,966 | $ | 189,093 | $ | 189,202 | $ | 127,546 | $ | 98,549 | $ | 42,021 | $ | 45,167 | ||||||||||||
| Property operating expenses | (80,226) | (77,140) | (79,862) | (47,224) | (37,544) | (18,055) | (16,906) | |||||||||||||||||||
| Compensation and administrative expenses | (29,766) | (28,488) | (25,947) | (16,982) | (11,863) | (10,464) | (12,656) | |||||||||||||||||||
| Investment, servicing and commission expenses | (4,862) | (5,255) | (6,565) | (3,329) | (2,362) | (696) | (317) | |||||||||||||||||||
| Other gain/loss, net | 285 | (349) | (3) | (200) | (45) | — | — | |||||||||||||||||||
| EBITDAre: | $ | 80,397 | $ | 77,861 | $ | 76,825 | $ | 59,811 | $ | 46,735 | $ | 12,806 | $ | 15,288 | ||||||||||||
| Straight-line rent expenses and amortization of above- and below-market lease intangibles | 482 | (98) | (399) | (2,607) | (2,106) | 1,837 | (338) | |||||||||||||||||||
| Compensation expense—equity-based | 308 | 308 | 308 | 728 | 148 | 296 | — | |||||||||||||||||||
| Installation services | (4,058) | 576 | 880 | 429 | (65) | 493 | 289 | |||||||||||||||||||
| Transaction, restructuring & integration costs | 4,042 | 2,999 | 4,670 | 1,155 | 420 | 1,021 | 748 | |||||||||||||||||||
| Other gain/loss, net | (285) | 349 | — | 200 | 46 | — | — | |||||||||||||||||||
Digital Operating Adjusted EBITDA - Consolidated (1) | $ | 80,886 | $ | 81,995 | $ | 82,284 | $ | 59,716 | $ | 45,178 | $ | 16,453 | $ | 15,987 | ||||||||||||
| DBRG OP share of consolidated amount | ||||||||||||||||||||||||||
| Total revenues | $ | 33,771 | $ | 32,624 | $ | 32,741 | $ | 21,013 | $ | 15,600 | $ | 8,413 | $ | 9,042 | ||||||||||||
| Property operating expenses | (14,115) | (13,690) | (14,165) | (7,911) | (6,026) | (3,615) | (3,385) | |||||||||||||||||||
| Compensation and administrative expenses | (5,615) | (5,350) | (4,888) | (3,276) | (2,310) | (2,095) | (2,534) | |||||||||||||||||||
| Investment, servicing and commission expenses | (709) | (819) | (1,090) | (433) | (290) | (139) | (63) | |||||||||||||||||||
| Other gain/loss, net | 61 | (69) | — | (26) | (6) | — | — | |||||||||||||||||||
| EBITDAre: | $ | 13,393 | $ | 12,696 | $ | 12,598 | $ | 9,367 | $ | 6,968 | $ | 2,564 | $ | 3,060 | ||||||||||||
| Straight-line rent expenses and amortization of above- and below-market lease intangibles | 295 | 247 | 192 | (250) | (154) | 368 | (68) | |||||||||||||||||||
| Compensation expense—equity-based | 62 | 62 | 62 | 146 | 30 | 59 | — | |||||||||||||||||||
| Installation services | (812) | 115 | 176 | 86 | (13) | 99 | 58 | |||||||||||||||||||
| Transaction, restructuring & integration costs | 759 | 587 | 920 | 245 | 77 | 204 | 150 | |||||||||||||||||||
| Other gain/loss, net | (60) | 69 | — | 26 | 6 | — | — | |||||||||||||||||||
| Digital Operating Adjusted EBITDA - DBRG OP share | $ | 13,637 | $ | 13,776 | $ | 13,948 | $ | 9,620 | $ | 6,914 | $ | 3,294 | $ | 3,200 | ||||||||||||
Notes:
(1) For reconciliations of net income/(loss) to Adjusted EBITDA, please refer to the Appendices section of this presentation.
DigitalBridge | Supplemental Financial Report | 19 | ||||||||||
| VI. Digital Operating | ||
| Capital Expenditures | |||||||||||
| Consolidated amount | 3Q21 | ||||||||||
| Recurring capital expenditures | 7,387 | ||||||||||
| Non-recurring capital expenditures | 42,841 | ||||||||||
| Total capital expenditures | 50,228 | ||||||||||
| Leasing Commissions | 1,233 | ||||||||||
| DBRG OP share of consolidated amount | |||||||||||
| Recurring capital expenditures | 1,349 | ||||||||||
| Non-recurring capital expenditures | 8,315 | ||||||||||
| Total capital expenditures | 9,664 | ||||||||||
| Leasing Commissions | 213 | ||||||||||
DigitalBridge | Supplemental Financial Report | 20 | ||||||||||
| VII. Corporate and Other | ||
| ($ in thousand, as of September 30, 2021) | Consolidated amount | DBRG OP share of consolidated amount | ||||||||||||
| Other | ||||||||||||||
| DBRG's GP Co-investment in DCP I and II Investments | $ | 230,972 | $ | 173,732 | ||||||||||
Equity interests in digital investment vehicles and seed investments | 272,134 | 165,902 | ||||||||||||
| Other - digital assets net carrying value | $ | 503,106 | $ | 339,634 | ||||||||||
Other - held for investment assets net equity carrying value (primarily BRSP shares)(1) | $ | 330,809 | $ | 330,809 | ||||||||||
Discontinued operations net carrying value(1)(2) | 5,217,765 | 3,059,965 | ||||||||||||
Investment-level non-recourse financing(3) | 3,257,912 | 2,087,005 | ||||||||||||
| 5.375% Exchangeable senior notes and TruPS | 293,722 | 293,722 | ||||||||||||
| Other - discontinued operations assets net equity carrying value | $ | 1,666,131 | $ | 679,238 | ||||||||||
| Corporate Net Assets | ||||||||||||||
| Cash and cash equivalents, restricted cash and other assets | $ | 670,912 | $ | 670,912 | ||||||||||
| Accrued and other liabilities and dividends payable | 109,764 | 109,764 | ||||||||||||
| Net assets | $ | 561,148 | $ | 561,148 | ||||||||||
Notes:
(1) The Company currently holds a 29% equity ownership in BRSP following a sale of 9.5 million shares in August 2021. Approximately 461,000 shares and 3.1 million units in BRSP are held by NRF Holdco which are included in assets held for disposition.
(2) Includes all components related to real estate assets, including tangible real estate and lease-related intangibles and cash of the investments presented under discontinued operations.
(3) Represents unpaid principal balance.
DigitalBridge | Supplemental Financial Report | 21 | ||||||||||
Appendices
DigitalBridge | Supplemental Financial Report | 22 | ||||||||||
| Reconciliations of Digital IM FRE/Adjusted EBITDA and Digital Operating Adjusted EBITDA to Net Income (Loss) | ||
| ($ in thousand) | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q20 | |||||||||||||||||||
| Digital IM net income (loss) | $ | 39,272 | $ | 15,786 | $ | 7,663 | $ | 2,702 | $ | 3,799 | $ | 2,424 | $ | 2,529 | ||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Interest income | 2,250 | — | (1) | (1) | (2) | — | (30) | |||||||||||||||||||
| Investment and servicing expense | — | — | 32 | 204 | — | — | — | |||||||||||||||||||
| Depreciation and amortization | 8,242 | 6,298 | 8,912 | 6,421 | 10,259 | 6,605 | 6,603 | |||||||||||||||||||
| Compensation expense—equity-based | 4,673 | 1,837 | 1,533 | 655 | 189 | 682 | 589 | |||||||||||||||||||
| Compensation expense—carried interest and incentive | 31,736 | 8,266 | (33) | 994 | 912 | — | ||||||||||||||||||||
| Administrative expenses—straight-line rent | 74 | 50 | (2) | (1) | 14 | 16 | 16 | |||||||||||||||||||
| Administrative expenses—placement agent fee | 3,069 | 6,959 | 59 | 1,202 | — | — | — | |||||||||||||||||||
| Incentive/performance fee income | (1,313) | (4,489) | — | — | — | — | — | |||||||||||||||||||
| Equity method (earnings) losses | (59,196) | (11,203) | 195 | (6,744) | (6,394) | (277) | (3) | |||||||||||||||||||
| Other (gain) loss, net | (461) | (119) | (165) | (102) | (32) | 8 | (47) | |||||||||||||||||||
| Income tax (benefit) expense | 3,089 | 2,236 | 7 | (757) | 144 | (151) | 393 | |||||||||||||||||||
| Digital IM FRE / Adjusted EBITDA | $ | 31,435 | $ | 25,621 | $ | 18,200 | $ | 4,573 | $ | 8,889 | $ | 9,307 | $ | 10,050 | ||||||||||||
| 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q20 | ||||||||||||||||||||
| Digital Operating net income (loss) from continuing operations | (71,822) | (10,850) | (64,260) | (53,591) | (38,795) | (21,262) | (18,415) | |||||||||||||||||||
| Adjustments: | ||||||||||||||||||||||||||
| Interest expense | 29,839 | 29,272 | 31,133 | 41,815 | 18,589 | 8,170 | 9,402 | |||||||||||||||||||
| Income tax (benefit) expense | 1,922 | (66,788) | (12,268) | (6,967) | (6,091) | (2,673) | (5,730) | |||||||||||||||||||
| Depreciation and amortization | 120,458 | 126,227 | 122,220 | 78,554 | 73,032 | 28,571 | 30,031 | |||||||||||||||||||
| EBITDAre: | $ | 80,397 | $ | 77,861 | $ | 76,825 | $ | 59,811 | $ | 46,735 | $ | 12,806 | $ | 15,288 | ||||||||||||
| Straight-line rent expenses and amortization of above- and below-market lease intangibles | 482 | (98) | (399) | (2,607) | (2,106) | 1,837 | (338) | |||||||||||||||||||
| Compensation expense—equity-based | 308 | 308 | 308 | 728 | 148 | 296 | — | |||||||||||||||||||
| Installation services | (4,058) | 576 | 880 | 429 | (65) | 493 | 289 | |||||||||||||||||||
| Transaction, restructuring & integration costs | 4,042 | 2,999 | 4,670 | 1,155 | 420 | 1,021 | 748 | |||||||||||||||||||
| Other gain/loss, net | (285) | 349 | — | 200 | 46 | — | — | |||||||||||||||||||
| Digital Operating Adjusted EBITDA | $ | 80,886 | $ | 81,995 | $ | 82,284 | $ | 59,716 | $ | 45,178 | $ | 16,453 | $ | 15,987 | ||||||||||||
DigitalBridge | Supplemental Financial Report | 23 | ||||||||||
| Reconciliations of Core FFO and Adjusted EBITDA to Net Income (Loss) | ||
| ($ in thousands) | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q20 | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 41,036 | $ | (141,260) | $ | (264,806) | $ | (140,575) | $ | (205,784) | $ | (2,042,790) | $ | (361,633) | ||||||||||||
| Net income (loss) attributable to noncontrolling common interests in Operating Company | 4,311 | (14,980) | (27,896) | (15,411) | (22,651) | (225,057) | (39,601) | |||||||||||||||||||
| Net income (loss) attributable to common interests in Operating Company and common stockholders | 45,347 | (156,240) | (292,702) | (155,986) | (228,435) | (2,267,847) | (401,234) | |||||||||||||||||||
| Adjustments for FFO: | ||||||||||||||||||||||||||
| Real estate depreciation and amortization | 126,494 | 150,458 | 184,762 | 136,245 | 162,705 | 131,722 | 130,523 | |||||||||||||||||||
| Impairment of real estate | (8,210) | 242,903 | 106,077 | 31,365 | 142,767 | 1,474,262 | 308,268 | |||||||||||||||||||
| Gain from sales of real estate | (514) | (2,969) | (38,102) | (26,566) | (12,332) | 4,919 | (7,933) | |||||||||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | (95,512) | (162,021) | (188,496) | (79,874) | (146,905) | (329,601) | (82,329) | |||||||||||||||||||
| FFO | $ | 67,605 | $ | 72,131 | $ | (228,461) | $ | (94,816) | $ | (82,200) | $ | (986,545) | $ | (52,705) | ||||||||||||
| Additional adjustments for Core FFO: | ||||||||||||||||||||||||||
| Adjustment to BRSP cash dividend | 9,478 | (40,165) | 55,648 | (22,999) | (18,207) | 328,222 | (86,213) | |||||||||||||||||||
| Equity-based compensation expense | 9,038 | 11,642 | 19,299 | 8,288 | 7,879 | 10,152 | 8,732 | |||||||||||||||||||
| Straight-line rent revenue and expense | (1,925) | (2,309) | 17,225 | (6,403) | (6,281) | (5,240) | (2,025) | |||||||||||||||||||
| Amortization of acquired above- and below-market lease values, net | (172) | (1,498) | 6,005 | (1,229) | (1,440) | (531) | (3,519) | |||||||||||||||||||
| Debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts | 7,651 | 10,196 | 45,627 | 25,034 | 4,296 | 10,080 | 15,049 | |||||||||||||||||||
| Non-real estate fixed asset depreciation, amortization and impairment | 13,616 | 19,996 | 20,563 | 4,885 | 12,754 | 13,390 | 13,253 | |||||||||||||||||||
| Restructuring and transaction-related charges | 19,501 | 5,174 | 34,482 | 21,887 | 13,044 | 8,864 | 15,568 | |||||||||||||||||||
| Non-real estate (gains) losses, excluding realized gains or losses within the Digital Other segment | 11,319 | (151,773) | 267,812 | 193,948 | 84,995 | 740,038 | 85,124 | |||||||||||||||||||
| Net unrealized carried interest | (27,953) | (6,485) | 189 | (5,734) | (5,170) | 801 | 9,230 | |||||||||||||||||||
| Preferred share redemption (gain) loss | 2,865 | — | — | — | — | — | — | |||||||||||||||||||
| Deferred taxes and tax effect on certain of the foregoing adjustments | 1,663 | (42,536) | (17,657) | (8,764) | (7,917) | (3,092) | (6,062) | |||||||||||||||||||
| Less: Adjustments attributable to noncontrolling interests in investment entities | 12,438 | 146,687 | (218,328) | (143,262) | (38,042) | (182,607) | 3,017 | |||||||||||||||||||
| Less: Core FFO from discontinued operations | (123,075) | (25,874) | (12,391) | 4,025 | 5,579 | 37,218 | (31,128) | |||||||||||||||||||
| Core FFO | $ | 2,049 | $ | (4,814) | $ | (9,987) | $ | (25,140) | $ | (30,710) | $ | (29,250) | $ | (31,679) | ||||||||||||
DigitalBridge | Supplemental Financial Report | 24 | ||||||||||
| Reconciliations of Core FFO and Adjusted EBITDA to Net Income (Loss) | ||
| ($ in thousands) | 3Q21 | 2Q21 | 1Q21 | 4Q20 | 3Q20 | 2Q20 | 1Q20 | |||||||||||||||||||
| Core FFO | $ | 2,049 | $ | (4,814) | $ | (9,987) | $ | (25,140) | $ | (30,710) | $ | (29,250) | $ | (31,679) | ||||||||||||
| Less: Earnings of equity method investments | (5,784) | (6,216) | (4,440) | — | — | — | (13,320) | |||||||||||||||||||
| Plus: Preferred dividends | 17,456 | 18,516 | 18,516 | 18,516 | 18,516 | 18,516 | 19,474 | |||||||||||||||||||
Plus: Core interest expense(1) | 14,160 | 11,834 | 12,387 | 11,972 | 12,234 | 12,625 | 10,393 | |||||||||||||||||||
Plus: Core tax expense(1) | (12,638) | (8,224) | (5,613) | (9,974) | (5,310) | (6,536) | 555 | |||||||||||||||||||
| Plus: Non pro-rata allocation of income (loss) to NCI | 231 | 223 | 201 | 201 | (751) | — | — | |||||||||||||||||||
| Plus: Placement fees | 2,102 | 4,767 | 40 | 823 | — | — | — | |||||||||||||||||||
| Less: Net realized carried interest, incentive fees, and other adjustments to Fee Related Earnings | (7) | (1,565) | 11 | 140 | 248 | (549) | (173) | |||||||||||||||||||
| Plus: Digital Operating installation services, transaction, investment and servicing costs | 53 | 856 | 1,423 | 1,018 | 254 | (42) | 162 | |||||||||||||||||||
| Adjusted EBITDA (DBRG OP Share) | $ | 17,622 | $ | 15,377 | $ | 12,538 | $ | (2,444) | $ | (5,519) | $ | (5,236) | $ | (14,588) | ||||||||||||
Notes:
(1) Excludes components that are included in adjustments for Core FFO.
