Q4 2020 Colony Capital Inc Earnings Call
Yeah.
Okay.
Greetings and welcome to Colony Capital, Inc, fourth quarter, and full year, 'twenty and 'twenty earnings call.
At this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
And once you require operator assistance during the conference. Please press star zero on your telephone keypad.
And as a reminder of this conference is being recorded.
And it's now my pleasure to introduce your host several one managing director of Investor Relations. Thank you you may begin.
Good morning, everyone and welcome to colony, Capital's fourth quarter, 'twenty and 'twenty earnings Conference call.
<unk> on the call today from the company as Marc Ganzi, our President and Chief Executive Officer, and Jackie Who's our Chief Financial Officer before I turn the call over to them I'll quickly cover the safe Harbor some of the statements that we make today regarding our business and operations.
The actual performance include the effect of the COVID-19 pandemic on those areas.
May be considered forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially.
All information discussed on this call is as of today February 25th 'twenty 'twenty, one and.
And colony capital does not intend and undertakes no duty to update future events or circumstances.
For more information please refer to the risk factors discussed in our most recent form 10-K filed with the FCC and connection with the quarter ended December 31, 'twenty and 'twenty.
With that I'll turn it over to Marc Ganzi, our president and CEO.
Mark.
Thanks Evan.
First of all I'd like to start by thanking everyone for their interest and attention today.
As many of you know where and flight on a profound transformation.
From a diversified REIT.
Operating across many real estate verticals to a very focused digital infrastructure REIT.
Today, Jackie and I'd like to cover four main topics.
First I'd like to walk you through some of the terrific progress we made in 'twenty and 'twenty towards our digital transformation.
Jacky will cover last year's financial results and lay out our 2021 digital guidance.
And I'll finish up with and outlook around what we're looking forward to in 'twenty and 'twenty one.
And lastly, the investment case around colony.
Yeah.
First off one of my favorite and simple slides that really crystallizes, what we're focused on here.
Along with the mantra that many investors have responded well to which is simply promises made promises kept.
This is really seminal to the colony Ciudadano story, where about setting goals.
And meeting and beating them consistently.
We made a lot of progress in this respect in 'twenty and 'twenty across all four of these pillars.
And I'll walk you through each of these briefly.
First and foremost it's and it was really important work what we did last summer building liquidity and stabilize and colony and the midst of the pandemic was absolutely central to our investment thesis.
We undertook four key initiatives that ultimately created almost $2 billion of liquidity to manage through this unprecedented period.
All of them ahead of cost, but ultimately they put us in a position of win into 'twenty and 'twenty, one and beyond.
Let me describe some of those silver linings and achievements first we amended our revolver.
We also built renewed credibility with our lenders.
I bring deep relationships from the digital sector and those were critical to.
The shifting that dynamic.
Our new exchangeable notes pay down our 'twenty and 'twenty, one maturities, but this process also very importantly expanded our shareholder base.
Many of these convert investors are here to stay and have initiated positions and our common stock.
As we expected our strategic investment from Walker is already expanding beyond its initial scope.
And they've supported the growth of our investment offerings were already north of $500 million invested up from $400 million at the start and we only see this relationship growing and the coming years.
Finally legacy monetization, we're at the high end of our guide.
Almost $700 million at prices in line with revised carrying values that we set up for you last summer.
All in all of this was a tremendous year in terms of building, our liquidity and setting up our foundation.
Before we jump to the next initiative I want to briefly revisit of slide that we shared with you last summer.
At that time, we suggested that the work we were doing to repair the top of the stack was necessary before we could build confidence and our common stock.
Our converts and preferreds were working at the time, but the stock was still well below $2.
Fast forward to today, our debt has continued to strengthen and notably our stock has started to respond trading north of $5 recently.
Our thesis at that time was if we fix the debt the common and turn would respond and we were correct.
The next pillar of our transformation centers around harvesting value from our legacy assets to fund the acquisition of digital businesses.
The other important piece here is simplification as we sell businesses.
<unk> diminishes from colony of.
Our overhead steps down and our path becomes clear.
Two of the Big steps forward, we took last year with the sale of our hospitality business.
Which was significantly impacted by Covid and the progress we've made selling assets from our other equity and debt or as we like to call it OE and D portfolio.
And the case of the hospitality of the Big deal here is reduced complexity.
Of course, lowering our debt stack.
And our overall leverage for the organization down 44% once we finalize the transfers later this quarter or early next quarter.
And the case of O N D. It's about unlocking almost $700 million to reinvest and digital.
We now have less than 50 investments and our O N D segment with less than $1 billion left to harvest.
Turning the page to the digital side of the business. This is where we really get excited one of the reasons for that excitement is all of the progress, we're making buying and increasingly building great digital companies and logos.
We raised and deployed $22 billion into digital assets last year.
And our investment management platform and our balance sheet.
The sale was a signature transaction for us we close it early and the air and we've been busy executing our digital colony value added playbook.
And for almost a year now.
On the balance sheet, we added a terrific stabilized asset and vantage S. D C. Our portfolio of the highest quality of Hyperscale data centers in North America.
We also transformed data bank supporting its acquisition of XE, Colo, which tripled the number of data centers, they manage all supporting edge compute workloads.
These two investments took our digital balance sheet.
To October of $550 million, and we raised over 1.5 billion alongside of those investments, which generate fee and carry which enhances of course our economics.
That's the fuel for the digital operating segment of our business the ability to take our balance sheet and bring along the third party capital side by side with us.
Not only handsome returns, but most importantly generates predictable earnings.
Okay.
The last pillar of our digital transformation centers around growing our digital investment management business.
We've made incredible progress and 2020.
We promise, 15% growth and we delivered that by the middle of the year and.
And by Q3, we had double that to 30%.
With the first close of digital colony partners. Two we took the premium growth to around 90 per cent for the year.
This was incredible.
I want to give a huge shout out to our private capital markets team, just an absolute amazing effort and raising this capital now we get to do it again.
Yeah.
I want to talk a little bit about D C b, two and more detail.
First and foremost the digital colony partners two funds first close was almost two times the size of our first close on D. C. P. One.
In fact, the first close of D. D. C. P. Two was actually larger than all of D. C. P. One.
We have a target of $6 billion.
And ideally we can get that done this year.
Capital formation continues to be a central part of our business thesis is we continue to pivot and transform colony.
And with that I'll turn it over to my partner, Jackie will who will walk us through our of 'twenty and 'twenty financial performance and our 'twenty and 'twenty one outlook.
Jackie Thank you Mark and good morning, everyone. As a reminder, and addition to the release of our fourth quarter earnings. We felt the supplemental financial report this morning, which is available within the shareholder section of our website.
Starting with our fourth quarter results on page 14. The company has continued to make progress and its digital transformation.
Digital AUM increased to 58 per cent of total AUM at the end of the fourth quarter almost doubling since the end of 2019.
For the fourth quarter reported total revenues were $339 million, which represent the seven per cent increase from third quarter revenues of $317 million GAAP.
Net loss attributable to common stockholders was $141 million for 30 cents per share.
