Q4 2022 DigitalBridge Group Inc Earnings Call

Greetings and welcome to the digital bridge grouping fourth.

Fourth quarter 2022 earnings conference call at.

At this time all participants are in a listen only mode.

A brief question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this.

Conference is being recorded.

It is now my pleasure to introduce your host Kevin White, managing director head of public Investor Relations.

Thank you you may begin.

Morning, everyone and welcome to the digital bridge's fourth quarter 2022 earnings conference call.

Speaking on the call today from the company is Marc Ganzi, our CEO Jacqui will our CFO .

I'll quickly cover the Safe Harbor, and then we can get started.

Some of the statements that we make today regarding our business operations and financial performance may be considered forward looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially.

All information discussed on this call is as of today February 24 2023.

And digital bridge does not intend and undertakes no duty to update it for future events or circumstances for more information. Please refer to the risk factors discussed in our most recent 10-K to be filed with the SEC for the year ending December 31 2022.

So we're going to start with Mark summarizing the progress we've made in 2020 to Jackie will outline.

Our financial results and updated guidance and turn it back over to Mark to outline what we're focused on in 2023.

With that I will turn the call over to Marc Ganzi our CEO .

Mark.

Thanks, Deb and thank you our investors for your continued interest in digital bridge.

Particularly as we enter 2023 and navigate the final stage of our transformation.

I'd like to start today by putting 2022 and the progress we made this year in context.

Most importantly through a dynamic macro environment, we delivered growth this year.

Painting, our position as the partner of choice.

Top operating management teams and institutional investors that are allocating capital to digital infrastructure.

Which has proven itself to be one of the most durable asset classes.

First on corporate strategy.

Established our asset management platform as the strategic growth driver for our business going forward.

<unk> building out a full stack profile with new complementary strategies.

Next.

Capital formation, it's our most relevant near term kpis.

When you look forward to revenue and earnings growth. This is where youll find our best opportunity.

Here, we exceeded our fund raising targets for the year building up significant embedded earnings growth going forward into 2023 and beyond.

Finally, and most importantly, our portfolio continues to perform with strong leasing driving solid outcomes for our investors.

The best way to deliver growth in today's environment is to create free cash flow from organic leasing and escalators.

Ken This is what matters portfolio performance and here is where we really excel will talk a little bit about that today.

Next slide please.

In 2022 digit rich really established our asset management platforms as the strategic growth driver for our business going forward.

The fundamental shift was about orienting our company around a scalable.

Light high return business model.

As we've detailed before in our corporate overview the returns on capital associated with investment management are superior and allow us to establish a leading market position up a smaller capital without having to tap capital markets regularly to grow our business.

This is an alternative.

We believe a superior alternative way to own digital infrastructure.

We achieved a number of key strategic objectives last year that allowed us to advance this roadmap.

First we scaled our full stack profile, both organically with the launch of our core <unk> credit strategies and also through M&A as we telegraphed to you our investors with the acquisition of <unk>.

<unk> infrastructure equity business now rebranded as <unk> bridge.

This gives us a compelling middle market capability with a digital plus investment focus.

Second we consolidated the ownership of our investment management platform buying back walkers minority stake so that 100% of our investment management earnings flow back to you did your bridge shareholders.

Finally, we continue to simplify our business profile, starting with the data bank recap.

This was the first step and deconsolidation of our operating segment, which represents the last phase in our corporate transformation.

Some very important strategic progress this year that sets us up to win in 2023 and beyond.

Next slide please.

In addition to advancing our investment management roadmap, we allocated capital strategically across four accretive transactions, while continuing to maintain strong liquidity at the corporate level.

As I've mentioned before maintaining strong liquidity in this environment is a strategic imperative to digital bridge.

In 2022, we allocated over $800 million in cash to accretive M&A in our investment management profile.

As well as continuing to optimize our capital structure let.

Let me elaborate a little bit on that first let's start with the Walker stake.

For a little bit under 500 million and cash, including the earn out as well as the issuance of stock.