DigitalBridge | Supplemental Financial Report | 25 | ||||||||||
| Definitions | ||
Assets Under Management (“AUM”)
Assets owned by the Company’s balance sheet and assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. Balance sheet AUM is based on the undepreciated carrying value of digital investments and the impaired carrying value of non digital investments as of the report date. Investment management AUM is based on the cost basis of managed investments as reported by each underlying vehicle as of the report date. AUM further includes uncalled capital commitments, but excludes DBRG OP’s share of non wholly-owned real estate investment management platform’s AUM. The Company's calculations of AUM may differ 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.
Contracted Revenue Growth (“Bookings”)
The Company defines Bookings as either (1) a new data center customer contract for new or additional services over and above any services already being provided as well as (2) an increase in contracted rates on the same services when a contract renews. In both instances a booking is considered to be generated when a new contract is signed with the recognition of new revenue to occur when the new contract begins billing.
Churn
The Company calculates Churn as the percentage of MRR lost during the period divided by the prior period’s MRR. Churn is intended to represent data center customer contracts which are terminated during the period and not renewed.
DigitalBridge Operating Company, LLC (“DBRG OP”)
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.
Fee-Earning Equity Under Management (“FEEUM”)
Equity for which the Company and its affiliates provides investment management services and derives management fees and/or performance allocations. FEEUM generally represents the basis used to derive fees, which may be based on invested equity, stockholders’ equity, or fair value 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.
Recurring Capital Expenditures
Represents capitalized expenditures including recurring maintenance repairs and improvements necessary to preserve the value of and maintain the functionality of the property, which are not expected to generate incremental revenue.
Non-recurring Capital Expenditures
Represents capitalized expenditures including major capital improvements for expansions, transformations and incremental improvements to the operating portfolio intended to result in increased revenues and Adjusted EBITDA at the property.
Max Critical I.T. Square Feet
Amount of total rentable square footage.
Monthly Recurring Revenue (“MRR”)
The Company defines MRR as revenue from ongoing services that is generally fixed in price and contracted for longer than 30 days.
UPB: Unpaid Principal Balance
% Utilization Rate: Amount of leased square feet divided by max critical I.T. square feet.
DigitalBridge | Supplemental Financial Report | 26 | ||||||||||
1 EARNINGS PRESENTATION 3Q 2021 N o v e m b e r 4 t h , 2 0 2 1
2 DISCLAIMER This presentation may contain forward-looking statements within the meaning of the federal securities laws, including statements related to our digital transformation. 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, the duration and severity of the current novel coronavirus (COVID-19) pandemic, and its impact on the global market, economic and environmental conditions generally and in the digital and communications technology, wellness infrastructure and hospitality real estate, other commercial real estate equity and debt, and investment management sectors; the effect of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments; whether we will successfully execute our strategic transformation to become a digital infrastructure and real estate focused company within the timeframe contemplated or at all, and the impact of such transformation on the Company's legacy portfolios and assets, including whether such transformation will be consistent with the Company’s REIT status; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the Company's ability to complete anticipated monetizations of non-core assets within the timeframe and on the terms contemplated, if at all; the impact of the completion of the sale of the Company's hospitality portfolios and whether we will realize the anticipated benefits of our exit from our hospitality business; the impact of completed or anticipated initiatives related to our digital transformation, including the strategic investment by Wafra and the formation of certain other investment management platforms, on our company's growth and earnings profile; whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital Other and Digital Operating segments; our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively; the ability to realize anticipated strategic and financial benefits from terminating the management agreement with Brightspire Capital, Inc. (NYSE:BRSP; formerly, Colony Credit Real Estate, Inc. or CLNC); the impact to our business operations and financial condition of realized or anticipated compensation and administrative savings through cost reduction programs; our ability to redeploy any proceeds received from the sale of our non-digital or other legacy assets within the timeframe and manner contemplated or at all; our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as BRSP) to execute their business strategies; BRSP's trading price and its impact on the carrying value of the Company's investment in BRSP; performance of our investments relative to our expectations and the impact on our actual return on invested equity; our ability to grow our business by raising capital for the companies that we manage; our ability to deploy capital into new investments consistent with our digital business strategies, including the earnings profile of such new investments; the impact of adverse conditions affecting a specific asset class in which we have investments; the availability of, and competition for, attractive investment opportunities; our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products; our ability to satisfy and manage our capital requirements; our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets; the general volatility of the securities markets in which we participate; stability of the capital structure of our wellness infrastructure portfolio and remaining hospitality portfolio; changes in interest rates and the market value of our assets; interest rate mismatches between our assets and any borrowings used to fund such assets; effects of hedging instruments on our assets; the impact of economic conditions on third parties on which we rely; any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims; our levels of leverage; adverse domestic or international economic conditions, including those resulting from the COVID-19 pandemic, and the impact on the commercial real estate or real-estate related sectors; the impact of legislative, regulatory and competitive changes; actions, initiatives and policies of the U.S. and non-U.S. governments and changes to U.S. or non-U.S. government policies and the execution and impact of these actions, initiatives and policies; whether we will maintain our qualification as a real estate investment trust for U.S. federal income tax purposes and our ability to do so; 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 our competition, 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, 2020 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, each 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 press release. The Company is under no duty to update any of these forward-looking statements after the date of this press release, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do so. This presentation may contain statistics and other data that has been obtained or compiled from information made available by third-party service providers. The Company has not independently verified such statistics or data. 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.
3 AGENDA 1. 3Q Highlights 2. Financial Results 3. Executing the Digital Playbook 4. Key Takeaways 5. Q&A
4 1 3Q HIGHLIGHTS
5 CORPORATE UPDATE – FINISH THE MISSION Relaunched DigitalBridge last quarter as a leading global digital infrastructure firm; with the recently announced sale of the wellness business, new management will have successfully rotated over $73B in AUM ‘from diversified to digital’ in less than three years ASSET ROTATION DigitalBridge is the Infrastructure Partner to the Digital Economy THE TRANSITION (2019-2021) Corporate Capitalization Corporate Governance $7B $1B Debt New Management New Board Digital & Diverse $73+ Billion Harvest Legacy Invest in Digital Healthcare Real Estate Industrial Real Estate Hospitality Real Estate BrightSpire Management Other Equity and Debt Legacy Invest. Management New management has led a significant transformation aligning the company with powerful secular tailwinds supporting the growth in global connectivity (1) Other Equity and Debt & Healthcare segments are currently under contract and expected to close 4Q21 and 1Q22, respectively
6 DBRG STRATEGIC ROADMAP…NOW ENTERING STAGE II Stage I The Transition (2019-2021) Stage II The Acceleration (2021-2023) Identify new platform opportunities that benefit from DBRG platform Invest in existing portfolio to build value In ve st m en t M an ag em en t D ig ita l O pe ra tin g $2B Capital D i g i t a l F i r e p o w e r PROMISES MADE – PROMISES KEPT 2021 Adjusted EBITDA $55-60M Capital Deployment Into Stable Mature Yield-focused Assets 1. Support existing Data Center platforms Vantage SDC/DataBank 2. Developed Market Cell Tower Assets 3. Develop Market Wholesale/Dark Fiber Assets Broader/Deeper Offerings Flagship With the transition complete, DBRG is set to ‘play offense’, focused on driving continued growth in Digital IM platform through new offerings and The Acceleration of Digital Operating earnings from balance sheet redeployment into digital Deploy Balance Sheet Capital 2023 Adjusted EBITDA $175-225M 2021 FRE $95-100M 2023 FRE $110-140M Grow FEEUM via new offerings Healthcare Real Estate Industrial Real Estate Hospitality Real Estate BrightSpire Management Other Equity and Debt Legacy Invest. Management (1) Other Equity and Debt & Healthcare segments are currently under contract and expected to close 4Q21 and 1Q22, respectively
7 CAPITAL FORMATION UPDATE… DCP II RAISES HARD CAP DigitalBridge is the partner of choice to institutional investors looking to build exposure to resilient, growing digital infrastructure asset class DCP I DCP II Fund Total Commitments $4.1B $8.1B 20212019 LARGEST DEDICATED DIGITAL INFRASTRUCTURE INVESTMENT PLATFORM ~2x Original Target: $6.0B Raised: $8.1B Updated Hard Cap: $8.6B Committed: 50%+ Regions: Americas, Europe, Asia Target $6.0B CU RR EN T CO M M IT M EN TS Strong participation from existing DCP I investors and industry- leading new logos; 4 of the 5 largest global infra investors are LPs Extended hard cap to $8.6B to meet investor interest; fundraising on track to be completed by end of 2021 Over $4.5 billion committed across 8 new platform investments in the Americas, Europe & Asia +$1.5B of new commitments since last quarter report Exceeds original $6.0 billion target by 35% ~2x the size of DCP I; raised in less than 2 years Drives total FEEUM past YE2021 target of $17B DCP II Commitments Reached $8.1 Billion $8.6B Updated Cap
8 CAPITAL FORMATION UPDATE…PROGRESS DRIVES GUIDANCE HIGHER Excellent fundraising momentum from DCP II and co-invest drive total FEEUM past YE 2021 target of $17B Note: Individual components of graph are not to scale (1) Includes ~$1.2B raised subsequent to 9/30/21 •Former the original base for growth $8.1B passed ($6B) 2019 2021 Digital Bridge Holdings (DBH) DCP II Q2 Co-Invest Q3 DCP I $17.2B+(1) 1Q AHEAD OF SCHEDULE $17B 2021 Y/E TARGET RECENT CO-INVEST CONTRIBUTION Key DBRG Benefits Boosts our firepower Generates incremental fee and carry Largest private Tower Operator In the U.S., 8,000+ Macros, 330K leasing sites Largest private Hyperscale Data Center Platform operating in Brazil, Chile and Mexico As the ‘partner of choice’ to institutional capital one of our important commitments to investors is access to unique co-invest opportunities Increasing Digital IM earnings guidance by 5% Credit Liquid NEW STRATEGIES EARNINGS GUIDANCE INCREASE IM F EE UM Co-Invest Programs Higher FEEUM Higher Revenue Higher Earnings Digital IM Algorithm Top largest independent tower operator in Brazil, 1,300 + sites nationwide
9 CAPITAL FORMATION UPDATE…EXTEND OUR SECTOR LEADERSHIP A Focus on New and Emerging Strategies Private Credit Experienced, 7-person team in place Deployed ~$120M of capital from balance sheet to seed investments that will be contributed to fund/credit products Focus on capital formation in 2022 Liquid Strategies $600M+ in FEEUM across two strategies, long-only and hedged Significant additional capacity Exploring logical extensions ‘in either direction’ Core – opportunity in longer-duration, strategic assets Ventures – leverage our ecosystem as networks are increasing software-defined WE WILL LAY OUT OUR VISION AND NEW GOALS NEXT QUARTER AS WE CONTINUE TO EXTEND OUR FRANCHISE FLAGSHIP DCP I/DCP II Liquid Core/ StrategicCredit Co-Invest Ventures Future Offerings…TBD As digital infrastructure emerges as its own asset class, the DBRG investible universe is getting bigger. As the pioneer and dedicated specialist in our sector, DigitalBridge is poised to create new offerings Broader/Deeper Offerings …Extend the Base 3Q PF FEEUM $17.2B +34% YTD SCALING THE LEADING DIGITAL INVESTMENT MANAGEMENT PLATFORM