The full year GAAP net loss of $2 $8 billion was primarily due to our recognition of and over 2 billion impairment charge on our legacy assets and the second quarter.
Total company core funds from operations, excluding gains and losses was $18 million from the fourth quarter, reflecting the results of continuing operations.
The continued core at the <unk> improvement and rebound from the impact of Covid pandemic was driven by the execution of our corporate strategy, including strong performance from the digital segment and our continued focus on reducing corporate G&A expenses.
And the fourth quarter, we returned net equity proceeds of $311 million from legacy asset monetization.
Included $125 million from a repayment of Portland multifamily preferred equity possession $85 million from of our remaining bulk industrial of laptops.
And $50 million from under origination drill called joint venture the.
The divestitures highlight our ability to not just monetize strong legacy asset portfolios, but our ability to also the drop our more challenged assets as demonstrated by our sale of origination drill count which was of distressed energy investment.
And notably we received net proceeds the approximate at our carrying values, while monetizing assets earlier than we had planned for.
For the full year 'twenty and 'twenty, we received net equity proceeds of nearly $700 million from legacy asset monetization and achieving the high end of our $600 million to $700 million guidance that we had outlined last quarter.
Moving to the next page consolidated revenues digital revenues increased to $152 million and 28 per cent increase from last quarter driven by the company's acquisition of the Colo and December 2020, the acquisition of vantage stabilized data centers and July of 2020, and new management fees from the.
Successful first closing of D C P too.
Looking at the right side of the page consolidated digital fee related earnings and adjusted EBITDA increased to $71 million during the fourth quarter, which is the 30% increase from last quarter.
Fourth quarter, FRE was $10 million, excluding of $6 million of one time outperformance incentives, but the successful DCP two capital raise the DCP two first close of $4 2 billion has already exceeded the D. C. P. One total funds side and is currently the largest dedicated digital infrastructure fund and the.
The sector.
In addition, adjusting for a full quarter impact of fees generated from the first close.
F. R E would have been $16 million and the FRE margin would have been and 52 per se, we will start to see the full impact of the DCP two first close next quarter.
Turning to page 16, we made significant progress in 'twenty and 'twenty towards our digital transformation.
Digital AUR and the increased $16 billion during 2020, representing an approximate 115 per cent increase with digital AUM, increasing from 33 per cent of total AUM at the beginning of the year to 58 per cent of total AUM per.
Pro forma for anticipated hospitality sale digital a L M would've been over 60 per cent and.
In fact, since the inception of digital colony colony capitalized rotated of approximately $50 billion and AUM.
Increasing digital to $30 billion, and a landmark transitioning over $20 billion of legacy assets.
Digital fee, earning equity under management or the U N has increased over $6 billion year to day, representing an approximately 90% increase.
And with digital the U N increasing from 43% of 64% of total AUM as.
As Mark outlined earlier this increase was driven by a strong DCP two first closing and co investment capital raised for a day of the Colo and multiple vantage data center platforms.
Turning to page 17, as we previously discussed the.
And then one of our revolver facility elimination of our original 2021 convertible notes maturity and our partnership with Walker has eliminated all liquidity risks and allowed us to accelerate our digital transformation and deploy dry powder towards digital acquisitions.
Our current financial position is very strong and we have eliminated all near term debt corporate debt maturities.
In addition, we ended 2020 with liquidity of $735 million, which was at the high end of our $650 million to $750 million guidance disclosed last quarter.
For 2021, and we expect that continued monetization of our legacy assets and the range of 400, the $600 million or greater.
And as a result, we would anticipate accumulating one one to one $3 billion of gross liquidity.
There's significant liquidity position would feel further acquisitions towards our digital transformation and allow us to further delever, our balance sheet or return capital to shareholders.
We're very excited for 2021, as our fund raising and M&A pipeline continues to be robust and this liquidity will help us execute on this pipeline and accelerate our digital growth.
On page 18, we provide and update on the corporate cost savings plan announced in the first quarter.
Since initiation of the plan the company has outperformed our original $40 million cost savings on a run rate basis through various initiatives, including the reduction of 20% of the company's non digital workforce and a 21% reduction and the company's office footprint existing at the beginning of the year.
We continue to decrease our office footprint and we expect the future of work and the office in a post Covid World include of hybrid plan that allows employees the flexibility and the work remotely.
As Mark will mention later, we are proud not just being a premier investor and digital infrastructure, but we embody it with being open and flexible with remote work and embracing ESG initiatives.
The G&A savings related to the legacy non digital business was partially offset by additional investments into our digital platform in order to support future and sustained growth for the near and long term.
We continue to expect total company cash G&A of 100 million to of $120 million. After our digital transformation is complete.
Turning to page 19, we have seen continued growth and investment management and operating segments.
Our annualized digital fee revenues increased from 76 million to $125 million and digital FRE has increased from 40 million to 66 million of accounting for a full year of fees from.
On the $4 2 billion dollar first closing of DCP two.
This increase was driven by the significant growth and digital fee you and out of had previously outlined.
The strong growth and digital operating segment revenues and earnings are the result of our continued rotation of the company's balance sheet with bandits stabilized data centers and July 2020, and the Colo and December 'twenty and 'twenty.
Looking ahead the company is providing 2021 guidance, but the key drivers of our digital transformation we.
We are targeting digital management fees revenues of 140 million to $150 million and 2021 and digital fee related earnings of 80 million to $85 million.
These are driven by our anticipated three five the 4.0 billions of additional capital raised throughout 2021, including additional fund raising to DCP, two and its final closing as well as the expansion of other products and scope of colony investment offerings.
Or digital operating we are targeting of $125 million to of $135 million of revenue and $53 million to $58 million of EBITDA and 2021.
Driven by organic growth bolt on acquisitions and are investing existing investments. It is important to note that this guidance excludes new balance sheet investments that will be partially funded by and anticipated 400 millions of $600 million of monetization starting 2021.
In addition to the 2021 guidance, we are reiterating our 2023 digital growth targets that we originally laid out with as part of our digital roadmap and the second quarter of 2020.
We continue to target digital fee revenues of 150 million to $200 million of <unk> by 2023, and digital fee related earnings of 80 million to $110 million.
The 2023 target is anticipated to be achieved through final closings of DCP, two <unk> and expansion of other products and scope of colony investment offerings.
In addition, we continue to expect until achieve of 175 million the $225 million of digital operating EBITDA with a strong pipeline of potential acquisitions to rotate proceeds received from our monetization.
Our acquisition of vantage stabilized data centers as well as our recently completed acquisition of the Colo are just two examples of our commitment to bring high quality digital assets onto the company's balance sheet and to achieve our 2023 targets.
Turning to page 21, we've summarized our 2021 guidance again, just for ease of reference and with that I'd like to turn it back to Mark where he will lay out further details of our 2021 outlook and initiatives.
Mark.
Thanks Jackie.
And I'd like to turn our attention to 'twenty and 'twenty one.
And some of the key themes that we're focused on in terms of our business plan and execution.
First off legacy monetization.
Our digital transformation continues to accelerate.
Legacy monetization and growing digital a few of them take colony to almost 67% rotated.