We purchased Anp's infrastructure equity franchise next and bought back over $110 million of common and preferred stock taking advantage of market dislocation in the fourth quarter of last year.

Those investments are set to generate over $85 million and incremental pro forma earnings, which translates to EPS of over 49 per share.

While we deployed significant capital in 2022, we also prioritize the maintained strong liquidity.

That stands at almost $700 million.

Further we continued to delever, our business, reducing both investment level and corporate debt on a pro rata basis during the course of 2022.

Again in this environment. This is essential to my Battle plan.

The ability to allocate capital in line with our priorities, while maintaining strong liquidity and deleveraging were significant achievements this year.

Next slide please.

Next is capital formation.

This is really the kpis that drives future revenue and earnings growth here.

Here, we finished off the year with a solid fourth quarter.

Raised $1 $4 billion.

Across four of our strategy.

That took our cumulative fundraising to $8 5 billion for the year.

And fee, earning equity to $4 8 billion exceeding our 2022 midpoint target of $3 $8 billion by 26%.

As that capital kicks into high gear in the first quarter of this year and beyond Youll see the revenue growth follow in our financials.

Next page please.

So where does that put us across the platform.

As of today, we're at approximately 28 billion and field that.

52% higher than last year with about half the growth coming from organic fund raising and.

And the other half via our acquisition of A&P.

Which we just closed at the beginning of February .

We're excited about that acquisition and we've already commenced the full integration of the teams and back office operations.

We're looking forward to the growth and in for bridge and we're excited about the prospects, but that business has for digirad shareholders.

The other really important thing here to note.

Is the proliferation of colors, you see on the slide we've talked about building the full stack.

And what you're starting to see is the manifestation of those efforts.

On top of our flagship Desert Ridge partners series funds, we've gotten significant growth in co investment.

Permanent capital vehicles.

And liquid strategies and.

And now we're laying in capital for our credit and core strategies.

That's significant embedded revenue and earnings growth that will manifest itself in 2023.

This enables us to scale and execute our go forward business plan.

Next slide please.

So the third piece that's relevant here as we look back in 2022 is the success, we've had across our global portfolio.

On the front end that means actively investing in new platforms on a global basis in.

In particular I want to highlight two signature transactions that we did in the back half of last year number $111 billion take private of switch.

And secondly, the $18 billion GDT Gd towers partnership with Deutsche Telekom.

I also want to call out the growth we're seeing in Asia.

Both with new platforms and tuck in acquisitions, we've been able to execute across existing portfolio companies in that geography.

We remain excited about that theatre, and we're looking forward to investing there in 2023 and beyond.

And look all of this is enabled by continued growth in AUM and fee them.

That we've experienced over the last few years.

We're now with investments in five continents.

So again, let me put that in a proper perspective for you in summary, one.

We beat <unk> by 26%.

In 2022 against our budget.

52% <unk> growth since 2021.

And 56% AUM growth over the last three years.

We continue to pose some of the fastest growth metrics and all of the key areas that matter and the asset management sector.

I couldnt be more pleased with our execution.

Next page.

So why can we posted this type of growth simple.

Simple our investments are outperforming and the most important metric of all organic revenue growth at the asset level.

Our performance continued to be strong this quarter.

With growth on a year over year basis in monthly reoccurring revenue across all of our food groups. This.

This is the foundation for the performance of our franchise over time deliver organic growth.

On the right side, you can see the conservative portfolio debt metrics that we've put in place over a year ago and have been able to manage effectively through a dynamic macro environment.

42% loan to value.

74% of that debt fixed.

With an average fully extended maturity of over seven years.

This is conservative management of the capital structures at our portfolio companies. This was not accidental.

This was the plan we put in place at the beginning of Covid.

We led multiple securitizations at the end of 2000, 22021 and 2022 setting.

Setting up our portfolio companies to maximize their liquidity by having fixed debt.

With only one covenant, which is the <unk> ratio and no cash traps. This is a playbook that worked incredibly well for us in 2001, and 2002 and worked very well for us in 2008, and 2009 and it's working again.