10 Our investor-operator model allows us to quickly transform and scale DBRG portfolio companies. During 3Q we continued to grow our digital asset base, reaching over $40B in assets with several key bolt-on acquisitions. PORTFOLIO ACTIVITY UPDATE…CONTINUING TO SCALE OUR PLATFORMS $21B AUM & $8B FEEUM in 1Q20 grows to $40B AUM & $17B FEEUM DigitalBridge and Columbia Capital to acquire fiber assets in Singapore and Hong Kong from Superloop DigitalBridge announced expansion of Vantage SDC Platform with the acquisition of CA22 DigitalBridge IM, announced acquisition of controlling stake in Vertical Bridge, largest private tower operator in U.S., 8,000+ macros Vantage Data Centers Expands Into Asia, with acquisitions of Agile Data Centers and PCCW data centers, bringing assets in Tokyo, Osaka, Melbourne, Hong Kong and Kuala Lumpur Asia Pacific hyperscale platform DBRG acquired leading Hong Kong-based data center business with significant expansion capacity AtlasEdge Increases to 100+ sites with Acquisition of twelve Colocation Sites from Colt Data Centre Services DBRG launched tower platform in Southeast Asia - EdgePoint June 2021 EdgePoint reaches a 10,000+ site portfolio across Indonesia and Malaysia DBRG and Liberty Global launch JV to develop edge data center platform in Europe, Atlas Edge INVESTMENT MANAGEMENT – (DCP II) DIGITAL OPERATING September 2021 August 2021 June 2021 October 2021 June 2021 September 2021 October 2021 September 2021D A T A C E N T E R S
11 CORPORATE ACTIVITY UPDATE Wellness Infrastructure Sale – Overview In Sep 2021, DBRG reached an agreement to sell final legacy business, Wellness Infrastructure, for $3.2 billion Transaction will generate net value of $316 million to DBRG and transfer $294 million of subsidiary-level debt, generating total value in line with DBRG carrying values When transaction closes in 1Q22, the rotation ‘from diversified to digital’ will be complete and $2.4 billion of ‘at-share’ investment-level debt goes away Wellness Sale to Significantly Decrease Debt TOTAL DEBT (DBRG Share) Vantage SDC Acquisition – CA22 In September 2021, Vantage SDC closed on the acquisition of CA22, a 24MW hyperscale data center adjacent to SDC’s fully owned CA21 $539M transaction value, funded through existing and new Vantage SDC debt facilities and cash-on-hand Extends Vantage SDC’s footprint to 13 stabilized hyperscale data centers across North America and expands capacity by 14% to 177MW Existing Vantage SDC 6/30/20 Hotel Sale Other Equity & Debt Sale Wellness Infra Sale Digital Op & Securitization 9/30/21 PF Acquired (1) 6/30/20 Total Debt shown net of temporary revolver draw of $400M (1)
12 2 FINANCIAL RESULTS
13 SUMMARY FINANCIAL OVERVIEW NOTE: All $ in millions except per share & AUM DigitalBridge revenue and earnings growth in core digital segments has been rapid over the past two years driven by: Strong capital formation momentum in Digital IM Growth in Digital Operating driven by new acquisitions and organic growth Beginning in 3Q21, DBRG is introducing AFFO as a key measure: During 3Q21, AFFO was $0.7M net of maintenance capital expenditures of $1.3M, which was above our anticipated normalized spend expected to average less than 3% of Monthly Recurring Revenue (“MRR”) TOTAL COMPANY 3Q20 2Q21 3Q21 Y/Y% Consolidated Revenues $123.0 $237.2 $252.2 +105% DBRG OP Share of Revenues $33.6 $66.7 $73.6 +119% Adjusted EBITDA (DBRG OP Share) $(5.5) $15.4 $17.6 N/M CFFO ($30.7) ($4.8) $2.0 N/M Per Share ($0.06) ($0.01) $0.00 N/M Net Income (DBRG Shareholder) ($205.8) ($141.3) $41.0 N/M Per Share ($0.44) ($0.29) $0.08 N/M Digital AUM ($B) $23.3 $34.9 $37.8 +63% Consolidated Revenues $20.4 $46.9 $53.8 +164% DBRG OP Share of Revenues $14.1 $33.4 $37.0 +163% DBRG OP Share of FRE $6.3 $17.4 $20.7 +229% Consolidated Revenues $98.5 $189.1 $195.0 +98% DBRG OP Share of Revenues $15.6 $32.6 $33.8 +116% DBRG OP Share of Adjusted EBITDA $6.9 $13.8 $13.6 +97% DIGITAL OPERATING DIGITAL INVESTMENT MANAGEMENT (IM)
14 $9 $26 $20 $46 $82 $84 $54 $108 $115 3Q20 2Q21 3Q21 Digital IM - Run Rate Digital OperatingDigital IM - 1x Items $20 $39 $42 $99 $189 $200 $119 $236 $254 3Q20 2Q21 3Q21 Digital IM - Run Rate Digital OperatingDigital IM - 1x Items DIGITAL EARNINGS SUMMARY Consolidated Digital FRE / Adjusted EBITDA(1)Consolidated Digital Revenues(1) (1) Includes Digital Operating and Digital Investment Management segments. Excludes Corporate and Other segment. (2) 3Q21 Digital Operating results pro-forma for Vantage’s CA22 acquisition, which closed at the end of September 2021. Digital IM includes $11.7M and $8.1M in 3Q21 and 2Q21, respectively, of catch-up fees earned during 2Q21, which are customary fees paid on newly raised 3rd party capital as if it were raised on the first closing date. ($ in millions) ($ in millions) Y/Y 69% 69% 69% 16% 17% 17% DBRG % Digital IM Digital Operating 69% 69% 69% 15% 16% 16% Core Digital Revenues increased to $249M in 3Q21, driven by new fees raised by DCP II and higher installation revenues, and is pro-forma $254M for Vantage’s CA-22 acquisition Consolidated Digital FRE / Adjusted EBITDA increased to $112M during 3Q21, also led by new DCP II fees, and is pro-forma $115M for Vantage’s CA-22 acquisition Y/Y 2 2 $18 $31$47 $54
15 $76M $79M $85M $100M $124M $137M $155M $40M $38M $40M $41M $62M $70M $79M 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Annualized Revenue Annualized FRE $36M $34M $62M $84M $131M $131M $138M $13M $13M $28M $39M $56M $55M $56M 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Annualized Revenue Annualized EBITDA STABILIZED GROWTH Digital IM and Digital Operating divisions have continued to grow consistently with ‘lower left to upper right trajectory’ Driven primarily by strong fundraising in the DCP and Co-Investment vehicles, annualized revenue in the IM segment has grown consistently since 1Q20 Continued strong bookings and low churn offset by unfavorable power margin due to unusual short term weather conditions. CONSOLIDATED INCLUDES 31.5% MINORITY INTEREST EXCLUDES 1X ITEMS DBRG SHARE 100% ATTRIBUTABLE TO DBRG Investment Management Digital Operating 1 (1) 3Q21 Digital Operating results includes annualized impact of CA22 acquisition, completed in September 2021
16 $140M $500M $600M $60M $225M $275M $54M $130M $400M $500M $23M $55M $175M $225M 2020 2021E 2023E 2025E $170M $230M $300M $100M $140M $200M $84M $165M $180M $240M $33M $95M $110M $140M 2020 2021E 2023E 2025E Digital IM revenue and Fee Related Earnings (FRE) projected to continue growth as DBRG expands the magnitude and scope of its investment products – Full Stack Digital Infra Manager Significant growth to 2023 targets achieved through Re-deployment of $1.5B capital from legacy monetizations Organic growth and bolt-on acquisitions at existing platforms Digital Operating Revenue (1) CAGR growth calculated based on mid-point estimates on FRE and Operating EBITDA Digital IM Fee Revenue Digital IM FRE Digital Operating Adj. EBITDA TWO EARNINGS STREAMS GENERATING STRONG GROWTH Digital Investment Management Digital Operating RA N G E RA N G E RA N GE RA N GE RA N GE RA N GE RA N G E RA N G E 13% CAGR(1) +2x YoY 15% CAGR (1) +1.5x YoY 87% CAGR (1) 44% CAGR (1) CONSOLIDATED INCLUDES 31.5% MINORITY INTEREST DBRG SHARE 100% ATTRIBUTABLE TO DBRG
17 Databank: In October, Databank completed its 2nd securitization of 2021, issuing $332M primarily A- notes at an all-in rate of 2.43% Brings Databank’s weighted average interest rate to ~2.4% Vantage: In November, Vantage priced $530M of 5-year class A securitized notes at an all-in rate of 2.17% Transaction completed at Vantage’s tightest ever spread, reflecting the markets growing appetite for Hyperscale Data Center ABS issuances Brings Vantage’s weighted average interest rate to ~2.5% STRATEGIC PRIORITY - LOWERING OUR COST OF CAPITAL CORPORATE Preferred Stock: During 3Q, DBRG redeemed $150M high-cost preferred stock, with avg coupon of 7.3% Funded by cash from new securitized notes with 3.9% coupon, net savings of over 340 bps. Generates annual net cash savings of over $5M Exchangeable Notes: DBRG recently conducted an early exchange of ~$44M of its 2025 5.75% convertible notes Exchange saves ~$2.5M of cash interest annually and represents savings to future cash payments relative to original terms Basis Net Annual Savings Preferred Stock $150M $5.1M Exchangeable Notes $44M $2.5M Total $194M $7.6M WE ARE JUST GETTING STARTED (1) Net savings on $150M of preferred equity redemptions against the cost of term securitization notes (1) INVESTMENT-LEVEL Size $332 million $530 million Rating Primarily A- A- Rate / Tenor 2.43% / 5 years 2.17% / 5 years Issuance October 2021 November 2021 Successful rotation to digital has enabled the conditions for DBRG management to advance a key strategic priority…lowering our cost of capital. We are progressing initiatives to advance this important, tangible objective
18 3 EXECUTING THE DIGITAL PLAYBOOK
19 Global and regional hyperscale, cloud, and enterprises increasingly need a partner with a Pan-European Footprint 0 1 2 3 4 5 2.5 billion GSMA ME Europe 2021 4.3 billion CONNECTED DEVICE GROWTH 2020 2025 0 2 4 6 8 10 12 14 16 18 TRAFFIC GROWTH (Exabytes per month) 4x GROWTH 2019 2020 2025 THE EUROPEAN EDGE OPPORTUNITY With European mobile data traffic projected to grow 4x over the next 5 years and new emerging use cases that favor or require localized, ultra-low latency digital infrastructure, AtlasEdge is poised to capture growth in the edge market NEXT WAVE OF CONNECTIVITY Latency sensitive apps push data and compute closer to the end user 1.7x GROWTH Extending the cloud from the Core to the Edge
20 BACKGROUND PAN EUROPEAN FOOTPRINT New edge infrastructure platform built to serve the growing demand from cloud providers, streaming services and enterprises for high-performance, scalable and secure edge facilities AtlasEdge’s highly inter-connected, scaled data center infrastructure can distribute low- latency applications and services such as 5G, gaming, IOT and edge compute. AtlasEdge is already the leading European edge data center provider with over 100+ owned facilities and a significant growth and consolidation opportunity ahead In May, DigitalBridge partnered with Liberty Global to launch AtlasEdge, a new European edge infrastructure platform. Less than 6 months later, DBRG’s ability to rapidly transform and scale our portfolio companies is already on display ATLASEDGE – EUROPE’S NEXT-GEN EDGE PLATFORM Extensive footprint with unique access to 11 European countries, broadly covering Western Europe with a low latency network The DBRG business building skills are already in full effect, helping AtlasEdge scale rapidly Key Partnerships Key Management Key Acquisitions First Strategic Acquisition Coverage Area
21 KEY PARTNERSHIPS – DBRG STRATEGIC DEVELOPMENT AT WORK DigitalBridge’s deep network of industry relationships allowed DBRG to source, develop and execute this proprietary strategy on a rapid time scale, effectively ‘standing up’ AtlasEdge in less than six months May 2021 - Long standing relationship with Liberty Global formed basis for founding partnership to launch innovative business Oct 2021 - Digital Realty selected AtlasEdge as its preferred European edge provider and made a strategic minority investment Oct 2021 - Zayo, a DBRG portfolio company, collaborating to connect its extensive fiber network with AtlasEdge facilities Joint Venture Partnership Connectivity Partnerships Carrier Partnerships…(TBA) Extend reach into new geographies Unlock value embedded in carrier technical real estate portfolios (akin to Liberty) AtlasEdge delivers neutral host, interconnected, scalable, high-speed, standardized edge compute services Partner with leading digital infrastructure companies Preferred European Edge Partner Create seamless, integrated connectivity solutions Unlocks growth potential of Liberty’s digital real estate holdings Liberty provides anchor tenancy to JV and contributes significant operational expertise Realign resources to most efficient framework…‘highest and best use’
22 KEY MANAGEMENT - BUILDING A LEADING TEAM IN PARTNERSHIP WITH LIBERTY GLOBAL Josh Joshi, a DigitalBridge operating partner and former CFO of Interxion prior to its sale to Digital Realty for $8 billion, serves as AtlasEdge’s Executive Chairman and has quickly built out a top-notch team with 100+ years of combined experience. DigitalBridge was also integral to the recruitment of CEO, Guiliano Di Vitanonio, a noted data industry leader. Giuliano Di Vitantonio CEO 25+ years of industry experience Prior EVP Strategy & Business Digital Realty 20+ years of industry experience Ex-CFO of various Divisions and Businesses of Liberty Global Ron Huisman CFO Zahl Limbuwala COO 20+ years of industry experience Former Exec Director Strategy at CBRE Mark Sokol CTO 20+ years of industry experience Former Senior Director at Google Founded 3 startup ventures Advisor Group Charlie Bracken Board Member Enrique Rodriguez Board Member Jon Mauck Board Member Mike Foust Senior Advisor at DBRG Sureel Choksi Senior Advisor at DBRG Raul Martynek Senior Advisor at DBRG EVP and CFO of Liberty Global EVP and CTO of Liberty Global Senior Managing Director, DBRG Chairman of Databank and Vantage. Founder and former CEO of Digital Realty Board Member of Zayo and Scala; President and CEO of Vantage CEO of DataBank Dan Thomas SVP Global Sales 10+ years of industry experience Former Senior Director at Interxion Josh Joshi Executive Chairman 25+ years of industry experience DBRG Operating Partner Former CFO of Interxion AtlasEdge Management Team
23 KEY ACQUISITIONS – COLT EUROPEAN DATA CENTRES DigitalBridge spearheaded AtlasEdge’s first strategic M&A deal, acquiring an attractive multi-country portfolio of 12 data centers across 11 markets in Europe, strengthening AtlasEdge’s unique portfolio of distributed data centres that are positioned to support localised or low latency applications DBRG is a trusted operating partner with an established track record and industry knowhow 12 data centers spanning 11 European markets in 9 countries Chosen as the partner to manage facilities hosting Colt’s mission critical infrastructure Colt DCS serves as anchor tenant across multiple facilities Stable contracted recurring revenue underpinned by long- term customer relationships Large existing customer base of national and international customers Carrier neutral facilities with access to over 50 on-net carriers driving diversified customer demand Berlin Copenhagen Zurich Milan Brussels Hamburg London Paris Amsterdam Mission Critical Infrastructure Stable, Recurring Revenue Profile Diversified and Attractive Customer Base Barcelona Madrid