Our hotel sales will close at the end of this quarter or the beginning of the second quarter.
Our 2021 OEM day monetization schedule.
And our 2021, new digital T O M guidance, which Jackie just walked you through.
This takes us up to 67% rotated from and AUM perspective.
This of course is before we harvest, our wellness infrastructure and portfolio.
And our investment and sealant and see which represents a potential another 20% of rotated AUM between now and the end of the year.
Moving on to page 24, I want to highlight really four key areas of opportunity that we see across the digital ecosystem in 2021.
These are really the themes that our investment team is pursuing and where youre going to see us put capital to work in the coming year.
First and foremost, it's hard to not pick up of paper or the read something on and the internet of about five G.
We think <unk> is a profound and transformative moment for mobile networks across the globe.
To that and $1, one trillion and new Capex will be spent between now and 2025 deploying these next generation networks, there's a lot to be excited and <unk>. Many of our portfolio of companies are already having exciting discussions some of them have already signed new master lease agreements and we are beginning to deploy.
<unk> <unk> technology around the globe.
Second is Iot.
Internet of things and Internet of things networks and connections.
And our growing by leaps and bounds.
Last year, the planet ended with 20 billion of Iot connections.
Over the next four years. This goes to 80 billion total connections.
And by nine years from now and 2030, we see this number growing the 500 billion connections. This is really important we need to begin to think about this planet and no longer as consumer to consumer connections or beat of sea connection you need to really start thinking and the parameters of D. D, which is really device to device and this.
As a massive opportunity for us and it's obviously impacting all of our existing portfolio companies and it will certainly impact our new investments as we go forward.
The third opportunity, we see as the theme that carries over from last year, which is investing in cloud.
On the cloud players of our key customers and our web scale players are core to our growth going forward.
Cloud Capex spending will move to $88 billion globally in 2021.
This is of 14% increase and spend.
With some of our best partners and best customers on a global basis.
We're really excited to keep growing our hyperscale businesses around the globe and supporting our key customers.
Last but not least and probably the one topic, that's most invoke today as edge and edge computing.
And as I joke around here and probably the most overused term and the analyst community today, we're working hard on the edge and and impacts of lot of our businesses.
One 6 million servers will be placed on the edge by 2028.
This will represent 10% of all cloud workloads and.
There's a lot of growth happening on the edge and.
As the applications need to move closer to consumers closer to devices and closer to enterprises, so must of the infrastructure follow.
This will be a consistent theme that we will talk about with you throughout 2021, we're really excited about the activities that we're engaged right now and edge computing.
Moving on to page 25.
So to that and we're incredibly active.
And we continue to be well positioned to invest and high quality digital businesses not only this year, but beyond.
As I mentioned before of secular trends like cloud computing <unk> edge computing artificial intelligence all of these secular trends are being accelerated by the COVID-19 pandemic.
And are driving growth higher.
And our business has never been busier.
We closed three new deals and Q4 2020.
We have three new deals and ex and exclusivity right now that we anticipate entering into definitive documentation over the next 90 days.
And we of afford pipeline of over 40, new opportunities that we're pursuing.
And look this is not new for US we deployed $22 billion of capital in 2020, putting over 5 billion of few of them to work.
And 2021, we expect to grow AUM by at least another three 5% of $4 billion.
40 pipeline opportunities and growing back.
Back and great companies, Great management teams.
And investors want to partner with the leading company and digital infrastructure.
The setup for us has never been better at colony capital.
Moving on to page 26.
And this is really the key to our franchise in terms of our investment management platform.
And the key here is we have long term contracted fee streams that drive stable and predictable earnings the compound over time.
Starting back in 2019 with our base of our digital Bridge holdings portfolio six separately capitalized companies.
Form the original base for our growth.
And then closing the first fund in 2019 digital card digital colony partners, one which was our flagship equity fund net.
Now almost fully committed.
Co investment co investment is such an important part of our process and it really helps our investors dig deeper into opportunities that they like and most importantly, it boosts our firepower to chase larger transactions and also it's an opportunity to grow fee and our promoted capital base.
The force stack here as DCP two <unk>.
<unk> is out deploying capital as we speak three investments closed already and the fund three investments already under exclusivity and we're targeting $6 billion of capital formation and we've already closed on $4. Two <unk> is off to a fantastic start.
And then last but not least our last category is emerging.
Our liquid securities platform today manages over $400 million of AUM generating alpha across two strategies.
And last one of at least our credit platform. We now have in house one of the great credit teams pursuing digital investments that candidly our equity funds cannot pursue.
The ability to look at that in terms of second lien first lien mezzanine loans subordinated debt preferred securities. All of these are part of our credit strategy and we're looking forward to sharing with you more information about our credit strategy as the year progresses.
This is the leading digital investment management franchise and the plan of today and we're going to continue to grow it as it's seminal to our growth and most importantly allows us to continue to invest and this asset class.
So how do we bring this all together.
The way it comes together for colony two <unk>.
Is is really about first and foremost creating shareholder value.
Our new management team has been building the great next digital infrastructure platform, we are creating value for you our shareholders as we transform a complicated and diversified REIT across many real estate verticals.
A new focus digital REIT.
And most importantly, we're creating now predictable earnings.
As the complex organization and streamlined a high growth digital business has emerged with predictable earnings and attractive returns on invested capital.
And last but not least our differentiated strategy.
Our transition most importantly is aligned with the key secular tailwind that I talked about earlier.
Supported by the broadest and deepest management team and the sector.
And based on a differentiated strategy around next generation networks built to serve rapid growth and the themes that we just discussed five G cloud Iot and edge computing demand.
I'm really excited to be hosting our first investor day, it will be virtual Unfortunately, and may but it will happen this year.
And the key here is we plan to share our vision with you and continue this dialogue.
And how do we leverage these key themes around edge <unk> and most importantly, convergence and how do we implement that convergence strategy to work with our customers.
Our customers are the most important thing and our business model today, and it's where we truly differentiate ourselves 27 years of operational experience. We have a team that has the breadth and the depth to.
And to deliver for customers and that's really the key at the end of the day is a three decade track record of being able to deliver for customers and.
And last but not least sharing our digital colony value add playbook, the way that we create value and all of our investments and the details on how we do that we're looking forward to sharing that with all of you. So we hope youll participate and that it's an open invitation and we're very much looking forward to it.
So I'd like to conclude today.
With a topic that I've, often challenge investors too, which is why would you want to own colony today.
Moving on to page 29.
What I would offer to you is first of all we're the fastest growing digital REIT and the sector today.
Our revenue growth and 2020, and our revenue growth and 2021 from an organic perspective is industry leading.
Second.
Our vision for converged networks and converged infrastructure really allows you the investor to participate and the entire ecosystem.
You don't have to choose and look there's a lot of great logos that are publicly traded and our my peers and I have deep respect for them and they're very well run companies.
The world is changing and as networks converge having of converged solutions provider. We believe is a better mousetrap.
Third leadership and experience matter.
And we believe we of the deepest bench and the industry.