When you deliver great performance on a portfolio company level that manifests itself in good outcomes for our investors. This is really the heart of the business.

Let's talk about a few of those outcomes on the next slide please.

The reason, we're so focused on portfolio performance is because ultimately strong performance drives great outcomes for our investors when we see our investors. We mean, our Lps and of course, you are public shareholders at digital bridge.

In 2022, despite a rising rate environment and inflation we delivered.

Generating realizations at attractive valuations well in excess of our carrying values and generating carried interest for you our shareholders.

These are deals we closed in the third and fourth quarter of 2022, not two years ago at the peak when multiples were greater than mid Twenty's and low thirties.

First advantage towers.

We cornerstone their IPO, a year and a half ago and generated a strong return for our investors that was otherwise a challenging market reinforcing.

Reinforcing the durability of digital infrastructure and towers in particular.

Second Wild stone, which is our leading digital media platform that we sold to <unk> again.

Drawn returns on a net basis at a substantial premium to where we maintained it on our books.

And then lastly.

And we continue to bring in new investors as that fund raising period stays open to the end of Q2 this year.

Thats a deal will regenerated to exploit for our balance sheet in just three years and.

And even better return for the original investors again, a significant premium.

Where we carried the asset on our balance sheet.

This is what it's all about <unk>.

Investing in great platforms best in class management teams.

Having growth in performance and then ultimately delivering great returns for our investors and shareholders.

That's been my track record over the last 25 years.

And now as we exit future investments you are public investors get to share in the profits with me and our team.

Creating alignment with you our public shareholders.

So that's the story in 2022 significant progress on our corporate strategy.

Beating our capital formation targets and continued performance at the portfolio level.

All of which sets the table for a very successful 2023 and beyond.

So with that I'll turn it over to Jacky to walk through the financials Jackie.

Thank you Mark and good morning, everyone.

As a reminder, in addition to the release of our fourth quarter earnings we filed a supplemental financial report this morning, which is available within the shareholders section of our website.

Starting with our fourth quarter results on page 14, the company saw strong year over year growth driven by fund raising in our investment management business and realized performance fees.

But the fourth quarter.

Reported total consolidated revenues were $301 million, which represents an 18% increase from the same period last year.

Net loss attributable to common stockholders was $19 million or <unk> 12 per share.

Total company adjusted EBITDA was $28 million, which grew by 32% from $21 million in the same period last year.

Total company distributable earnings with a loss of $11 million or <unk> <unk> per share.

It is important to note that our results this quarter were negatively impacted by a $53 million noncash valuation allowance.

Although we expect to have the ability to use the value of our Nols under GAAP standards. We have conservatively applied this was our now.

And as the company continues to generate growth and its earnings.

Will be reversed in future periods.

<unk> was 53 8 billion in the fourth quarter, which grew by 17% from 45 billion in the same period last year, including the recently closed transaction of A&P capital switch and Gd towers.

We have reached over $65 billion.

On a pro forma basis.

Turning to page 15, our fourth quarter highlights have trended positively with fee revenues fee related earnings.

<unk> earnings all up year over year, when excluding the previously mentioned noncash valuation allowance.

The company was 22 billion and fee, earning equity under management up 22% year over year, and we raised $4 $8 billion of fee paying capital during the year, despite a very difficult fundraising environment.

Furthermore, the company continues to prioritize the optimization of its capital structure, our core current corporate liquidity sits at approximately $680 million.

After closing the A&P capital acquisition.

During 2022, we executed a share repurchase program and initiated a regular quarterly dividend, which we believe we have the capacity to increase in the future.

We will touch on this in more detail later in the presentation.

Moving to page 16, the company grew recurring investment management revenue and earnings driven by fee, earning equity under management.

The company's share of revenues and fee related earnings increased by 49% and 33% year over year, respectively led by our increased ownership of the business. Following the acquisition of <unk> minority stake.

Moving to page 17, consolidated digital operating adjusted EBITDA was $99 million, which is a 17% increase from the same period last year, driven by continued data center acquisitions and organic leasing growth.