24 ATLASEDGE – AN ARCHETYPAL DBRG INVESTMENT AtlasEdge investment aligns with key DigitalBridge thematics, leveraging all aspects of our differentiated business-building strategy DigitalBridge Strategy Alignment with secular tailwinds Deploy capital into growing market verticals that naturally support/boost progress Leverage Industry Relationships Proprietary deals and operating expertise spring from a deep network of industry relationships Building Next-Gen Networks Relentless focus on evolution of networks and building future-ready/proof infrastructure Follow The Logos A core DBRG mantra...stay close to customers, listen, and deliver Tap the DBRG Value-Add Playbook Built from experience…Strategic Development & Finance, Management Augmentation, M&A Execution Growth at the Edge – ‘The Edge’ is where ‘The Cloud’ was 10 years ago, an overused, misunderstood term. 10 years later, ‘The Cloud’ is very real and investors that prudently allocate to ‘The Edge’ now will benefit from a rising tide Looking ahead 5 years – AtlasEdge is building a highly-interconnected, scalable and agile network capable of meeting the low-latency, high-throughput demands of emerging mobile/ internet uses cases Follow the Data – Conversations with key DBRG customer relationships shaped the AtlasEdge strategy…as data traffic grows and gravitates to the edge of the network, AtlasEdge’s ability to efficiently distribute data is increasingly relevant Entire playbook in use – Within the first 6 months, DigitalBridge has been active in advancing the strategic development of the organization, supporting the buildout of the management team and executing AtlasEdge’s first substantial M&A deal. Partnerships at the Core – DigitalBridge, Liberty Global, and senior mgmt. are leveraging their deep network of industry relationships to develop and execute this proprietary strategy, which is very-much built around partnerships AtlasEdge Alignment
25 4 3Q 2021 KEY TAKEAWAYS
26 KEY TAKEAWAYS – 3Q 2021 CEO 3Q Checklist Secular Tailwinds Around Connectivity – Big Growing TAM The Leading Management Team 25+ years Investing and Operating Digital Assets Converged Vision with Exposure to Entire Digital Ecosystem Finish The Mission (Rotation To Digital) 100% pro forma rotated, ahead of plan • Enhanced Corporate Capitalization • Digital Board • Exceptional focused leadership DBRG is the ‘Partner of Choice’ to institutional capital in the sector DCPII exceeded original target hitting $8.1B Exceeded 2021 Target FEEUM, raising guidance Invest In High Quality Digital DCP II with 8 platform investments already, building actively on a global basis Rapidly transforming and scaling our portfolio companies Fast-growing Digital Infrastructure Platform Highly experienced management building the next great digital infra platform
27 UNVEILING A NEW SIMPLER DBRG DigitalBridge is releasing its 2021 Corporate Overview The dominant player in a secular growth sector managed by the leading management team in the space Unique DigitalBridge architecture gives investors diversified exposure to the Digital Investment Cycle from ‘business-building’ expertise in the Digital IM platform to stable, mature assets in Digital Operating…both generate growing, predictable earnings Published 2021 Corporate Overview Outlines our Differentiated Approach How more structural 'at bats' allows us to build deeper relationships with customers that leads to proprietary deals and a 'solutions vs. components' Highlights the firm’s two high-growth revenue and earnings streams and simple digital algorithms to facilitate analysis
28 5 Q&A SESSION
29 NON-GAAP RECONCILIATIONS ($ in thousands) 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Digi tal IM net income ( loss ) $ 39,272 $ 15,786 $ 7,663 $ 2,702 $ 3,539 $ 2,424 $ 2,529 Adjustments: Interest income 2,250 - (1) (1) (2) - (30) Investment and servicing expense - - 32 204 - - - Depreciation and amortization 8,242 6,298 8,912 6,421 10,259 6,605 6,603 Compensation expense—equity-based 4,673 1,837 1,533 655 189 682 589 Compensation expense—carried interest and incentive 31,736 8,266 (33) 994 912 - Administrative expenses—straight-line rent 74 50 (2) (1) 14 16 16 Administrative expenses—placement agent fee 3,069 6,959 59 1,202 - - - Incentive/performance fee income (1,313) (4,489) - - - - - Equity method (earnings) losses (59,196) (11,203) 195 (6,744) (6,134) (277) (3) Other (gain) loss, net (461) (119) (165) (102) (32) 8 (47) Income tax (benefit) expense 3,089 2,236 7 (757) 144 (151) 393 Digi tal IM FRE / Adjus ted EBITDA $ 31,435 $ 25,621 $ 18,200 $ 4,573 $ 8,889 $ 9,307 $ 10,050 DBRG OP share of Digi tal IM FRE / Adjus ted EBITDA $ 20,736 $ 17,449 $ 11,645 $ 2,051 $ 6,306 $ 9,307 $ 10,050 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Digi tal Operat ing n et income ( loss ) f rom con t inu ing operat ions (71,822) (10,850) (64,260) (53,591) (38,795) (21,262) (18,415) Adjustments: Interest expense 29,839 29,272 31,133 41,815 18,589 8,170 9,402 Income tax (benefit) expense 1,922 (66,788) (12,268) (6,967) (6,091) (2,673) (5,730) Depreciation and amortization 120,458 126,227 122,220 78,554 73,032 28,571 30,031 EBITDAre: $ 80,397 $ 77,861 $ 76,825 $ 59,811 $ 46,735 $ 12,806 $ 15,288 Straight-line rent expenses and amortization of above- and below-market lease intangibles 482 (98) (399) (2,607) (2,106) 1,837 (338) Compensation expense—equity-based 308 308 308 728 148 296 - Installation services (4,058) 576 880 429 (65) 493 289 Transaction, restructuring & integration costs 4,042 2,999 4,670 1,155 420 1,021 748 Other gain/loss, net (285) 349 - 200 46 - - D igi tal Operat ing Adjus ted EBITDA $ 80,886 $ 81,995 $ 82,284 $ 59,716 $ 45,178 $ 16,453 $ 15,987 DBRG OP share of Digi tal Operat ing Adjus ted EBITDA $ 13,637 $ 13,776 $ 13,948 $ 9,620 $ 6,914 $ 3,294 $ 3,200
30 NON-GAAP RECONCILIATIONS ($ in thousands) 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Net income (loss) attributable to common stockholders $ 41,036 $ (141,260) $ (264,806) $ (140,575) $ (205,784) $ (2,042,790) $ (361,633) Net income (loss) attributable to noncontrolling common interests in Operating Company 4,311 (14,980) (27,896) (15,411) (22,651) (225,057) (39,601) Net income ( loss) attributable to common interests in Operating Company and 45,347 (156,240) (292,702) (155,986) (228,435) (2 ,267,847) (401,234) Adjustments for FFO: Real estate depreciation and amortization 126,494 150,458 184,762 136,245 162,705 131,722 130,523 Impairment of real estate (8,210) 242,903 106,077 31,365 142,767 1,474,262 308,268 Gain from sales of real estate (514) (2,969) (38,102) (26,566) (12,332) 4,919 (7,933) Less: Adjustments attributable to noncontrolling interests in investment entities (95,512) (162,021) (188,496) (79,874) (146,905) (329,601) (82,329) FFO $ 67,605 $ 72,131 $ (228,461) $ (94,816) $ (82,200) $ (986,545) $ (52,705) Additional adjustments for Core FFO: Adjustment to BRSP cash dividend 9,478 (40,165) 55,648 (22,999) (18,207) 328,222 (86,213) Equity-based compensation expense 9,038 11,642 19,299 8,288 7,879 10,152 8,732 Straight-line rent revenue and expense (1,925) (2,309) 17,225 (6,403) (6,281) (5,240) (2,025) Amortization of acquired above- and below-market lease values, net (172) (1,498) 6,005 (1,229) (1,440) (531) (3,519) Debt prepayment penalties and amortization of deferred financing costs and debt premiums and 7,651 10,196 45,627 25,034 4,296 10,080 15,049 Non-real estate fixed asset depreciation, amortization and impairment 13,616 19,996 20,563 4,885 12,754 13,390 13,253 Restructuring and transaction-related charges 19,501 5,174 34,482 21,887 13,044 8,864 15,568 Non-real estate (gains) losses, excluding realized gains or losses within the Digital Other segment 11,319 (151,773) 267,812 193,948 84,995 740,038 85,124 Net unrealized carried interest (27,953) (6,485) 189 (5,734) (5,170) 801 9,230 Preferred share redemption (gain) loss 2,865 - - - - - - Deferred taxes and tax effect on certain of the foregoing adjustments 1,663 (42,536) (17,657) (8,764) (7,917) (3,092) (6,062) Less: Adjustments attributable to noncontrolling interests in investment entities 12,438 146,687 (218,328) (143,262) (38,042) (182,607) 3,017 Less: Core FFO from discontinued operations (123,075) (25,874) (12,391) 4,025 5,579 37,218 (31,128) Core FFO $ 2 ,049 $ (4 ,814) $ (9 ,987) $ (25,140) $ (30,710) $ (29,250) $ (31,679) ($ in thousands) 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Core FFO $ 2,049 $ (4,814) $ (9,987) $ (25,140) $ (30,710) $ (29,250) $ (31,679) Less: Earnings of equity method investments (5,784) (6,216) (4,440) - - - (13,320) Plus: Preferred dividends 17,456 18,516 18,516 18,516 18,516 18,516 19,474 Plus: Core interest expense 14,160 11,834 12,387 11,972 12,234 12,625 10,393 Plus: Core tax expense (12,638) (8,224) (5,613) (9,974) (5,310) (6,536) 555 Plus: Non pro-rata allocation of income (loss) to NCI 231 223 201 201 (751) - - Plus: Placement fees 2,102 4,767 40 823 - - - Less: Net realized carried interest, incentive fees, and other adjustments to Fee Related Earnings (7) (1,565) 11 140 248 (549) (173) Plus: Digital Operating installation services, transaction, investment and servicing costs 53 856 1,423 1,018 254 (42) 162 Adjusted EBITDA (DBRG OP Share) $ 17,622 $ 15,377 $ 12,538 $ (2 ,444) $ (5 ,519) $ (5 ,236) $ (14,588)
31 IMPORTANT NOTE REGARDING NON-GAAP FINANCIAL MEASURES This presentation includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles, or GAAP, including the financial metrics defined below, of which the calculations may from methodologies utilized by other REITs for similar performance measurements, and accordingly, may not be comparable to those of other REITs. Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): The Company calculates Adjusted EBITDA by adjusting Core FFO to exclude cash interest expense, preferred dividends, tax expense or benefit, earnings from equity method investments, placement fees, realized carried interest and incentive fees and revenues and corresponding costs related to installation services. The Company uses Adjusted EBITDA as a supplemental measure of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. However, because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited. FFO, Core FFO and AFFO: The Company calculates funds from operations (FFO) in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, which defines FFO as net income or loss calculated in accordance with GAAP, excluding (i) extraordinary items, as defined by GAAP; (ii) gains and losses from sales of depreciable real estate; (iii) impairment write-downs associated with depreciable real estate; (iv) gains and losses from a change in control in connection with interests in depreciable real estate or in-substance real estate, plus (v) real estate-related depreciation and amortization; and (vi) including similar adjustments for equity method investments. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity method investments, as well as equity and debt securities, as applicable. The Company computes core funds from operations (Core FFO) by adjusting FFO for the following items, including the Company’s share of these items recognized by its unconsolidated partnerships and joint ventures: (i) equity-based compensation expense; (ii) effects of straight-line rent revenue and expense; (iii) amortization of acquired above- and below-market lease values; (iv) debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts; (v) non-real estate depreciation, amortization and impairment; (vi) restructuring and transaction-related charges; (vii) non-real estate loss (gain), fair value loss (gain) on interest rate and foreign currency hedges, and foreign currency remeasurements except realized gain and loss from the Digital Other segment; (viii) net unrealized carried interest; and (ix) tax effect on certain of the foregoing adjustments. The Company’s Core FFO from its interest in BrightSpire Capital, Inc. (NYSE: BRSP) represented the cash dividends declared in the reported period. The Company excluded results from discontinued operations in its calculation of Core FFO and applied this exclusion to prior periods. The Company computes adjusted funds from operations (AFFO) by adjusting Core FFO for recurring capital expenditures necessary to maintain the operating performance of its properties. The Company uses FFO, Core FFO and AFFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs, and such a measure is useful to investors as it excludes periodic gains and losses from sales of investments that are not representative of its ongoing operations and assesses the Company's ability to meet distribution requirements. The Company also believes that, as widely recognized measures of the performance of REITs, FFO, Core FFO and AFFO will be used by investors as a basis to compare its operating performance and ability to meet distribution requirements with that of other REITs. However, because FFO, Core FFO and AFFO exclude depreciation and amortization and does not capture changes in the value of the Company’s properties that resulted from use or market conditions, which has real economic effect and could materially impact the Company’s results from operations, the utility of FFO, Core FFO and AFFO as measures of the Company’s performance is limited. FFO, Core FFO and AFFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO, Core FFO and AFFO should be considered only as supplements to GAAP net income as measures of the Company’s performance and to cash flow from operating activities computed in accordance with GAAP. Additionally, Core FFO and AFFO excludes the impact of certain fair value fluctuations, which, if they were to be realized, could have a material impact on the Company’s operating performance. Digital Operating Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDA: The Company calculates EBITDAre in accordance with the standards established by the National Association of Real Estate Investment Trusts, which defines EBITDAre as net income or loss calculated in accordance with GAAP, excluding interest, taxes, depreciation and