And this does give us an advantage it gives us an advantage to invest it gives us an advantage to find proprietary deals. It gives us the edge to finance the asset a little bit tighter and it gives us the edge to operate our business is just a little bit better.
And at the end of the day. This creates returns returns for you and a track record of track record that's been going for 27 years.
Last but not least and this is really important to me on a personal based on some of you have heard this from me when you have met with me one on one.
And myself and the entire management team remains very focused on ESG and we want to walk you through our best in class approach and how we're delivering that value for not only our employees our customers, but you are investors and how this impacts the way we operate our businesses.
So moving on to page 30, you know today, where are we we are a global digital REIT and we are focused on converged networks.
We believe the differentiation that colony offers today is a series of solutions that are focused on next generation mobile and Internet connectivity solutions through this experience with customers.
Our customers don't just buy one thing from US today, what were finding increasingly is that our customers want to buy fiber from us. They wanted by edge compute they want to buy infrastructure on our towers. They want to purchase of small cell and some of these customers are doing it and multiple chances or what I would say multiple at that.
And so this is really important.
Just being able to sell one of those asset classes, certainly is interesting and investors will make money on it.
But as we think about this notion of where <unk> networks are going.
And ultimately where they need to perform from a speed and the latency perspective, and most importantly from a reliability perspective.
Understanding the convergence of these networks and understanding how to deliver for customers across multiple swim lanes and digital infrastructure is going to be of critical success factor.
And once again this is not a knock on the traditional digital infrastructure ecosystem, where the great companies that we call our peers and that we compete against.
And what we offer to you today is the world is changing the landscape is changing.
So on page 31, just a little taste of what we've built so far.
Between the balance sheet and investment management, we've assembled the diverse digital ecosystem, where we've invested over 30 billion of AUM today and.
Across 19 distinct portfolio of companies.
This represents over 360000 and cell sites.
130000, and fiber route miles well.
Well over 38000, and small cells and over 100 data centers globally.
And as you can see we've laid this out for you we've laid out at the time of the investment the vertical that we compete in and ultimately where the capital was sourced from.
This is truly the digital colony ecosystem.
Next up on page 32, as I mentioned earlier people do matter and people that have been around me for the.
The three decades that we've been working together now is.
The simple phrase that I say around here, which is people create the alpha not the assets.
We absolutely have the best team and the industry.
Our digital colony investment team is 93 professionals globally on.
Operating between Boca Raton, Los Angeles, New York, London, and most recently Singapore.
And then down below we have a <unk>.
Team of leaders that are second to none of.
This is really our operating Ceos and our in house, what we call our entrepreneurs and residents are our management partners and.
And this is the operating team that helps us form our views and our ideas and gives us really unique perspective and insights into our customers.
So it's a unique model for us our team is a combination of obviously very experienced and skilled investment managers and investment professionals.
But also our bench is very deep in terms of operating Ceos that have had multiple decades of experience and negotiating leases and.
Attending zoning hearings building, new infrastructure of leasing new infrastructure, managing that infrastructure and most importantly, managing it to 509 standards and two of eight and acceptable reliability standard that our customers. Most importantly rely on on a global basis.
We would be nowhere without our team and we do believe we have the deepest digital bench and the industry.
So lastly, I want to share a little bit with you my view of the future and.
And that future involves ESG.
And today, we're implementing ESG not only here at colony on a corporate basis, but we're implementing this down below of our portfolio companies and well.
So the key initiative from my perspective, and you've heard it from me here as the CEO is what we call colony net zero 2030.
This is the bold initiative that we're setting and to action that over the next nine years, we plan to get all of our portfolio companies net zero of greenhouse gas emissions within that nine years and.
And look we're already well down the road.
Last year, we announced the vertical bridge became the world's first carbon neutral tower company.
Databank hosting of climate Corp, 's fellow from the Environmental Defense Fund in 2021.
And in addition to that today Databank.
The has about 58% of their energy and that has acquired from Green sources.
Banfield, our fiber company, and Toronto, which serves eastern Canada, both Montreal and Toronto has agreed to go net zero carbon footprint by December 21 2021.
And we just announced in 2020 and November net Scala, which is our Hyperscale data center business in Brazil, now uses 100% of its energy consumption from renewable power.
And this is just the start we're going to bring you more details more kpis and more dashboards. This is important this matters, we have to do better and it starts here. It starts with the leaders here of colony capital and it will continue down on our portfolio of companies and we're leading from the front on this initiative.
Secondly dei.
And I've long believed and a diverse and talented workforce through mentorship internships recruiting and most importantly, providing a quality for careers and compensation and promotions.
This is something that started a long time ago for us it's not something that just started about a year ago.
We did form of DDI Committee and this is a committee of professionals inside of our company and it is initiating programs that have a focus and our scalable.
There are four pillars to our DDI policies and our implementation of <unk>.
First and foremost we've got to provide mentorship.
This starts at the high school level.
We're working with high school students to let them believe they have of future and then they can go to college and the best way to prove to people that the world is an equal places through education, and giving young students the chance to believe they can get to college and neighborhoods, where they have been told they can't get to college is absolutely central to the dialogue.
Second internships, we recently partnered with five black universities, and we're implementing and internship program, where 50% of our and turns and the 2021 class come from those universities four out of five have already been hired.
Third.
Not only do we have to provide those internships, but we have to recruit from those universities, attracting the best diverse talent from around the globe to work at colony capital and.
And most importantly work and our digital business, where we're connecting communities and really building those digital bridges.
Last but not least we got to create a level playing field.
Got to make it clear that at colony capital everyone has the chance to advance.
And that there is an equal opportunity for everyone to be promoted and the compensation is also equal for all of our employees irrespective of race irrespective of gender. This is so important the.
These four pillars are the central and part of our strategy to ensure that we create the level playing field not only of colony capital, but hopefully we create a level playing field and this country.
Last but not least is results and execution.
We've begun defining ESG metrics from all of our portfolio of companies. We're collecting we're analyzing and most importantly, we're reporting that data.
Digital colony integrates our ESG analysis into our due diligence we have been doing that since 2013.
On potential investments.
And then we report key company level and macro ESG risks and opportunities.
And then we implement that and our asset management framework, and ultimately reporting back out and Kpis and metrics.
Partnerships are critical to this implementation.
We partnered with and we've become a member of several organizations that ensure that the company has a best in class industry ESG framework.
And down below you'll see some of these organizations that we have partnered with the <unk>.
<unk> the.
The PRA, which stands for.
Sponsel investment principles and the.
And last our global charity of telecom phones from Ta, which actually goes into communities that have been ravaged by acts of God and disasters or simply just does not have the wherewithal from an economic framework to have digital infrastructure and their community. We go into these communities, we invest our time, we invest our capital and once again the common theme is building the.
And those digital bridges.
So.
With that I think we've shared for you the invitation.
To partner with us to invest with us.
It's an incredibly exciting year for us we feel like we've made a lot of progress and this journey with you over the last year.
We now get to finish the mission.
<unk> thousand 21 is about that we have it all in front of US we are of great opportunity. We are of great team, we have and an incredible investment framework and.