The company's share of digital operating revenues was down 14% year over year, while adjusted EBITDA was down 15%.

These reductions are attributed to the previously announced data bank recapitalization, which reduced the company's ownership from 22% at the beginning of the year to 11% in the fourth quarter.

Turning to page 18, we have seen continued growth in our high margin investment management business.

Since the fourth quarter of 2021, our annualized fee revenues increased from $120 million to $233 million.

The related earnings increased from $73 million to $120 million on a pro forma basis.

This includes the recently closed acquisition of A&P capitals equity infrastructure platform, which was subsequently re branded as <unk>.

Looking at the right side of the page our run rate fee revenues were $250 million.

This provides an indication of expected revenues and is calculated simply by multiplying committed <unk> at the end of the year by the average annual fee rates.

Moving to slide 19, I will now outline our earnings guidance for 2023 and 2025.

We are updating our 2023 and 2025 targets for the investment management business and are providing indicative guidance on run rate earnings.

We've laid out two scenarios for 2023 based on our intent to Opportunistically recapitalized and deconsolidation, the operating segment, which once accomplished brings up additional capital to allocate towards new earnings.

This will shift the earnings profile of the business towards asset light higher margins lower capital intensity and a higher day as a result.

We are expecting an exceptionally strong fundraising year in 2023, driven by our success our flagship fund product.

Note that this is intended to represent FRE at the end of 2023, excluding catch up fees and one time items.

Nominal earnings for 2023 will be impacted by timing of fund raising.

We have additionally introduced guidance on distributable earnings now that we have begun generating positive recurring earnings and will begin to focus heavily on the bottom line going forward.

Our strong liquidity position and near term firepower allows for opportunistic deployment, which we expect to contribute significantly to run rate earnings. In addition to the potential to generate realized gains and carried interest earned from further successful exits.

Turning to page 20, we wanted to look back at where we've been to highlight what has been accomplished to date.

And how that continues to drive into the future.

Back in 2018 in 2019, the Companys legacy assets generated earnings on paper, but were over Levered and unsustainable.

Over the next couple of years, we've shed over 99% of the legacy assets and move the company from this low margin and unsustainable business model into a high growth high margin asset light business with promising growth prospects led by our fund raising engine.

We continue to see <unk> upside to our core model presented led by further M&A and capital structure optimization with compounding uplift from continued investment alongside our Lps in our funds, which target IR attractive irr's and resulting carried interest as well.

Begin harvesting exits like we successfully completed in the third and fourth quarter of 2022.

No major transformation is easy and we'd like to thank our shareholders for the continued support and patience and I am pleased to say that as we continue to execute this plan digital bridge will be prime for long term shareholder success.

Turning to page 21, the company has built significant balance sheet liquidity.

Driven by proceeds from both the data bank recapitalization and return a warehouse investments due to successful fund raise.

Following our recent acquisition of the Infra bridge platform for $360 million, we are strongly positioned with approximately $700 million of balance sheet liquidity.

Additionally, we have further potential sources of capital, including bright spire shares and remaining legacy asset sales, which can be utilized to offset medium term obligations such as the upcoming 2023 convertible note repayments, which we expect to retire with readily available cash on hand.

Throughout 2023, we expect to remain well positioned to deploy capital for accretive uses.

Moving to page 22, we have continued to make significant progress improving our debt profile with our debt to adjusted EBITDA ratio improving from 11 times down to 10 times.

This reduction is driven by lower investment level debt and our operating segment as a result of the data bank recapitalization and transfer warehouse investments into our newly raised CT and credit funds.

Resulting in a $206 million total reduction in debt.

We will pay down the convertible notes due in April and target the reconsolidation of the operating segments, leaving only $300 million of securitization at the company's remaining debt.

As we continue to execute upon our plan, we expect to achieve leverage ratios in the low single digits.

In summary, and as I've continued to reiterate our company is strong and healthy driven by our sector, leading asset light manner investment management business that generates high quality predictable long dated earnings we.