amortization, gains or losses from the sale of depreciated property, and impairment of depreciated property. The Company calculates Adjusted EBITDA by adjusting EBITDAre for the effects of straight-line rental income/expense adjustments and amortization of acquired above- and below-market lease adjustments to rental income, revenues and corresponding costs related to the delivery of installation services, equity-based compensation expense, restructuring and transaction related costs, the impact of other impairment charges, gains or losses from sales of undepreciated land, gains or losses from foreign currency remeasurements, and gains or losses on early extinguishment of debt and hedging instruments. The Company uses EBITDAre and Adjusted EBITDA as supplemental measures of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. EBITDAre represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which we believe is particularly helpful for generalist investors in REITs. EBITDAre depicts the operating performance of a real estate business independent of its capital structure, leverage and noncash items, which allows for comparability across real estate entities with different capital structure, tax rates and depreciation or amortization policies. Additionally, exclusion of gains on disposition and impairment of depreciated real estate, similar to FFO, also provides a reflection of ongoing operating performance and allows for period-over-period comparability. However, because EBITDAre and Adjusted EBITDA are calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited. Digital Investment Management Fee Related Earnings (FRE): The Company calculates FRE for its investment management business within the digital segment as base management fees, other service fee income, and other income inclusive of cost reimbursements, less compensation expense excluding equity- based compensation, carried interest and incentive compensation, administrative expenses (excluding fund raising placement agent fee expenses), and other operating expenses related to the investment management business. The Company uses FRE as a supplemental performance measure as it may provide additional insight into the profitability of the overall digital investment management business. Assets Under Management (“AUM”): Assets owned by the Company’s balance sheet and assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. Balance sheet AUM is based on the undepreciated carrying value of digital investments and the impaired carrying value of non digital investments as of the report date. Investment management AUM is based on the cost basis of managed investments as reported by each underlying vehicle as of the report date. AUM further includes uncalled capital commitments, but excludes DBRG OP’s share of non wholly-owned real estate investment management platform’s AUM. The Company's calculations of AUM may differ 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. DigitalBridge Operating Company, LLC (“DBRG OP”): 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. Fee-Earning Equity Under Management (“FEEUM”): Equity for which the Company and its affiliates provides investment management services and derives management fees and/or performance allocations. FEEUM generally represents the basis used to derive fees, which may be based on invested equity, stockholders’ equity, or fair value 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. Monthly Recurring Revenue (“MRR”): The Company defines MRR as revenue from ongoing services that is generally fixed in price and contracted for longer than 30 days.. This presentation includes forward-looking guidance for certain non-GAAP financial measures, of guidance for Adjusted EBITDA or FRE to the most directly comparable GAAP measure because the Company is not able to predict with reasonable certainty the amount or nature of all items that including Adjusted EBITDA and FRE. These measures will differ from net income, determined in accordance with GAAP, in ways similar to those described in the reconciliations at the end of this presentation. We do not provide guidance for net income, determined in accordance with GAAP, or a reconciliation will be included in net income. In evaluating the information presented throughout this presentation see definitions and reconciliations of non-GAAP financial measures to GAAP measures. For purposes of comparability, historical data in this presentation may include certain adjustments from prior reported data at the historical period.
32
1 DIGITALBRIDGE CORPORATE OVERVIEW N o v e m b e r 2 0 2 1
2 DigitalBridge (NYSE: DBRG) is the only global-scale digital infrastructure firm investing across five key verticals: data centers, cell towers, fiber networks, small cells, and edge infrastructure A LEADING GLOBAL DIGITAL INFRASTRUCTURE FIRM 25+ years of experience - Largest Digital Infrastructure Investment Team Converged Next Gen Networks - Built for Speed and Performance High Growth - Revenue and Earnings Profile Aligned With Secular Tailwinds (1) As of 9/30/21 Towers Small Cells Fiber Data Centers Edge Infrastructure Hyper- Converged Digital Infrastructure Investing Across the Digital Ecosystem 100 Digital Assets Under Management1 23 Digital Portfolio Companies $40B Digital Infrastructure Professionals A unique investment strategy gives investors exposure to a portfolio of growing, resilient businesses enabling the next generation of mobile and internet connectivity DATA CENTERS Play a vital role in computing, storing, and managing information FIBER NETWORKS The ultra-fast connective tissue binding networks together TOWERS Enable mobility and provide critical network coverage EDGE INFRASTRUCTURE Emerging connectivity demands at the edge of networks SMALL CELL NETWORKS Network densification and capacity in high demand areas DigitalBridge is the Infrastructure Partner to the Digital Economy
3 TABLE OF CONTENTS Build the Next Great Digital Infrastructure Platform ONE OPPORTUNITY ONE MISSION Digital Infrastructure THE OVERVIEWSE CT IO N 1 THE FINANCIALSSE CT IO N 2 THE DETAILSSE CT IO N 3 Digital Investment Management Digital Operating TWO DIVISIONS Simple, High-Growth Business Digital Infrastructure Experts Powerful Secular Tailwinds THREE REASONS TO OWN
4 ONE OPPORTUNITY Digital Infrastructure
5 Coverage Ultra-reliability and low-latency User-To-User / Machine-To-Machine 2G 3G 4G Future Siloed Towers Data Centers Small CellsFiber Secular Tailwinds Traditional Approach “Old Infra” DBRG is Building Next-Gen Networks to Serve an Increasingly Converged Digital Ecosystem As the leading digital infrastructure investor-operator, DigitalBridge is levered to the powerful thematics driving significant investments in mobile and internet connectivity on a global basis Internet of Things (IoT) >500 billion connected devices by 2030 Artificial Intelligence Hyper-automation powered by AI Towers Small Cells Fiber Data Centers Edge Infrastructure Hyper-Converged Digital Infrastructure 5G - Mobile Capex ~$1.1T worldwide (2020-2025) Digital Transformation - Cloud $1.3T on global data center Capex On Demand and Fully-Scalable Demand for More, Better, Faster Connectivity ONE OPPORTUNITYMASSIVE GLOBAL DEMAND FOR CONNECTIVITY
6 TWO DIVISIONS Digital Investment Management Digital Operating
7 DIGITALBRIDGE BUSINESS PROFILE Operating Earnings from Balance Sheet Investments Investment Management Fees and Profits Participation Digital Investment Management Digital Operating Two business lines that both generate growing, predictable earnings backed by investment grade clients Bu si ne ss M od el Po rt fo lio Pr of ile Leading global digital infrastructure investment platform managing over $17B on behalf of institutional investors Bu si ne ss Pr of ile Direct ownership and control of REIT-qualified digital infrastructure businesses serving leading global technology and telecom companies TWO DIVISIONS
8 BUILT FOR THE ENTIRE DIGITAL INVESTMENT CYCLE Unique DBRG architecture gives investors diversified exposure to the Digital Investment Cycle from high-return ‘business-building’ expertise in the Digital IM platform to stable, mature assets in Digital Operating…both generate growing, predictable earnings Business Building / Development Investor-Builder Mature Assets Owner/Operator Participate in business-building alpha generation but with steady, predictable management fees and earnings profile Mid-Teens Target Across Portfolio Balanced Portfolio across Geographies and Verticals Target 8-12% Initial ROIC Organic Growth and Reinvestment Drive Returns Higher Over Time Enhanced economics from 3rd party co-invest fees/carry Reinvest Cash Flows in Continued Growth TOP MGMT TEAM in digital infra, 25+ years of experience Scalable, extensible corporate platform Growing, Predictable Long- Term Contracted Cash Flows Inv. Grade counterparties A Portfolio Approach with Diversification Benefits Distinct Mandates Digital Investment Management Digital Operating Towers Small Cells Fiber Data Centers Edge Infrastructure Hyper-Converged Digital Infrastructure A full stack approach to capitalizing on the entire spectrum of digital infrastructure opportunities In ve st m en t Fo cu s R et ur n Pr of ile D BR G Ad va nt ag es Common Characteristics Business Building – Growth Phase Mature, Stabilized, Yield-Focused TWO DIVISIONSTWO DIVISIONS
9 THREE REASONS TO OWN
10 THE DBRG INVESTMENT CASE The Demand- Global demand for More, Better, Faster connectivity is driving digital infrastructure investment and DBRG is well positioned for key emerging digital thematics: edge, convergence The Supply– DBRG’s investment management platform is the Partner of Choice as the world’s leading institutional investors increasingly allocate capital to this growing, resilient asset class Investor-Operator - The premier business-builder in digital infrastructure; over 25 years investing and operating digital assets; 100s of years of cumulative experience managing investor capital and operating active infrastructure. Investing Across A Converging Digital Ecosystem - Only global REIT to own, manage, and operate across the entire digital ecosystem with a flexible investment framework built to capitalize on evolving networks. Deep relationship networks drive proprietary sourcing Entering ‘Phase II: The Acceleration’ – DBRG mgmt. completed the 'diversified to digital' transition ahead of schedule and has significant capital to deploy into an earnings-driven framework High-Growth Secular Winner – Two high-growth business lines poised to continue strong momentum, with a clear roadmap to DBRG’s converged vision At the Intersection of Supply & Demand Powerful Secular Tailwinds Executing a Unique Converged Strategy Digital Infrastructure Experts Entering the Next Phase of Growth Simple, High Growth Model THREE REASONS TO OWN
11 THREE REASONS TO OWN 1 2 3 Powerful Secular Tailwinds Digital Infrastructure Experts Simple, High-Growth Business
12 THE DEMAND: MORE, BETTER, FASTER CONNECTIVITY Global demand for connectivity is driving the need for significant, persistent investment in digital infrastructure Exponential Growth in Data Traffic global capex investment of >$400B Annually to meet digital infrastructure demand $300 $250 $200 $150 $100 $50 $0 2021 2022 2023 2024 2025 2026 Global Data Center Capex Cumulative Global Hyperscale + Non Hyperscale CapEx (billion) $101 $152 $95 $142 $89 $133$124 $83 $116 $77 $110 $73 Global Hyperscale Global Non Hyperscale Source: Credit Suisse, Dell´Oro $0.9T $1.3T $145 $17 $157 $182 $56 $39 $285 $18 $54 $12 $18 $30 $31 $23 $12 $30 Source: GSMA The Global Mobile Economy 2021 North America Greater China EuropeAsia Pacific Latin America MENA Sub-Saharan Africa CIS 5G Capex Non-5G Capex Global Mobile Capex CapEx 2021–2025 (billion) $300 $250 $200 $150 $100 $50 Significant, Growing TAM Source: Ericsson Mobility 2021 Report Global Mobile Network Data Traffic (EB per month) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0 50 100 150 200 250 300 Fixed Wireless (3G/4G/5G) Mobile Data (5G) Mobile Data (2G/3G/4G) 5x in Next 5 Years More COMPUTE and PIPES are required THREE REASONS TO OWN Powerful Secular Tailwinds
13 THE SUPPLY: DIGITALBRIDGE IS THE PARTNER OF CHOICE DBRG’s investment management platform is the partner of choice as the world’s leading institutional investors increasingly allocate capital to this growing, resilient asset class DIGITAL FEEUMALTERNATIVES AUM Source: Preqin Note: DigitalBridge’s definition of FEEUM is different from Preqin’s definition of AUM, and therefore the two may not be directly comparable. CAGR 10% CAGR +65% $4.06T $11.8T 20212010 $6.8B $17B 20212019 “Paradigm shift”: institutional investors raise allocations to alternatives 1. Moody's Seasoned Aaa Corporate Bond Yield 9% 8% 7% 6% 5% 4% 3% 2% 1% State Pension Plan Return Targets Median Assumed Rate of Return Aaa Corporate Bond Yield1 Alternatives Are Already Exhibiting Steady Growth… We Are Growing Faster Than The Industry Return Needs Not Met Through Traditional Assets Wallet Share 0.14% THREE REASONS TO OWN Powerful Secular Tailwinds
14 THREE REASONS TO OWN 1 2 3 Powerful Secular Tailwinds Digital Infrastructure Experts Simple, High-Growth Business
15 THE DIGITAL INFRASTRUCTURE EXPERTS THREE REASONS TO OWN Digital Infrastructure Experts The DigitalBridge team has a 25+ year track record of successfully building businesses in the digital infrastructure sector. Deep specialization creates durable competitive advantages that generate alpha for our portfolio companies and investors OPERATIONAL EXPERTISE SECTOR FOCUS PLATFORM CREATION CUSTOMER CENTRIC Senior Leadership team has deep operational expertise across the full spectrum of Digital Infrastructure Bench consists of global industry leaders Sector specific focus provides clear differentiation from other alternative asset managers Provides unique ability to source proprietary capital deployment opportunities Proven ability to create value at scale, combining access to capital with top industry management Unique ability to buy and/or build across market cycles Portfolio company operating model focused on delivering for customers Differentiate from competition through speed and flexibility Unparalleled Sector Expertise Track Record of Value Creation Differentiated Investment Opportunities