And we're really excited to continue down this digital road with you.
And I want to thank you for your faith and trust and our management team.
And we look forward to continuing the dialogue and most importantly, we look forward to working hard for your capital. Thank you very much.
Have a great day.
Operator that concludes our prepared remarks.
Please open the call for questions.
Thank you, ladies and gentlemen at this time and we will be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad.
Confirmation tone will indicate your line is and the question queue. You May Press Star two if you would like to remove your question from the Q4 participants using speaker equipment and may be necessary to pick up your handset before pressing the starkey of.
The first question comes from the line of Randy Randy Binner with B Riley Securities. Please proceed with your question.
Hey, Good morning. This is Helen Johnson and it'd be around I'm on for Randy on set of question on the guidance around monetization for the year.
The $4 million to $600 million figure encompass potential dispositions and the wellness infrastructure or is that just net reflect OE day.
Yes that does only reflect the OLED this is jackie.
Okay, great and potentially that could be and even more capital freed up if you could.
Monetize and I'll take wellness.
And that is correct.
Okay, Great. That's helpful. And then on the guide for digital FRE and I think of those numbers are a little higher in the valley.
And that we had come in and of the quarter on does that.
Primarily fully reflecting the impact of DCP two are there any of the major assumption changes driving that I.
I would say that principally it includes only DCP two to the degree that we're successful with new products, which we're continuously innovating on with and Mark with HOKA has talked about there.
And there could be upside there.
Yeah and also some of our legacy companies for example, like vantage and continue to actually raise capital so.
As these platform scale and they get bigger and sometimes we go back to the well and we'll put more capital to work across the 19 portfolio companies.
The vantage and vantage Europe are great examples of that last year, Jack in the fourth quarter, we raised a significant amount of new capital supporting those two platforms and of course that comes in the form of co investment which of course drives.
AUM.
Okay, Great. Thanks, and then just my last one and St Digital Aon and as the 58% with <unk> results.
Think back and the task they talked about 90% digital is kind of of target towards the year in 'twenty, one and that's still the reasonable way to think of it.
I think it is and I think it's very much the reason way to think about it I think we are.
With the monetization and OE and D. The guidance that we've just given you between four to 600.
And some of the past that we see Ford for wellness infrastructure, and then of course of the path forward for sealant and see.
Where we think Theres a lot of strategic alternatives ahead of us there.
Obviously, we see a path into the high <unk>. The question is can we get into the Ninety's and that will be a function of whether or not we're successful and deploying new capital in 2021, I think we've telegraphed pretty clearly today three deals have closed and DCP. Two <unk>. We have three that are on the runway of getting ready to close so that.
That's great we're going to deploy a lot of capital out of that second fund and keep in mind, and that's purchased and the first quarter of the year and by the end of the first quarter and maybe beginning of second quarter will of always we will have already closed six transactions for the year and at that point, we're talking about being 90 to 120 days into a into.
The long year. So remember this is a push and a pull correct. The push is obviously as we push and put more capital to work that grows our digital and AUM. The pull is of course, and we sell assets and pull that out of AUM. So we're showing you a clear road to 65%.
We have of potential road that gets us to 85% if we find the correct outcomes for sealant and see and for wellness and then of course, if we deploy capital certainly I'm not predicting at the same velocity of last year is a pretty good year last year, but if we can deploy more capital.
And that 90% threshold that I'd telegraphed almost two years ago at NAREIT in New York City is something that we can get to.
Okay great.
All right I appreciate it.
Thank you.
Our next question comes from the line of Colby <unk> with Cowen. Please proceed with your question.
Great. Thank you a few if I may 1st off as it relates to on balance sheet opportunity.
I'm curious if you have some thoughts around asset type and you obviously have two data centers on the balance sheet now and then houses and timing potentially around that and then secondly, as it relates to seal on the feed has been comments and the past about potentially selling below book value.
Any color on how youre thinking about that today and potential timing and then lastly on the healthcare business.
And what is the update.
Since last quarter are you more confident and the ability to sell that.
And what evaluations look like which part of it been trending et cetera. Thank you.
Hey, Colby and good morning, how are you.
And so.
Three questions there that I'll have to unpack I always loved working with you call. The you always you always give me a lot to think about maybe I can start.
First with wellness infrastructure and.
And I just want to start by saying.
I really applaud the effort of rich Welch and his team.
This was an incredibly difficult year for that business and if you take a look at the core of <unk> that was driven out of that business, particularly in the fourth quarter against the fourth quarter of 2019, rich actually outperformed and I think this is a function of a lot of things a lot of hard work happened, there which was opportunistic refinancings.
Selling some non core assets.
Building occupancy and skilled nursing and our medical office portfolio and.
This is really a.
And interesting interesting business and now as the elections are behind us and we begin to vaccinate, our seniors, we see recovery and senior care and of course, our triple net lease hospitals performed incredibly well and the pandemic.
The continued to be optimistic about wellness infrastructure.
I continue to also be optimistic about the range of strategic alternatives, we have for that business Colby.
We think that this is indeed, a life sciences infrastructure.
We received a lot of inquiries about this business, it's really difficult koby to assemble a portfolio of the size of the scale almost 400 properties generating significant cash flow and significant EBITDA. So like I said, we feel like this business has strengthened we.
We think we are of Great management team led by rich and his team they've done a fantastic job and we think scarcity and platforms is really hard to find.
And as infrastructure investors look for ways to play of life Sciences.
We do think this is a very unique portfolio.
Now we've been very cleared of the street, we don't intend to stay in the wellness infrastructure business forever, but I do what I would say is the performance has been strong we have a really unique set of assets. We're.
We're going to continue to evaluate the strategic alternatives.
Particularly here in this quarter and and the next quarter and we will continue to give you the street guidance around that.
Second sealant and see.
Once again, another really tough business that had a very tough year, but leadership matters, Mike Massey has done an incredible job and the entire team. There I got on also signal out Andy Witt, who has done a fantastic job, helping Mike first of all rebuild credibility and that business.
Similar to my strategy here of colony, when I brought Mike on Board and the first thing. We both said is we've got to restore liquidity and we've got to be transparent and now <unk> done both of those things provided transparency. We built liquidity we've originated a bunch of new loans. They had a great earnings call yesterday and the outlook for <unk> looks good.
I think one great thing about Mike Mazzie as he has an enormous track record and you want to have Ceos that are battle tested Colby guys that have been to the war before Mike was of great Seo of ladder navigated through the financial crisis of <unk>.
Unlike me, we both have been through many financial crisis, So I really like what he's done now.
And now mortgage rates typically as you know Colby don't trade of book value. That's just something that just doesn't really happen what I would say is since I've become the CEO and I put Mike in charge of the business, we've had a tremendous recovery and the share price.
And along that road to recovery others of noticed.
Similar to our life Sciences, and wellness infrastructure business. We think the platform is really unique we think the platform is obviously has scale and we continue to receive a lot of interest and that platform.
Much like our wellness business, we are evaluating the strategic alternatives that business inside this quarter those alternatives will manifest itself probably in the second quarter and will continue to keep an open mind and look we have a lot of options for sealant and see.