We expect to have a strong start to 2023 as our near term fund raising and our growth prospects remain robust.

And with that I will turn it back to Marc Thank you.

Thanks Jackie.

I want to finish up by laying my top priorities for 2023.

This is a section we've done in previous.

Q4 earnings calls, where I like to lay out the three things that matter.

This year, it's pretty simple number one we've got a fund raise we will continue to form capital around new and existing platforms.

<unk> as a promise to all of you simplification.

Getting the operating segment deconsolidation, while we maintain strong liquidity.

Lastly, we need to continue to perform at our portfolio companies.

With strong asset management through the cycle and driving free cash flow growth.

By industry, leading organic revenue growth at the asset level.

This is seminal to our success going forward.

It's a tried and tested formula for me as the CEO .

Who has presided over the good and the bad times.

The key in our market fraught with Crosswinds is you have to have a simple and focused battle plan.

We have that here at digital ridge in 2023 and.

And beyond.

Next page please.

So let's start with fund raising this is really going to be our number one <unk> in 2023.

This is the metric that I know all of you will have your eyes on quarter to quarter.

Our plan is to raise more than $8 billion.

Of net new capital across our platforms.

That will breakdown essentially into three buckets of opportunity first.

We're going to launch our next digit rich partner series.

Two we're going to finish raising around our core and credit strategies that we started last year, where we have excellent momentum heading into the first part of this year.

Three we're going to continue to grow our co invest program.

Porting the acquisition of new platforms, as well as providing additional capital to existing portfolio companies to fuel their growth or co invest program over the last four years has been really one of the standouts attributes of why institutional investors want to partner with us.

That incremental <unk> is going to drive a substantial amount of high margin reoccurring fee revenues as you can see on the right.

With little to no incremental G&A.

Now this is largely the fact that we invested heavily in 2022 and systems and people.

We invested in those people to seed and grow new products and the fruits of that labor will pay off in 2023 with high margin FRE.

We're confident that we can achieve these targets because we continue to see very strong interest in the digital infrastructure asset class by the world's leading institutional investors.

That naturally are attracted to its combination of persistent growth durability.

And the recognition that digital ridge is the leading investor in the sector.

Next page please.

So.

Next up my priority continues to be advancing the simplification of our corporate profile.

Which will ultimately result in the deconsolidation of our operating segments into I am.

There are three drivers here that I want you all to pay attention to <unk>.

One <unk>.

Significantly reduced complexity. This is the number one thing we talk to public investors about today the.

The financial consolidation of businesses that we own.

A combined 12% of in my view distort true digital rich shareholder revenues cash flows and capital structure.

Which leads to unnecessary complexity that is a tangible cost burden and makes it challenging for investors to understand what is <unk>.

Getting stickier and that question, so we're going to make things simple.

The second key here is the acceleration of our pure play corporate profile.

What will ultimately emerge as the lien profitable asset manager serving secular growth markets.

Boyd of the complexity of Assembly and then pulling apart two business models, which makes it tough on you our investors.

Lastly, we expect this initiative to unlock incremental capital that we can redeploy in order to fuel the growth in the form of incremental digital M&A.

And our optimization of our capital structure.

We're essentially monetizing assets at attractive multiples and then redeploying them at lower levels into businesses the compound over time.

We've demonstrated this already with the acquisition of A&P taking.

Taking over the full stake of our iron business from <unk>, and we will do that again in 2023.

Next slide please.

So.

What does this look like when we finalized our asset manager profile.

Well, here's just a quick illustration of what we look like today on the left.

With two segments to.

Two thirds of our earnings coming from investment management, and one third coming from the operating segment, which is predominantly vantage STC in databank.

So migrating to the right side of the page going forward, our earnings will be driven by reoccurring revenues and earnings from our investment management platform.

Supplemented by income from retained principal investments, which is the residual amount that we'll keep and manage STC and data bank in essence as the GP of those continuation vehicles.

Strategically one of the most attractive aspects of this transition is we are more closely aligning our capital.

With that of our limited partners the ability to align the balance sheet.