16 EXPERIENCED TEAM DEDICATED TO DIGITAL INFRA EXECUTIVE LEADERSHIP Marc Ganzi President and Chief Executive Officer Jacky Wu Chief Financial Officer Ben Jenkins CIO, Digital Investment Management DIGITAL INVESTMENT & ASSET MANAGEMENT TEAM Leslie Golden Managing Director Jeff Ginsberg Managing Director & CAO Steven Sonnenstein Senior Managing Director TOWER LEAD Jon Mauck Senior Managing Director DATA CENTER LEAD Warren Roll Managing Director FIBER & SMALL CELL LEAD BOCA RATON Kevin Smithen Chief Commercial & Strategy Officer Tom Yanagi Managing Director Peter Hopper Managing Director Dean Criares Managing Director Digital Credit Geoff Goldschein Managing Director, General Counsel Sadiq Malik Managing Director Scott McBride Principal Hayden Boucher Principal LONDON Manjari Govada Principal James Burke Principal Matt Evans Managing Director, Head of Europe Justin Chang Managing Director Head of Asia Wilson Chung Principal Geneviève Maltais-Boisvert Principal DATA CENTER TEAM OPERATIONS, IT, FINANCE & COMPLIANCE GLOBAL INDUSTRY LEADERS & LOCAL EXPERTS Raul Martynek Senior Advisor CEO of DataBank Sureel Choksi Senior Advisor Board Member of Zayo & Scala; President and CEO of Vantage Brokaw Price Operating Partner NORTH AMERICA Michael Foust Senior Advisor Chairman of Databank & Vantage Marcos Peigo Senior Advisor CEO of Scala Data Centers SOUTH AMERICA GLOBAL Josh Joshi Operating Partner Chairman of AtlasEdge EUROPE Giles Proctor Senior Advisor President of Vantage APAC ASIA Giuliano Di Vitantonio Operating Partner CEO of AtlasEdge TOWER TEAM Alex Gellman Senior Advisor Board Member of Highline and FreshWave; CEO of Vertical Bridge Jose Sola Senior Advisor CEO of Mexico Tower Partners Daniel Seiner Senior Advisor CEO of Andean Telecom Partners Fernando Viotti Senior Advisor CEO of Highline NORTH AMERICA SOUTH AMERICA EUROPE Michael Bucey Operating Partner Steve Smith Senior Advisor CEO of Zayo Group Michael Finley Operating Partner CEO of Boingo Murray Case Operating Partner Chairman of Scala Data Centers Dan Armstrong Senior Advisor CEO and Board Member of Beanfield Technologies NORTH AMERICA SOUTH AMERICA Richard Coyle Operating Partner Interim CEO of ExteNet Systems David Pistacchio Operating Partner Chairman of Beanfield; Board Member of Aptum and Zayo FIBER & SMALL CELLS TEAM NEW YORK SINGAPORE Graham Payne Senior Advisor Executive Chairman of Freshwave Liam Stewart Managing Director & Chief Operating Officer Mark Serwinowski Managing Director, Chief Information Officer Matty Yohannan Chief of Staff Kristen Whealon Chief Compliance Officer Severin White Head of Public Investor Relations Kay Papantoniou Managing Director, Global Head of HR Ron Sanders Chief Legal Officer & Secretary Donna L. Hansen Chief Admin Officer & Global Head of Tax Sonia Kim Chief Accounting Officer Leon Schwartzman Managing Director, Chief Risk and Compliance Officer THREE REASONS TO OWN Digital Infrastructure ExpertsACTIVE INFRASTRUCTURE SPECIALISTS
17 WHY DOES A CONVERGED STRATEGY MATTER? DigitalBridge forges deeper relationships with customers through a structural ‘at-bats’ advantage that leads to proprietary deals and the ability to offer ‘converged solutions’ vs. components FLEXIBILITY Relative contribution and relevance of verticals shifts as use cases change 2G/3G/4G Today Tomorrow AI 5G/IOT Towers Data Centers Small Cells Fiber Edge Connectivity Spectrum: Demand Grows and Use Case Complexity Increases Built for change: DBRG flexible capital allocation evolves alongside the digital infra ecosystem DEEPER RELATIONSHIPS Customer Siloed approach digital peers CUSTOMER Touchpoints = Deeper Relationships compared to siloed-approach peers Towers Data Centers Silo Fiber Small Cells Edge 1 Touchpoint VS THREE REASONS TO OWN Digital Infrastructure Experts DigitalBridge’s flexible capital allocation strategy is built to ‘follow the logos’ as networks evolve, aligning investor exposures with the best opportunities over time MICRO MACRO
18 THREE REASONS TO OWN 1 2 3 Powerful Secular Tailwinds Digital Infrastructure Experts Simple, High-Growth Business
19 $170M $230M $300M $100M $140M $200M $84M $165M $180M $240M $33M $95M $110M $140M 2020 2021E 2023E 2025E $140M $500M $600M $60M $225M $275M $54M $130M $400M $500M $23M $55M $175M $225M 2020 2021E 2023E 2025E Digital IM revenue and Fee Related Earnings (FRE) projected to continue growth as DBRG expands the magnitude and scope of its investment products – Full Stack Digital Infra Manager Significant growth to 2023 targets achieved through Re-deployment of $1.5B in capital from legacy monetizations Organic growth and bolt-on acquisitions at existing platforms Digital Operating Revenue (1) CAGR growth calculated based on mid-point estimates on FRE and Operating EBITDA Digital IM Fee Revenue Digital IM FRE Digital Operating EBITDA TWO EARNINGS STREAMS GENERATING STRONG GROWTH Digital Investment Management Digital Operating RA N G E RA N G E RA N GE RA N GE RA N GE RA N GE RA N G E RA N G E 13% CAGR(1) +2x YoY 15% CAGR (1) +1.5x YoY 87% CAGR (1) 44% CAGR (1) CONSOLIDATED INCLUDES 31.5% MINORITY INTEREST DBRG SHARE 100% ATTRIBUTABLE TO DBRG
20Strictly Private and Confidential ONE MISSION Build the Next Great Digital Infrastructure Platform
21 DBRG STRATEGIC ROADMAP…NOW ENTERING STAGE II Stage I The Transition (2019-2021) Stage II The Acceleration (2021-2023) Identify new platform opportunities that benefit from DBRG platform Invest in existing portfolio to build value In ve st m en t M an ag em en t D ig ita l O pe ra tin g $2B Capital D i g i t a l F i r e p o w e r PROMISES MADE – PROMISES KEPT 2021 Adjusted EBITDA $55-60M Capital Deployment Into Stable Mature Yield-focused Assets 1. Support existing Data Center platforms Vantage SDC/DataBank 2. Developed Market Cell Tower Assets 3. Develop Market Wholesale/Dark Fiber Assets Broader/Deeper Offerings Flagship With the transition complete, DBRG is set to ‘play offense’, focused on driving continued growth in Digital IM platform through new offerings and The Acceleration of Digital Operating earnings from balance sheet redeployment into digital Deploy Balance Sheet Capital 2023 Adjusted EBITDA $175-225M 2021 FRE $95-100M 2023 FRE $110-140M Grow FEEUM via new offerings Healthcare Real Estate Industrial Real Estate Hospitality Real Estate BrightSpire Management Other Equity and Debt Legacy Invest. Management (1) Other Equity and Debt & Healthcare segments are currently under contract and expected to close 4Q21 and 1Q22, respectively
22 DBRG STRATEGIC ROADMAP…THE FLYWHEEL EFFECT The “Flywheel” stage serves the long-term vision for the company as a serial compounder of value… The dominant player in a secular growth sector managed by the leading management team in the space Stage III The Flywheel (2023+) Capitalize on Digital Transformation, 5G and future network cycles with a sustainable reinforcing edge Serial Value Compounder High ROIC capital formation in Digital IM Digital Operating: Core organic growth in mid/high single digits Operating leverage from DBRG platform Reinvest Earnings/Cash Flows into DBRG Algorithm Growth capex, strategic M&A Broader, deeper base of capital ONE MISSION Build the Next Great Digital Infrastructure Platform 2020A 2021E 2023 Target 2025 Target $125 $51 $260 $250 $130 $120 $520 $590 $320 $250 $660 $800 $320 $410 Industry Leading Top Line and Bottom- Line Growth Powerful Hybrid Business Model High Margins Alt Asset Managers Multiple of Distributable Earnings Multiple of AFFO Multiple of EBITDA Digital Infra Peers Digital Infra Peers Average Peer Trading Multiples(2) CORE DIGITAL(1) FINANCIAL PROFILE (Pro Rata) RA N G E RA N G E RA N G E Digital Infra Peers: AMT, CCI, SBAC, EQIX, DLR, COR Alt Asset Peers: BX, APO, CG, KKR, EQT, ARES 25.8x28.7x27.6x RA N G E Revenues Adjusted EBITDA (1) Includes Digital Operating and Digital Investment Management segments. Excludes Corporate and Other segment. (2)Sources: Bloomberg, Credit Suisse, Barclays, KBW
23 2 THE FINANCIALS
24 SUMMARY FINANCIAL OVERVIEW NOTE: All $ in millions except per share & AUM DigitalBridge revenue and earnings growth in core digital segments has been rapid over the past two years driven by: • Strong capital formation momentum in Digital IM • Growth in Digital Operating driven by new acquisitions and organic growth Beginning in 3Q21, DBRG is introducing AFFO as a key measure: • During 3Q21, AFFO was $0.7M net of maintenance capital expenditures of $1.3M, which was above our anticipated normalized spend expected to average less than 3% of Monthly Recurring Revenue (“MRR”) TOTAL COMPANY 3Q20 2Q21 3Q21 Y/Y% Consolidated Revenues $123.0 $237.2 $252.2 +105% DBRG OP Share of Revenues $33.6 $66.7 $73.6 +119% Adjusted EBITDA (DBRG OP Share) $(5.5) $15.4 $17.6 N/M CFFO ($30.7) ($4.8) $2.0 N/M Per Share ($0.06) ($0.01) $0.00 N/M Net Income (DBRG Shareholder) ($205.8) ($141.3) $41.0 N/M Per Share ($0.44) ($0.29) $0.08 N/M Digital AUM ($B) $23.3 $34.9 $37.8 +63% Consolidated Revenues $20.4 $46.9 $53.8 +164% DBRG OP Share of Revenues $14.1 $33.4 $37.0 +163% DBRG OP Share of FRE $6.3 $17.4 $20.7 +229% Consolidated Revenues $98.5 $189.1 $195.0 +98% DBRG OP Share of Revenues $15.6 $32.6 $33.8 +116% DBRG OP Share of Adjusted EBITDA $6.9 $13.8 $13.6 +97% DIGITAL OPERATING DIGITAL INVESTMENT MANAGEMENT (IM)
25 $76M $79M $85M $100M $124M $137M $155M $40M $38M $40M $41M $62M $70M $79M 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Annualized Revenue Annualized FRE $36M $34M $62M $84M $131M $131M $138M $13M $13M $28M $39M $56M $55M $56M 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 Annualized Revenue Annualized EBITDA STABILIZED GROWTH Digital IM and Digital Operating divisions have continued to grow consistently with ‘lower left to upper right trajectory’ Driven primarily by strong fundraising in the DCP and Co-Investment vehicles, annualized revenue in the IM segment has grown consistently since 1Q20 Continued strong bookings and low churn offset by unfavorable power margin due to unusual short term weather conditions. CONSOLIDATED INCLUDES 31.5% MINORITY INTEREST EXCLUDES 1X ITEMS DBRG Pro-Rata 100% ATTRIBUTABLE TO DBRG Investment Management Digital Operating 1 (1) 3Q21 Digital Operating results includes annualized impact of CA22 acquisition, completed in September 2021
26 DBRG FINANCIAL PROFILE Financial Snapshot – DBRG Share $40B+ Digital AUM (PF)(1) $6.1B Total Assets $1.4B Total Debt Corporate Cash @ 9/30/21 $574M OED sale to Fortress (Other Equity & Debt, est. 4Q21) $535M BrightSpire (NYSE:BRSP 35M Shares @ $9.50) $350M Wellness Infra Sale (net of $90M seller note, est. 1Q22) $226M VFN Availability ‘Corporate revolver’ $200M Remaining OED Monetize in 2022 ~$100M Total ~$2,000M Pro Forma Capitalization Investment Level Debt $588M 3.1% Corporate Debt Converts - 2023 $200M 5.00% Converts – 2025(2) $256M 5.75% Securitized Notes $300M 3.93% Total Corporate Debt $756M 4.8% Preferred Stock(3) $884M 7.13% Common Stock(2) 568M shares Blended Avg. Cost Pro Forma Digital Firepower $17B Digital FEEUM Other Assets GP Interest in DCP I and II (at net carrying value) $174M Other Digital Investments (investments in digital investment vehicles and seed investments) $166M (1) In October 2021, funds affiliated with the Company’s investment management platform acquired a controlling stake in Vertical Bridge Holdings, LLC, resulting in a net increase of approximately $2 billion to AUM over 3Q21 AUM of $38B. (2) In October 2021, DBRG pursuant to a privately negotiated exchange agreement, exchanged $44 million of the outstanding principal of the 5.75% exchangeable notes into 20 million shares of the Company's class A common stock. (3) In November 2021, the Company will redeem 2,560,000 shares, representing approximately 22.3% of the 11,500,000 issued and outstanding shares of 7.125% Series H Cumulative Redeemable Perpetual Preferred Stock with a total liquidation preference of $64 million
27 $100M $140M $33M $95M $110M $0M $50M $100M $150M $200M $250M 2020 2021E 2023T2020 2021E 2023T SPV Coinvest DCPI DCPII Future DIGITAL INVESTMENT MANAGEMENT ALGORITHM AVG. FEEUM (avg. of beginning and ending #s) REVENUE FRE/Adjusted EBITDA Figures do not include Performance Fees RevenueFEEUM Average Investment Management Fee of 90-100bps Fee-Related Earnings / EBITDA 55-60%+ marginRevenue Revenue algorithm FRE/EBITDA algorithm Margin 55% to 60%+ bps 90-100$15B $9B TBD RAN GE $170M $230M $84M $165M $180M $0M $50M $100M $150M $200M $250M 2020 2021E 2023T
28 DIGITAL OPERATING ALGORITHM… EASY AS 1-2-3 $55M-$60M 2021 Guidance Core Organic Growth Tuck-In M&A New Platforms, M&A 2023 Guidance 4-6% YoY 2-3% YoY $175M-$225M Deploy $1.5B Dry Powder 3 1 2 3 Incremental EBITDA Algorithm For Illustrative Purposes Only Core Organic Growth Annual Core Organic Growth 4% to 6% Annual Contracted Escalation Rates 2% to 3% Tuck-In Mergers and Acquisitions / Inorganic 60% Levered Free Cash Flow reinvested 20x Site CF multiples 2.5% Incremental Cost of Debt (primarily ABS) $1.5B Dry Powder $150M Incremental EBITDA 1 2 ~20x Avg Acquisition Multiple $3.0B Firepower Acquisition Debt @ 50% LTV Digital Operating earnings driven by three key drivers, notably the deployment of $1.5B+ into high quality digital infrastructure assets over next two years
29 3 THE DETAILS
30 35% 35% 20% 10% DIGITAL IM GROWTH PROFILE Long-term contracted fee streams drive stable, predictable earnings that compound over time, similar in nature to our Digital Operating assets EQUITY FUNDS LAUNCH DATE FEEUM Avg. Mgmt Fee SPV 2013 $2.2B 0.8% DCP I 2018 $3.0B 1.1% DCP II 2020 $7.8B 1.1% Co-invest $3.7B 0.5% NEW STRATEGIES Digital Liquid $0.5B 0.5% BUILDING BALANCED PORTFOLIOS Illustrative Target Portfolio Construction Asia 30% 30% 30% 10% Geographic North America Europe Rest of World Asset Class Towers Fiber Data Centers Small Cells ..with the flexibility to evolve with opportunities over time Note: Individual components of graph are not to scale (1) Includes ~$1.2B raised subsequent to 9/30/21 •Former the original base for growth $8.1B passed ($6B) 2019 2021 Digital Bridge Holdings (DBH) DCP II Q2 Co-Invest Q3 DCP I 1Q AHEAD OF SCHEDULE $17B 2021 Y/E TARGET Credit Liquid NEW STRATEGIES IM F EE UM $4B+ 30%+ YoY •5 original separately capitalized companies Actively deploying An important commitment to our investors Flagship equity fund $17.2B+(1)