And.
What I would say is this management team as you have come to appreciate is incredibly thoughtful and.
We're thinking through all of the alternatives that are available to us in the meantime.
And Mike and his team and Andy and the rest of the team there are executing and that's what we ask them to do so we're going to continue to build confidence and the share price, we're going to continue to put good loans out and.
Like where we stand today and the mortgage REIT.
You got me so excited about two legacy businesses Colby.
Your first question again, one more time. Please if you don't mind, just about the digital balance and I think.
Yes, so yes.
<unk> sheet.
When we.
What we always think about Colby on the balance sheet as I like to have assets on our balance sheet that our yield driven.
That of REIT qualifying.
And the most important off of the best downside protection and so as you think about our investment management platform and you think about DCP one of the DCP to those investments are typically very growth of <unk>.
And in that respect don't have current cash yield.
And most of those are platforms, you know a lot of those platform company Ceos really well and.
And our digital colony franchise on the investment management side. Those businesses are built to grow we're putting capital behind them. We're building new data centers, new fiber routes, new towers and so they traditionally don't throw off the current cash yield that would like to see on our balance sheet of the digital REIT. So that really creates the opening that creates the opportunity. So we took that opportunity.
The first investing in data bank, which had an absolute stellar year last year.
And then we invested and vantage yieldco.
Moving 12 of the best data centers and the U S and to that Yieldco and look as vantage continues to build great data centers and they become stabilized and they become more into that yield vehicle. We will continue to add great Hyperscale data centers to our balance sheet that is the right type of asset to own on balance sheet.
We continue to believe towers, particularly mature towers that have greater than one 5% of two tenants could exist on our balance sheet. We continue to believe that wholesale fiber, where you have those long contracted cash flows could reside on our balance sheet and so we continue to look.
What I would tell you is we had we took quite a few of at bats, and the fourth quarter and the first quarter and adding some high quality assets to our digital balance sheet, but candidly, we got priced out of those opportunities.
By example, we really like U S domestic towers.
We chased the transaction well through Christmas and into January but ultimately what we're seeing the other public tower companies pay just doesn't make sense. So we stayed disciplined we could have chased we could have top of the bid. We could have won the bid but ultimately the decision rests with me and you've known me for a long time, Colby I'm not going to overpay for assets.
And so the good news is we've got a deep pipeline of balance sheet ideas.
We're pursuing one of them right now and we'll just keep coming up with good ideas I would say on the balance sheet side, we probably are going to of a little more patients Colby because of that balance sheet capital and so precious. So I think this year of the ideas to add a new asset to the balance sheet. That's what we promise you. We will continue to add more hyperscale data centers to the balance sheet. This year. So.
Pretty confident and our ability to deploy capital off the balance sheet to build more of those predictable balance sheet earnings.
Great. Thank you.
Yeah.
Our next question comes from the line of Jade Rahmani with K VW. Please proceed with your question.
Thank you very much based on the 'twenty and 'twenty. One the outlook you gave I was wondering if theres anything you can say about maybe your core of <unk> expectations, perhaps on the digital standalone basis or excluding.
The losses and gains.
Since you spelled out some of those other targets.
Yeah, well I would say Jay that we're focused more on EBITDA off of the digital business and and that's why we've given the guidance associated with that and and if you kind of look at where we are headed towards in terms of our digital only business.
That's the more of the the right metric.
Core <unk> per digital really if you kind of look at the digital infrastructure of rate is very much starting with adjusted EBITDA and net if you kind of back out maintenance Capex, which for our business is on the two data.
Some of our businesses is very low so it sort of eight to five 5% to 8% of.
Of EBITDA.
So that's kind of how you should look at it.
Thanks, very much just in terms of the overall capital structure or are there further rationalizations or contemplating perhaps redemption of any of the preferreds or some other refinancing did see of the securitization that was completed at the very attractive yields and I know thats something Mark has spoken about so any comments on the capital.
Structure overall, thanks for taking the questions.
Yes, Jay Thank you, it's Mark how are you.
So look I think we feel like the work we did last year was the heavy lift on the balance sheet and I think now we are and are positioned to be perhaps more forward leaning and play offense. So I think we'll take a look at our revolver and we're seeing a lot of attractive terms to recast that revolver, we honestly haven't needed it because we've done a great job.
Rotating to cash I would say the second part of our analysis continues to be around the other portions of our debts deck, particularly the preferreds, we look at that as obviously long term perpetual capital, but it's expensive and so as we think about our ability to access the securitization market.
We think that's an interesting opportunity for us and in fact yesterday, we did access the securitization market place.
The data bank had an incredible financing that got done yesterday of $658 million securitization, Jade, which really puts the permanent capital structure in place for data bank on a 30 year tenure with a five year <unk> date, what's great about that is and it's a great lesson and perhaps a case study for us thinking about the broader colony.
Balance sheet is that deal was 9% to seven times oversubscribed and every class. We ultimately were able to refine and tighten pricing for data bank and that deal was led by Tom <unk>, who runs our global.
Credit team and ultimately the coupon blended out at about two 3% now what's great about that is obviously, we've reduced our borrowing cost by $17 million per year, and so from our perspective that puts another $87 million of free cash flow back into the data bank, which obviously enhances its earned.
<unk>, but allows us to reinvest and we also closed of 100 and $100 million VFR on top of that the.
And variable funding note that allows us to continue to finance new construction at these incredibly attractive rate. So we do have a great relationship with the rating agencies. It's been a 20 year, we're almost a 20 year relationship that I've had.
And my partner, Tommy and Augie and I worked very hard to spend time with the rating agencies. This is the first edge datacenter securitization that's been done and it follows a long track record of many first trust were the first to do a small cell securitization. We are the first to finance the cell towers on the securitization structure and Latin America with our MTP securitization.
First to do of Hyperscale datacenter securitization, we've gone on and do four we've done multiple cell tower securitization. So this is the marketplace Jade, we feel really comfortable with and we do feel like Jackie and I feel like we can ultimately transform the colony balance sheet over the next 24 months, that's kind of our our goal. This is something thats on the to do list for this year and we will continue to.
Give you more guidance and more specificity, but obviously.
Getting database and capital structure in place for the next 30 years was really important and most importantly, generating that incremental savings and free cash flow for our investors was really important as well and our Jackie if you want to add any color of that think about those great Mark and.
And what's your question on preferred equity look we've got over one $3 billion of other equity and debt values that work and the container monetize over the course of the next one year to two years, we have over $600 million of carrying value on healthcare REIT that we previously disclosed and continue to have the significant over $2 billion worth of.
Of value and our RF up and all the legacy Ochlocrat will monetize over the course of the next couple of years and we will look to deploy good digital operating infrastructure, good REIT assets onto our balance sheet as Mark restocking and we've got a good pipeline on it and took the degree that we've got upfront cash which will ensure the quickly.
Hopefully the have significant amounts of though we will of drop that billion dollars of preferred equity.
And we would look the same on on that cost of debt. So we'll be opportunistic about it and I think the core.
Plenty of one of the doable.