And private Lps with our public investors is where we're going and we think that symmetry bodes well for all parties.

And it creates the right outcomes for all investors.

Next slide please.

So at the end.

This is what that simpler profile looks like on a natural basis.

As you can see the transition will reveal.

Fast growing asset manager.

Levered to the secular growth market in digital infrastructure.

The incredible 42% three.

Three year CAGR on FRE is growth that we're anticipating over the next few years.

This manifest itself in very strong financial performance, we have a simple algorithm with new <unk> generating revenue at an average rate of 90 bps.

Very attractive incremental margins.

As I stated before my focus go forward is to grow our profitability.

This is an attractive high growth profile, that's simple to understand and appreciate.

Next page please.

So finally, I want to address where we're going to put the money to work and what our priorities are going forward. So there is no confusion.

As you can see over the past few years, we've allocated capital to a combination of usage I think we as a management team have demonstrated we tend to be very pragmatic about these choices.

One of our biggest allocations has been almost $400 million and GP commitments alongside of our Lps.

Today, we structurally allocate about 2% to 3% of the equity in each of our fund vehicles and in the long run, especially as we finalize our capital structure optimization, we expect to allocate more capital to this high return use case.

We're eating our own cooking.

And we like to see our capital compound at attractive rates and we think you will agree with that.

The second primary use is accretive digital M&A as I stated a few pages ago.

Between the Walker transaction A&P.

Last year, we deployed over $500 million in cash to continue to build our <unk> platform and.

And increased our exposure in this high quality earnings stream.

We will continue to be active here with a focus on strategic and.

And complementary platforms that we can accelerate growth.

I highlighted in my last quarterly earnings call. We've also been looking at the notion of entering the private equity space in digital infrastructure, which is a space that we do not occupied today.

We think there are good opportunities here and a fertile ground and we will continue to build that organically and also go out and look at accretive M&A.

The third piece is capital structure optimization look here, we've been opportunistic.

We bought back preferred last year, which we expect to continue to be a use of free cash flow going forward.

In the near term as I promised we will pay down our $200 million of 2023 converts when they come due on time in April with cash on hand.

Finally repurchases and dividends, we took advantage of what we see as an attractive price for our stock last quarter buying back $55 million and we also retained a one cent dividend last year in terms of making sure that we stayed committed to our promises.

We intend to continue to maintain what we call a low but grow dividend policy and we're going to continue to execute share repurchases.

Opportunistically overtime.

Measuring it against the other three categories of where we can put capital to work.

The key here is as we look at our capital allocation framework.

As a focus in the near term on successfully executing creative digital M&A the way we have last year.

And continue to rationalize and optimize our capital structure as we did last year.

Over time, we'll have more free cash flow to invest alongside our Lps and compound shareholder capital.

Next page please.

So in conclusion today, let's bring it back to where we're going and where we want to take you our investors in 2023.

What's my scorecard for the year ahead pretty simple here's my checklist, one we're going to fund rates.

As most of you know I am laser focused right now on forming 8 billion in new net capital around our digital edge partner core and credit strategies as well as co invest.

To simplification.

To finish our transformation with the deconsolidation of the operating segment and.

And continued to Delever our business and.

And lastly portfolio performance.

<unk> to invest in high quality digital businesses, driving free cash flow through organic growth and investing in the best management teams in the digital infrastructure ecosystem.

Taking a step back I believe that these are really our control variables for 2023.

These are the things that we can go out and execute.

And my belief is as we execute on these three initiatives good things will happen at the company and most importantly, good things will happen for you our shareholders.

With that I want to thank you for listening to our earnings presentation. This morning, I'd like to turn the call back over to the operator to initiate our Q&A session.

Operator.

Thank you.

We will now be conducting a question and answer session.

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One moment, please while we poll for questions.

First question is from the line of Ric Prentiss with Raymond James. Please go ahead.

Hey, Thanks, everyone. This is Brent on for Rick This morning.

First question you talked about M&A in the <unk> segments with the A&P deal done what new swim lanes.