31 Digital Operating segment comprised of stakes in two data center businesses: DataBank and Vantage SDC Segment focused on growing exposure to mature, yield-focused digital infrastructure assets with stable growth profile and positive cash flows DBRG maintains management control as investment sponsor, consolidates financials DBRG balance sheet capital invested alongside 3rd party co-invest capital generating fees and carry, amplifying core investment returns. DIGITAL OPERATING PROFILE Overview North American portfolio of stabilized hyperscale data centers Portfolio 13 data centers / 4 hyperscale markets Profile Yield-focused, stabilized (90% + utilization) data centers with long-term contracts and investment-grade hyperscale customers DBRG Growth Strategy M&A of Stabilized Assets - Support continued growth primarily through acquisition and integration of stabilized hyperscale data centers Initial Acquisition Value ~$3.7B Initial Acquisition Value Investment $200 million balance sheet investment, Jul/Oct 2020 Ownership ‘Minority Control’ structure; 13% interest Overview Premier edge/colocation data center platform with nationwide US footprint Portfolio 64 data centers / 29 edge markets served Profile Nationwide footprint with continued growth driven by enterprise customer demand as data gravitates to the Edge DBRG Growth Strategy New Build + M&A - support ‘new build’ strategy driven by customer demand and strategic M&A to build out ‘edge’ opportunity Initial Acquisition Value ~$3.0B Initial Acquisition Value Investment $334 million balance sheet investment, Dec 2019/Dec 2020 Ownership 'Minority Control' structure; 20% interest
32 DIGITALBRIDGE – INVESTING ON A GLOBAL SCALE Leading digital infrastructure investment firm with operating expertise and global presence - $40B in assets and growing rapidly Colombia, Peru, Chile Canada, U.S. and U.K. U.K. United StatesUnited States United States Brazil Brazil, Chile, Colombia, Mexico U.K. Asia Europe North America Europe United States 3 Mexico North America Europe Canada FinlandNorth America, Europe Asia G LO B A L FO O T P R I N T ~30,000 active tower assets 95,000+ small cell nodes 100+ data centers fiber network of 135,000+ route miles 400 edge facilities Boca Raton, Florida (HQ) New York Los Angeles London Singapore United States LEADING GLOBAL PORTFOLIO TOWERS • Largest private tower company in the U.S, Vertical Bridge • 8 tower companies globally DATA CENTERS • Vantage Data Centers - fastest- growing private hyperscale data center platform globally • DataBank - the widest geographic edge coverage in the US, 60 facilities in 25 metros FIBER • Largest private fiber footprint in the U.S. and Europe EDGE INFRASTRUCTURE • Launched first European Edge Infrastructure Platform in partnership with Liberty Global
33 DIGITALBRIDGE UNIVERSE: WHAT WE'VE BUILT...SO FAR INVESTMENT MANAGEMENT DIGITAL OPERATING1 DBH Legacy Cos. DCP I/DCP II(1) Co-Invest Capital DBRG Balance Sheet Mgmt. Fees Mgmt. Fees & Carried Interest Mgmt. Fees & Carried Interest Investment Earnings MEXICO TOWER PARTNERS 2013 ~3,000 active sites, ~5,700 total sites(2) Tower EXTENET SYSTEMS 2015 ~36,000 nodes(3), ~420 networks(3), ~3,600 route miles fiber(3) Small Cell ANDEAN TELECOM PARTNERS 2016/2017 ~3,000 active sites, ~39,000 total sites(2) Tower DATABANK 2016/2020 64 data centers Edge Infrastructure VANTAGE (SDC) 2017/2020 13 stabilized data centers (separated in 2020) Data Center VANTAGE DATA CENTERS 2017 3 operating data centers; 8 data centers currently under dev. Data Center FRESHWAVE GROUP 2018 ~5,000 nodes ~5,000 total sites(4), ~150 networks(4) Small Cell DIGITA OY 2018 ~300 active sites, ~2,400 total sites(2) Tower APTUM TECHNOLOGIES 2019 6 data centers Data Center BEANFIELD METROCONNECT 2019 ~3,000 on-net locations, ~2,400 route miles Fiber HIGHLINE DO BRASIL 2019 ~4,700 active sites, ~5,600 total sites(2),(3) Tower WILDSTONE 2020 ~2,000 active sites Digital Real Estate ZAYO GROUP HOLDINGS 2020 133,000+ route miles, 400 markets served Fiber VANTAGE DATA CENTERS (EUROPE) 2020 7 operating data centers; 5 currently under dev. Data Center SCALA DATA CENTERS 2020 4 operating hyperscale data centers; 2 currently under dev. Data Center LANDMARK DIVIDEND 2021 5,000+ assets managed Digital Real Estate VANTAGE TOWERS 2021 82,000 towers (minority stake) Tower EDGEPOINT INFRASTRUCTURE 2021 ~10,000 active sites Tower ATLASEDGE DATA CENTRES 2021 100+ owned edge sites Edge Infrastructure BOINGO WIRELESS 2021 75+ DAS venues live with 50,000+ DAS nodes Small Cell VANTAGE DATA CENTERS (APAC) 2021 5 market launched and acquisitions pending Data Center VERTICALBRIDGE 2014/2021 ~8,000 active sites, ~310,000 total sites(2) Tower Notes: All figures as of 9/30/2021 (1) DBRG balance sheet has a combined exposure to DCP I and DCP II of $245M of which $94M has been funded as of February 2021; (2) “Active sites” represents owned and other revenue generating sites, while “total sites” includes other sites on which the company has marketing/management rights; for Digita, “total sites” includes certain micro data centers and IoT sites; for Wildstone, “active sites” represents the number of revenue generating panels; (3) Includes contracted and in construction (“CIC”) networks; (4) Includes BBNB (contracted) sites and other active near-term pipeline opportunities. Between the balance sheet and investment management, we have assembled a diverse global portfolio of digital infrastructure assets equating to +$40B in AUM EARNINGS STREAM CAPITAL SOURCE
34 WE ARE ACTIVELY BUILDING WORLDWIDE EUROPE ASIA NORTH AMERICA LATAM
35 Towers Small Cells Fiber Data Centers Edge Infrastructure Hyper-Converged Digital Infrastructure DigitalBridge (NYSE: DBRG) is the leading global digital infrastructure investor, managing and operating assets across five key verticals: data centers, cell towers, fiber networks, small cells, and edge infrastructure DigitalBridge is the infrastructure partner to the Digital Economy
36 NON-GAAP RECONCILIATIONS ($ in thousands) 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Digi tal IM net income ( loss ) $ 39,272 $ 15,786 $ 7,663 $ 2,702 $ 3,539 $ 2,424 $ 2,529 Adjustments: Interest income 2,250 - (1) (1) (2) - (30) Investment and servicing expense - - 32 204 - - - Depreciation and amortization 8,242 6,298 8,912 6,421 10,259 6,605 6,603 Compensation expense—equity-based 4,673 1,837 1,533 655 189 682 589 Compensation expense—carried interest and incentive 31,736 8,266 (33) 994 912 - Administrative expenses—straight-line rent 74 50 (2) (1) 14 16 16 Administrative expenses—placement agent fee 3,069 6,959 59 1,202 - - - Incentive/performance fee income (1,313) (4,489) - - - - - Equity method (earnings) losses (59,196) (11,203) 195 (6,744) (6,134) (277) (3) Other (gain) loss, net (461) (119) (165) (102) (32) 8 (47) Income tax (benefit) expense 3,089 2,236 7 (757) 144 (151) 393 Digi tal IM FRE / Adjus ted EBITDA $ 31,435 $ 25,621 $ 18,200 $ 4,573 $ 8,889 $ 9,307 $ 10,050 DBRG OP share of Digi tal IM FRE / Adjus ted EBITDA $ 20,736 $ 17,449 $ 11,645 $ 2,051 $ 6,306 $ 9,307 $ 10,050 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Digi tal Operat ing n et income ( loss ) f rom con t inu ing operat ions (71,822) (10,850) (64,260) (53,591) (38,795) (21,262) (18,415) Adjustments: Interest expense 29,839 29,272 31,133 41,815 18,589 8,170 9,402 Income tax (benefit) expense 1,922 (66,788) (12,268) (6,967) (6,091) (2,673) (5,730) Depreciation and amortization 120,458 126,227 122,220 78,554 73,032 28,571 30,031 EBITDAre: $ 80,397 $ 77,861 $ 76,825 $ 59,811 $ 46,735 $ 12,806 $ 15,288 Straight-line rent expenses and amortization of above- and below-market lease intangibles 482 (98) (399) (2,607) (2,106) 1,837 (338) Compensation expense—equity-based 308 308 308 728 148 296 - Installation services (4,058) 576 880 429 (65) 493 289 Transaction, restructuring & integration costs 4,042 2,999 4,670 1,155 420 1,021 748 Other gain/loss, net (285) 349 - 200 46 - - D igi tal Operat ing Adjus ted EBITDA $ 80,886 $ 81,995 $ 82,284 $ 59,716 $ 45,178 $ 16,453 $ 15,987 DBRG OP share of Digi tal Operat ing Adjus ted EBITDA $ 13,637 $ 13,776 $ 13,948 $ 9,620 $ 6,914 $ 3,294 $ 3,200
37 NON-GAAP RECONCILIATIONS ($ in thousands) 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Net income (loss) attributable to common stockholders $ 41,036 $ (141,260) $ (264,806) $ (140,575) $ (205,784) $ (2,042,790) $ (361,633) Net income (loss) attributable to noncontrolling common interests in Operating Company 4,311 (14,980) (27,896) (15,411) (22,651) (225,057) (39,601) Net income ( loss) attributable to common interests in Operating Company and 45,347 (156,240) (292,702) (155,986) (228,435) (2 ,267,847) (401,234) Adjustments for FFO: Real estate depreciation and amortization 126,494 150,458 184,762 136,245 162,705 131,722 130,523 Impairment of real estate (8,210) 242,903 106,077 31,365 142,767 1,474,262 308,268 Gain from sales of real estate (514) (2,969) (38,102) (26,566) (12,332) 4,919 (7,933) Less: Adjustments attributable to noncontrolling interests in investment entities (95,512) (162,021) (188,496) (79,874) (146,905) (329,601) (82,329) FFO $ 67,605 $ 72,131 $ (228,461) $ (94,816) $ (82,200) $ (986,545) $ (52,705) Additional adjustments for Core FFO: Adjustment to BRSP cash dividend 9,478 (40,165) 55,648 (22,999) (18,207) 328,222 (86,213) Equity-based compensation expense 9,038 11,642 19,299 8,288 7,879 10,152 8,732 Straight-line rent revenue and expense (1,925) (2,309) 17,225 (6,403) (6,281) (5,240) (2,025) Amortization of acquired above- and below-market lease values, net (172) (1,498) 6,005 (1,229) (1,440) (531) (3,519) Debt prepayment penalties and amortization of deferred financing costs and debt premiums and 7,651 10,196 45,627 25,034 4,296 10,080 15,049 Non-real estate fixed asset depreciation, amortization and impairment 13,616 19,996 20,563 4,885 12,754 13,390 13,253 Restructuring and transaction-related charges 19,501 5,174 34,482 21,887 13,044 8,864 15,568 Non-real estate (gains) losses, excluding realized gains or losses within the Digital Other segment 11,319 (151,773) 267,812 193,948 84,995 740,038 85,124 Net unrealized carried interest (27,953) (6,485) 189 (5,734) (5,170) 801 9,230 Preferred share redemption (gain) loss 2,865 - - - - - - Deferred taxes and tax effect on certain of the foregoing adjustments 1,663 (42,536) (17,657) (8,764) (7,917) (3,092) (6,062) Less: Adjustments attributable to noncontrolling interests in investment entities 12,438 146,687 (218,328) (143,262) (38,042) (182,607) 3,017 Less: Core FFO from discontinued operations (123,075) (25,874) (12,391) 4,025 5,579 37,218 (31,128) Core FFO $ 2 ,049 $ (4 ,814) $ (9 ,987) $ (25,140) $ (30,710) $ (29,250) $ (31,679) ($ in thousands) 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 Core FFO $ 2,049 $ (4,814) $ (9,987) $ (25,140) $ (30,710) $ (29,250) $ (31,679) Less: Earnings of equity method investments (5,784) (6,216) (4,440) - - - (13,320) Plus: Preferred dividends 17,456 18,516 18,516 18,516 18,516 18,516 19,474 Plus: Core interest expense 14,160 11,834 12,387 11,972 12,234 12,625 10,393 Plus: Core tax expense (12,638) (8,224) (5,613) (9,974) (5,310) (6,536) 555 Plus: Non pro-rata allocation of income (loss) to NCI 231 223 201 201 (751) - - Plus: Placement fees 2,102 4,767 40 823 - - - Less: Net realized carried interest, incentive fees, and other adjustments to Fee Related Earnings (7) (1,565) 11 140 248 (549) (173) Plus: Digital Operating installation services, transaction, investment and servicing costs 53 856 1,423 1,018 254 (42) 162 Adjusted EBITDA (DBRG OP Share) $ 17,622 $ 15,377 $ 12,538 $ (2 ,444) $ (5 ,519) $ (5 ,236) $ (14,588)
38 DISCLAIMER This presentation may contain forward-looking statements within the meaning of the federal securities laws, including statements related to our digital transformation. 