Our next question comes from the line of Jonathan Atkin with RBC. Please proceed with your question.
Thank you.
A question about the kind of the deal pipeline for inorganic growth of lot of opportunities and just conceptually how do you think about <unk>.
Bringing in minority JV partners or co investment partners.
The dependence on geography type of assets size of the size of deal flow.
Or any other kind of things that you could share around to criteria and then secondly on the.
On the mobile five G front with the C band auction, having concluded now and the U S and I'm just interested if you have any views on the cadence with which we might start to see of ramp.
Of the activity from some of the auction winners. Thank you.
Jonathan how everybody good to hear your voice, thank you for and spending time on the call today.
First of all let's let me start with <unk> I mean, I think you and I are both sort of.
Surprised at.
At the total quantum of dollars spent on C band.
And look my broad view is this is a good thing and it's a good thing because ultimately C band spectrum.
As you know performs incredibly well and indoor situations and enterprise situations and I think all of the carriers of bought the spectrum because they know that the opportunity set for them is the head towards enterprise and so providing those enterprise and <unk> solutions.
And really is something we've already been doing.
Particularly and extranet, we'd already been deploying C band technology inside of some.
And some commercial users large corporations large factories.
One of the the largest shipping port and the United States, we have of trial going with so we're pretty excited about C band. It has multiple parts of opportunity for the carriers and most importantly, Jonathan for us as infrastructure owners and as we've seen and our two trials one of the factory and auto and auto factory and Detroit and the others of shipping Port and long Beach, we're seeing multiple.
We'll use case scenarios develop and this is really interesting. So when you think about what <unk>. When you think about what C band can do.
And what Cvr's ultimately means I think you've got to think bigger beyond just simple.
Data communications, you've got to be thinking about how can you manage SKU codes and Barcodes. How do you manage inventory how do you ultimately have that feature sales force tool to ultimately provide real time data and analytics and dashboards and kpis to make the factory of experienced a little bit easier to make the shipping experience more easier than we can.
The run the three major mobile U S carriers on that infrastructure. We can then use it for Iot sensors like we talked about with the SKU codes Barcodes and we're seeing a lot of different use cases being deployed Jonathan and these initial trial test networks that extra net has developed so there's a lot of.
Applications that can be run off this it's a great opportunity for enterprises, and we candidly see this technology as being.
And on one part disruptive, but and the second part of it really opens up and entirely new.
The series of use cases for the carriers I understand now why they paid for the spectrum now with the dinner Bill comes a series of challenges, which is the cost to build out fiber infrastructure as I said earlier $1. One trillion dollars will be spent Jonathan you know this pretty well you track. This over the next four to five years in terms of <unk> Capex and once.
Again, we're well positioned to take advantage of that whether it's <unk>.
Bringing dark fiber to the infrastructure using <unk>, whether it's building on towers with Alex Gilman of vertical bridge or whether it's building and another 30 to 40000 and small cells with Jim <unk> and ex net we have all of the arrows in our quiver to execute across five G. And then having this understanding of ultimately how to deploy indoor and outdoor <unk>.
Brs spectrum and how to build those use cases and partnership with customers. It's so important so I'm pretty excited about that I'm actually really fired up about it and then you add this met of physical layer around edge and even that gets more interesting. So there's a lot happening right now and <unk> known each other for almost 25 years, Jonathan and I actually think this is one of the most exciting.
Environments that I've ever seen and in terms of the set up for new technology, new infrastructure and we've been waiting a long time for new use cases for the carriers I think we have found them and I said it earlier in my comments around Iot and just this notion of no longer beat of CRC to see really we've got to start thinking bigger around.
The <unk> device the device.
I think your first question was Jonathan was around.
Just the different types of investments, we're making and partnerships first of all.
And I'd be remiss, if I didn't thank our friends at EQT.
And at Fidelity, who are both our partners and <unk>.
We need partners and we've always had great partners.
For example, our Mexican business, we partner with Macquarie.
Our domestic U S tower business vertical bridge next net we partner with Goldman Sachs Stone peak, the Jordan companies and we have a long heritage of being great partners and that'll continue Jonathan no matter, how big or funds get and how big we can raise co invest and it's always good to phone a friend and the good news is we have a lot of friendships around the globe with other infrastructure.
Funds and we're going to continue to seek out and partner with other folks because these checks do tend to get bigger and bigger and it's always good day ever and another set of hands that understands the sector.
And now, saying all of that and one breath I would tell you that our co invest program has never been bigger.
And one of the benefits of having a slightly bigger second fund and having more Lps and that fund and as we do have the ability to dial up capital on a co invest basis to support these opportunities we talked about the incredible growth advantage USA and vantage Europe and advantage starts looking at other places and the globe, whether it's Asia, whether it's the middle East.
We're going to continue to bring strategic co invest capital side by side net understands those regions.
And so we're excited about that and there's going to be a tremendous amount of co invest capital raise this year at colony in 2021, I would also point out one more thing Jonathan and I think you were starting to intimate about it a little bit just around our partnerships and <unk>.
I really find that our relationships with customers, who have never been better and thats opening up and entirely new Avenue of dialogue for us Jonathan around partnerships and so as I think.
Whether it's the web scalar.
Whether it's a cable company, whether it's a <unk>.
The wireless carrier and all of these guys have infrastructure the.
And all want to figure out more efficient ways to own that infrastructure, we want to help them build new infrastructure and so we're thinking a bit out of the box and fun too about how do we get closer to customers how.
How do we help them relieve stranded capital, which is infrastructure and then how do we help them grow their vision around edge computing around <unk> around cloud around Iot and so I think what we're telegraphing to you is some of the things that we're working on right now and are in concert with customers and we're really excited about that and Thats where were finding our best.
Ideas because look win.
Wind tower deals trade for North of 30 times for US that's just a little that's a little that's a little steep and so we've got to be more creative Jonathan and that's how we've done our pipeline has never been bigger and I'm excited about the three deals that are currently moving towards definitive documentation and they're all super unique and platform investments for us and some of them.
And involve deeper partnerships with customers so.
We're incredibly active at the moment and and.
This is going to be of great year in terms of deploying capital.
Thanks very much.
Our next question comes from the line of Greg Miller with true Securities. Please proceed with your question.
Good morning, guys. Thanks for squeezing me in.
Good morning, Greg how are you.
I'm doing fine. Thank you very much and just a few quick questions one on the.
Investment management side.
<unk>, obviously off to a strong start and it looks like youre going to be on the trajectory of the blow through your 2023 targets pretty quickly.
Is there a limit on the asset management side of the business that it becomes a little bit more difficult to run as an operator and we're talking about the sky's the limit here too how should we be thinking about organic growth and the digital operating side of the house I mean do you have the colo that need some tender loving care.
And my guess is accelerates and the second half of the ear, but I'll leave that to you and then just a follow up on Colby's question about <unk>.
<unk>.
At a discount of book, you've outlined OED and what you expect asset monetization to be would you ever consider doing it the whole shooting match for it for a slight discount and just being on.
On the.
The accelerated path of being digital.
So I think that was the three pack Greg So let me free questions embedded in there let's start at the front.