Target fit into to expand your offering you mentioned private equity and what else should we be thinking about there.

Well good morning.

It's Martin and thanks for tuning in so I think we've been pretty prescriptive about that.

Did it very clear that private equity digital private equity as it is a high priority of us there.

There are many firms that are in middle market digital private equity that you're investing in digital infrastructure and TMT.

And also software.

SaaS models.

We think theres a couple of really good teams out there that we have a lot of respect for we're out talking to all of them just like we would be in our traditional investment management space, we talked to all the management teams and so we've been spending the last year getting to know a couple of those management teams and.

We think there's a good opportunity to add that.

To add that part of our iam business through through an acquisition and that's why we've been harvesting the cash so that we can be opportunistic.

We've also said is.

I think I've also been pretty prescriptive about the importance of renewable energy.

And the ability to power digital infrastructure with renewable energy we've seen that.

Case study.

Full force at switch where were outperforming our leasing projections, our full year of leasing and 22 exceeded our our three year guidance.

And customers want to be in data centers and they want to be around digital infrastructure that as renewable energy. So we're spending a lot of time around thinking about how we can grow.

The <unk> platform and continue to add strength in the renewable space.

So those are really my two areas of focus today is really private equity a digital private equity middle market and renewable energy, we're very focused got.

Got a number of targets.

And.

Obviously, we have a guide in terms of what we think we're going to do an M&A.

We did well last year with the warfarin A&P deals and I think this management team those that follow me know that we've got a pretty rich history in doing M&A.

Our confidence and conviction level.

Round that is pretty strong.

Got it and then on the day guidance.

What kind of carried interest is assumed in that guide and is that sort of the difference between the upper end and lower end of the guidance.

Yes.

Jackie on that.

Great.

The biggest difference in the guide really in the range is driven by the fund raising range, but we have not assumed the carried interest in our in our guide itself that would be incremental upside.

To our numbers.

Okay, and then mark you'll you'll have a lot of funds to deploy it.

If you hit this guide and then you also have some portfolio codes that might be nearing time to exit. So could you just give us an update on how you're viewing M&A multiples right now globally, what looks attractive what looks less attractive.

Yes.

So look it's kind of a tale of two cities right I think the high quality.

Digital infrastructure assets are still hanging in and are holding their value and I think what youre seeing is and when I say high quality businesses that have contracted cash flows greater than 510, 15 years that are more than 80% exposed to investment grade counterparties.

And businesses that have securitized debt long term capital structures that are that are portable we prove that in the wild stone transaction. We've proved that out in the data bank transaction.

Had portable capital structures, and we had high quality assets with long duration cash flows.

I think what you're also seeing us to tell the other side of the city, which I sort of telegraphed about two three years ago, which is.

You have a series of generalists and for funds that went and bought a lot of fiber that was facing consumer.

That did not have long term contracted cash flows, which we were very clear we were staying away from.

So.

The last two to three years, we've been focusing on quality.

Deutsche Telekom transactions switch landmark these are businesses that have high exposure to investment grade Counterparties and long term leases and that's where we deploy capital.

Went left and we played risk off the rest of the World went right and paid high multiples for residential fiber and other businesses that don't have long term cash flow. So we've always been very careful to stay away from businesses that have consumer.

Consumer facing.

Graphics and are built on hope dividends, we don't invest on hope dividends, just not what we do with digital bridge and so.

It comes as no surprise in the third quarter and fourth quarter that both of our funds did rich partners, one and two moved up in value. While we saw other counterparties in private equity and other forms of <unk>.

Investing in the space either at par moved down and.

And I think that was largely because of our disciplined investment framework, which we continue to execute today. So the setup as we go forward. It's really interesting. We think there are good opportunities to play in kind of three types of investment opportunities.

As we form all this new capital one we do think there is dislocation.

And when there is dislocation you.

You can invest you can take advantage of a remark to market.

And we're certainly seeing that in the fiber to the home space and we think theres going to be good opportunities to not play in that sector in the mid twenties, but play in that sector back down again in the low teens of not even single digits. So we're looking very carefully at some of those businesses, because we think theyre finally, reflecting their value and maybe that's the right time and our fiber.