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, the duration and severity of the current novel coronavirus (COVID-19) pandemic, and its impact on the global market, economic and environmental conditions generally and in the digital and communications technology, wellness infrastructure and hospitality real estate, other commercial real estate equity and debt, and investment management sectors; the effect of COVID-19 on the Company's operating cash flows, debt service obligations and covenants, liquidity position and valuations of its real estate investments; whether we will successfully execute our strategic transformation to become a digital infrastructure and real estate focused company within the timeframe contemplated or at all, and the impact of such transformation on the Company's legacy portfolios and assets, including whether such transformation will be consistent with the Company’s REIT status; our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all; the Company's ability to complete anticipated monetizations of non-core assets within the timeframe and on the terms contemplated, if at all; the impact of the completion of the sale of the Company's hospitality portfolios and whether we will realize the anticipated benefits of our exit from our hospitality business; the impact of completed or anticipated initiatives related to our digital transformation, including the strategic investment by Wafra and the formation of certain other investment management platforms, on our company's growth and earnings profile; whether we will realize any of the anticipated benefits of our strategic partnership with Wafra, including whether Wafra will make additional investments in our Digital Other and Digital Operating segments; our ability to integrate and maintain consistent standards and controls, including our ability to manage our acquisitions in the digital industry effectively; the ability to realize anticipated strategic and financial benefits from terminating the management agreement with Brightspire Capital, Inc. (NYSE:BRSP; formerly, Colony Credit Real Estate, Inc. or CLNC); the impact to our business operations and financial condition of realized or anticipated compensation and administrative savings through cost reduction programs; our ability to redeploy any proceeds received from the sale of our non-digital or other legacy assets within the timeframe and manner contemplated or at all; our business and investment strategy, including the ability of the businesses in which we have a significant investment (such as BRSP) to execute their business strategies; BRSP's trading price and its impact on the carrying value of the Company's investment in BRSP; performance of our investments relative to our expectations and the impact on our actual return on invested equity; our ability to grow our business by raising capital for the companies that we manage; our ability to deploy capital into new investments consistent with our digital business strategies, including the earnings profile of such new investments; the impact of adverse conditions affecting a specific asset class in which we have investments; the availability of, and competition for, attractive investment opportunities; our ability to achieve any of the anticipated benefits of certain joint ventures, including any ability for such ventures to create and/or distribute new investment products; our ability to satisfy and manage our capital requirements; our expected hold period for our assets and the impact of any changes in our expectations on the carrying value of such assets; the general volatility of the securities markets in which we participate; stability of the capital structure of our wellness infrastructure portfolio and remaining hospitality portfolio; changes in interest rates and the market value of our assets; interest rate mismatches between our assets and any borrowings used to fund such assets; effects of hedging instruments on our assets; the impact of economic conditions on third parties on which we rely; any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims; our levels of leverage; adverse domestic or international economic conditions, including those resulting from the COVID-19 pandemic, and the impact on the commercial real estate or real-estate related sectors; the impact of legislative, regulatory and competitive changes; actions, initiatives and policies of the U.S. and non-U.S. governments and changes to U.S. or non-U.S. government policies and the execution and impact of these actions, initiatives and policies; whether we will maintain our qualification as a real estate investment trust for U.S. federal income tax purposes and our ability to do so; 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 our competition, 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, 2020 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, each 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 press release. The Company is under no duty to update any of these forward-looking statements after the date of this press release, nor to conform prior statements to actual results or revised expectations, and the Company does not intend to do so. This presentation may contain statistics and other data that has been obtained or compiled from information made available by third-party service providers. The Company has not independently verified such statistics or data. 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.
39 IMPORTANT NOTE REGARDING NON-GAAP FINANCIAL MEASURES This presentation includes certain “non-GAAP” supplemental measures that are not defined by generally accepted accounting principles, or GAAP, including the financial metrics defined below, of which the calculations may from methodologies utilized by other REITs for similar performance measurements, and accordingly, may not be comparable to those of other REITs. FFO: The Company calculates funds from operations (FFO) in accordance with standards established by the Board of Governors of the National Association of Real Estate Investment Trusts, which defines FFO as net income or loss calculated in accordance with GAAP, excluding (i) extraordinary items, as defined by GAAP; (ii) gains and losses from sales of depreciable real estate; (iii) impairment write-downs associated with depreciable real estate; (iv) gains and losses from a change in control in connection with interests in depreciable real estate or in-substance real estate, plus (v) real estate-related depreciation and amortization; and (vi) including similar adjustments for equity method investments. Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity method investments, as well as equity and debt securities, as applicable. Core FFO: The Company computes core funds from operations (Core FFO) by adjusting FFO for the following items, including the Company’s share of these items recognized by its unconsolidated partnerships and joint ventures: (i) equity-based compensation expense; (ii) effects of straight-line rent revenue and expense; (iii) amortization of acquired above- and below-market lease values; (iv) debt prepayment penalties and amortization of deferred financing costs and debt premiums and discounts; (v) non-real estate depreciation, amortization and impairment; (vi) restructuring and transaction-related charges; (vii) non-real estate loss (gain), fair value loss (gain) on interest rate and foreign currency hedges, and foreign currency remeasurements except realized gain and loss from the Digital Other segment; (viii) net unrealized carried interest; and (ix) the tax effect on certain of the foregoing adjustments. The Company’s Core FFO from its interest in BrightSpire Capital, Inc. (NYSE: BRSP) represented the cash dividends declared in the reported period. The Company excluded results from discontinued operations in its calculation of Core FFO and applied this exclusion to prior periods. Beginning with the first quarter 2021, the Company revised the computation of Core FFO and applied this revised computation methodology to prior periods presented. FFO and Core FFO should not be considered alternatives to GAAP net income as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions. FFO and Core FFO should not be used as supplements to or substitutes for cash flow from operating activities computed in accordance with GAAP. The Company uses FFO and Core FFO as supplemental performance measures because, in excluding real estate depreciation and amortization and gains and losses, it provides a performance measure that captures trends in occupancy rates, rental rates, and operating costs, and such a measure is useful to investors as it excludes periodic gains and losses from sales of investments that are not representative of its ongoing operations. The Company also believes that, as widely recognized measures of the performance of REITs, FFO and Core FFO will be used by investors as a basis to compare its operating performance with that of other REITs. However, because FFO and Core FFO exclude depreciation and amortization and capture neither the changes in the value of the Company’s properties that resulted from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of its properties, all of which have real economic effect and could materially impact the Company’s results from operations, the utility of FFO and Core FFO as measures of the Company’s performance is limited. FFO and Core FFO should be considered only as supplements to GAAP net income as a measure of the Company’s performance. Additionally, Core FFO excludes the impact of certain fair value fluctuations, which, if they were to be realized, could have a material impact on the Company’s operating performance DigitalBridge Operating Company, LLC (DBRG OP): DBRG OP is the operating partnership through which the Company conducts all of its activities and holds substantially all of its assets and liabilities. The Company is the sole managing member of, and directly owns approximately 90% of the common units in, DBRG OP. The remaining common units in DBRG OP are held primarily by current and former employees of the Company. Each common unit is redeemable at the election of the holder for cash equal to the then fair value of one share of the Company’s Class A common stock or, at the Company’s option, one share of the Company’s Class A common stock. DBRG OP share excludes noncontrolling interests in investment entities. Throughout this presentation, consolidated figures represent the interest of both the Company (and its subsidiary, the “DBRG OP”) and noncontrolling interests. Figures labeled as DBRG OP share represent the Company’s pro-rata share. Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA): The Company calculates Adjusted EBITDA by adjusting Core FFO to exclude cash interest expense, preferred dividends, tax expense or benefit, earnings from equity method investments, placement fees, realized carried interest and incentive fees and revenues and corresponding costs related to installation services. The Company uses Adjusted EBITDA as a supplemental measure of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. However, because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited. Digital Operating Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate (EBITDAre) and Adjusted EBITDA: The Company calculates EBITDAre in accordance with the standards established by the National Association of Real Estate Investment Trusts, which defines EBITDAre as net income or loss calculated in accordance with GAAP, excluding interest, taxes, depreciation and amortization, gains or losses from the sale of depreciated property, and impairment of depreciated property. The Company calculates Adjusted EBITDA by adjusting EBITDAre for the effects of straight-line rental income/expense adjustments and amortization of acquired above- and below-market lease adjustments to rental income, revenues and corresponding costs related to the delivery of installation services, equity-based compensation expense, restructuring and transaction related costs, the impact of other impairment charges, gains or losses from sales of undepreciated land, gains or losses from foreign currency remeasurements, and gains or losses on early extinguishment of debt and hedging instruments. The Company uses EBITDAre and Adjusted EBITDA as supplemental measures of our performance because they eliminate depreciation, amortization, and the impact of the capital structure from its operating results. EBITDAre represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which we believe is particularly helpful for generalist investors in REITs. EBITDAre depicts the operating performance of a real estate business independent of its capital structure, leverage and noncash items, which allows for comparability across real estate entities with different capital structure, tax rates and depreciation or amortization policies. Additionally, exclusion of gains on disposition and impairment of depreciated real estate, similar to FFO, also provides a reflection of ongoing operating performance and allows for period-over-period comparability. However, because EBITDAre and Adjusted EBITDA are calculated before recurring cash charges including interest expense and taxes and are not adjusted for capital expenditures or other recurring cash requirements, their utilization as a cash flow measurement is limited. Digital Investment Management Fee Related Earnings (“FRE”) / Adjusted EBITDA: The Company calculates FRE / Adjusted EBITDA for its investment management business within the digital segment as base management fees, other service fee income, and other income inclusive of cost reimbursements, less compensation expense (excluding equity-based compensation), administrative expenses (excluding fund raising placement agent fee expenses), and other operating expenses related to the investment management business. The Company uses FRE as a supplemental performance measure as it may provide additional insight into the profitability of the overall digital investment management business. FRE / Adjusted FRE is presented prior to the deduction for Wafra's 31.5% interest. Assets Under Management (AUM): Assets owned by the Company’s balance sheet and assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations. Balance sheet AUM is based on the undepreciated carrying value of digital investments and the impaired carrying value of non digital investments as of the reporting date. Investment management AUM is based on the cost basis of managed investments as reported by each underlying vehicle as of the reporting date. AUM further includes uncalled capital commitments, but excludes DBRG OP’s share of non wholly-owned real estate investment management platform’s AUM. The Company's calculations of AUM may differ 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. Fee-Earning Equity Under Management (FEEUM): Equity for which the Company provides investment management services and derives management fees and/or performance allocations. FEEUM generally represents the basis used to derive fees, which may be based on invested equity, stockholders’ equity, or fair value 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. Monthly Recurring Revenue (“MRR”): The Company defines MRR as revenue from ongoing services that is generally fixed in price and contracted for longer than 30 days. This presentation includes forward-looking guidance for certain non-GAAP financial measures, of guidance for Adjusted EBITDA or FRE to the most directly comparable GAAP measure because the Company is not able to predict with reasonable certainty the amount or nature of all items that including Adjusted EBITDA and FRE. These measures will differ from net income, determined in accordance with GAAP, in ways similar to those described in the reconciliations at the end of this presentation. We do not provide guidance for net income, determined in accordance with GAAP, or a reconciliation will be included in net income.
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