So just just thinking about investment management for a second when you compare us to the to.
To the.
The monsters of I am which would be Macquarie Brookfield, Blackstone, KKR, and we're relatively small actually and so.
And we live and breathe every day and the fastest growing segment.
Of infrastructure, which is digital and so what we think is there a sort of three dimensions to that business. One is our core equity business, which is the legacy businesses DCP, one <unk> and we think that that franchise and that business model has a lot of sustainability and has a lot of legs. So we were.
We anticipate growing that business.
Over the long haul.
The second area of opportunity is new products and so we called out of emerging which is liquid securities and of course, our credit platform and those are pretty exciting opportunities for us as well because if you think about the growth and liquid securities and you think about our unique insights into the industry and our ability to.
Invest and those asset classes and.
Informed views for public investing.
And we really sit in the front row of where all of this happens and it gives us unique domain expertise and we've got two really great portfolio managers right now and managing two different strategies for us Bill Hughes, Alan but those are both running two funds doing a great job for us and and we think this is of great year for both of those products and theyre going to grow.
On the credit side, Dean Caris, and Mike's coupon of done a great job building, our credit platform, where and the process of originating new loans.
Obviously, the market is really frothy, but we do see an environment where spreads begin the wide and.
And we have seen a little bit of of backup and the traditional senior lending marketplace and.
And pockets of digital infrastructure, we see inflation creeping in the Europe and so we think this is the right time to form capital and we think this is the right time to be and the digital infrastructure credit solutions business. So our pipeline. There is growing we're up to almost 19 different transactions that we're looking at from a credit perspective, we're looking forward to deploying cash.
<unk> and <unk> credit and and that's candidly and it's at some of the lineage and the history of colony, So were steeped and understanding how to deploy capital there had administer those loans and how to play across the capital structure. So that's going to be a big narrative for us and I think we're excited about the things we're doing there and as you know the credit business could be.
In terms of investable capital that goes into first lien second lien securitizations.
Mezzanine and subordinated debt buying secondary positions and the bond market, having a wide open credit platform could lead to a significant amount of growth in terms of AUM, there and I would say the last thing is really around the permanent capital.
And I think what's interesting for US is our legacy companies are not in a fund structure and of taught US a lot about raising permanent capital vehicles and so as we think around the road and we think into the future and as I've been on the road for the last six months raising DCP to one of the Battle Cry that I hear from investors is and they would love to play and digital infrastructure and the.
Permanent way.
Our balance sheet, obviously offers that permanently and the ability to invest long term permanent capital off the balance sheet and pair that with LP long term pension fund capital and sovereign wealth fund capital was on display and advantaged yieldco.
So as we think about how to create more investment management opportunities youre going to see this notion of permanent capital or perhaps maybe even core capital related to digital infrastructure and we're really excited about that so three really strong themes.
I think we've demonstrated to the street that we can raise capital and I think we've demonstrated we can deploy it and we're now deploying and we're now raising and forming capital and new strategies, we have places to put that capital and so I really don't see of limitation per se on our investment management platform today.
That was your first question.
And again on that.
Operating and yes that one is easy on on operating we're forecasting about 5% organic growth, which is in line with our industry peers, maybe perhaps even a little higher than some of the domestic use cell tower Reits from what I've been reading the last few days so.
We're happy with that domestic growth and <unk>.
Hopefully, there's a beat and in there, but 5% generally feels correct.
Alright and.
Would you ever consider.
As a single package and the modernization program, yeah, absolutely and and we've gotten some of those phone calls and so I think it's a really unique assembly of assets.
And Jonathan Brunswick has done such an incredible job, our CIO of OE and D. The monetization that his team delivered last year was well below beyond my expectations. He has got some stuff lined up already for the first and second quarter from monetization.
And that portfolio and a recovering market is valuable and I think for people that are looking to build.
Real estate, and AUM and invest and strong.
Assets, we have that and so we will continue to take those phone calls from opportunistic.
Real estate investment managers around the globe a lot of them are our friends for many decades and.
The phone will ring will answer it and.
And we will continue to have those discussions look it would be and elegant out right. Greg. If you think about it if you could make a block trade on OEM D that really puts to bed one of the the big sort of value on locks for colony going forward. So as you can imagine where we're paying attention to that.
Great. Thanks, Thanks for the time.
Thank you Greg I appreciate your support.
Our next question is a follow up question from the line of Jade Rahmani with <unk>. Please proceed with your question.
Thank you very much just on the DCP two <unk> the.
The $4 2 billion I assume that that's the first close of committed capital do you guys get paid on capital once it's called or are there any fees on committed capital.
And so it's paid on committed Jade.
Okay. So we should be modeling fees on the $4 2 billion and then.
That's correct Kevin.
And our supplemental we've offered disclosures on what our run rate because it'll fee related earnings.
If you look at the fall through on a full quarter faith. The so I'd start with that and that there should be growth on top of that as we continue to fund growth.
Do you have the target size and mined for the digital credit funds.
No size yet.
This creature doesn't exist. So we don't talk about things that don't exist yet but.
Suffice to say, we do think there is a.
A significant multibillion dollar opportunity and digital credit Jade.
Okay.
The.
Current G&A of the company could you give a range for what you expect in 'twenty and 'twenty, one and maybe break out how much of that is cash versus annual stock and just looking beyond 2021. Since I think that's more important given the transformation and where do you expect the run rate G&A to beat the support the stand.
The alone digital business.
Sure.
This is Jackie so what we've previously guided and we're sticking to a by 2020 once we're fully almost fully digital.
The infrastructure Bay is going to be a range of 100, the $120 million on a cash G&A basis, we did not guide the street on 2021, G&A, principally because there will be and we expect there could be step wise function in the G&A bucket as we continue that the vast legacy asset sales, depending on timing of that which we have.
And while I've got and yet because of their party.
And all of our novel of the Wi.
Wi function.
There will be material reductions in G&A, So right now where we're at it's about $200 million of little under $300 million of cash G&A, but over the course of the last couple of days of fleet. The basket will get down to about 100 per $120 million bucket and that is on a steady state of course digital.
Call it eight going forward.
Yes.
Thank you very much for taking the questions.
All of ours.
There are no further questions in the queue I'd like to hand, the call back to management for closing remarks.
Thank you and thank you all of you for your thoughtful questions. We appreciate the analyst coverage I want to thank Greg and Colby for picking up coverage on the company.
This is an important moment to cover colony capital.
And we think the work that we're doing this year is going to be obviously, not only transformational, but exciting and I think you've heard the excitement and our voices in terms of the conversations we're having with customers.
The opportunities that we're seeing and in digital I am and most importantly, finishing the mission.
It's going to be the.
Fluid year of somewhat dynamic year, but as I said and my comments earlier today. It sits now all in front of us.
And I want to thank everyone for their faith and trust and us.
We're looking forward to this year and of course, we are looking forward to our investor.
Investor Day in May and should you have and interest in attending please reach out to our public IR team led by southern White and we're looking forward to hosting you, albeit virtually once again. Thank you very much for your time and support.
And have a great day.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.