To the home or resi fiber.

We will continue to look at towers on a global basis towers have always held a very strong.

And these sort of turbulent mark macro environments.

Number of tower deals we're working on.

Still like Datacenters, we like private cloud, we like what we're doing at switch we certainly like what we're doing in public cloud advantage and we have numerous data center opportunities to execute.

And this fund focusing on private and public cloud narratives. Another area that I think that we're seeing.

A really good opportunity is in <unk>.

Network infrastructure that is based on SaaS models, so software defined networking businesses that were <unk>.

Trading in the mid thirties are now trading back down in the low teens again, that's an interesting opportunity as we think about what makes an <unk>.

<unk> <unk> in the future.

And then of course, we'll also look at digital media assets, we had a great experience with the Wild stone acquisition.

The outdoor media business is coming under some pressure right now like other sectors. So.

It's a combination of value shopping high quality shopping and then the last of the three legs to the stool, where we'll invest as what we call backing management teams and new ideas and something that we've done time and time again, we've stood up new businesses, new ideas and we're not afraid to do that with the right management team has to be sort of best in class. So.

A lot to do right now we've got a very big pipeline of new ideas that we're prosecuting.

For our new digital bridge partners.

Strategy, and we're pretty we're pretty optimistic about the things that we're doing right now.

Thanks, and last one for me when should we expect the 2023 Investor day.

I'll leave that to seven wide seven you want to answer that question.

Yes, I think were looking potentially June .

So more to follow on that.

Great. Thanks, guys.

Thank you.

Thank you.

Our next question is from the line of.

Joe.

Congrats Fargo. Please go ahead.

Great. Thanks for taking the question good morning, everyone.

Just wanted to get an update on the deconsolidation Databank advantage SBC obviously.

A successful recap thus far data bank could you kind of remind us what you have left to do there and maybe do you think you can continue to achieve I think 30 times multiple that you did on the initial stages of the recap and then separately with Manta just what type of appetite you see out there today from investors for more stabilized data center assets like advance.

<unk> versus more of a development platform that you have in the fund business.

Yes, Thanks, Eric and those are those are great questions, let's start with data bank I think thats kind of the easier one.

First of all since we announced the transaction.

Last June with Swiss life, and EDF. The headline multiple was was close to 30 times what.

I am pleased to tell you is that multiple today is not 30 times.

The businesses as you saw from digital operating results.

Which were very strong.

Year over year.

<unk> Bank is massively outperformed its business plan in fact had its best quarter of leasing in company history in the fourth quarter and today the subscription period on that fund to remember that's a continuation fund Eric.

That stays open until June 30, so investors can subscribe all the way to June 30th at the initial share price. So investors that have been patient and have continued to look at the company have the chance to invest and clearly now have the chance to invest in the <unk>.

Lower to mid Twenty's type multiple so the business has managed to take that entry multiple down from 30% to 28 now.

Now closer to 25% to 24 times, we've had spectacular execution at Databank I'm pleased to say so.

What we did Eric is we had a number of different initiatives in flight with switch and Deutsche Telecom. So we actually turned off the data Bank fund raising in the fourth quarter.

We are reigniting that fundraising starting March one where we'll take subscriptions again, and we will take subscriptions all the way until the end of June 30th.

We do have roughly about 22 investors in the data room doing the work we feel really good about our ability to raise another 600 million there that gets us.

600 million, if I'm correct, Jackie that takes us from about 12% down.

Six or 7% you'll have to give back my numbers here.

Thanks.

No worries.

Around 11% right now and that will take us a little under 8%.

So really high conviction, Eric around data bank.

Largely because the business is just performing at an incredible pace. So we're we're pretty optimistic that we will get that done here.

In short order.

Vantage FTC same story, it's a business that continues to execute against its plan.

Really hard to find.

At that entry price and at that cap rate.

The quality of the cash flows of domestic U S.

Close to a 100% investment grade 15 year leases with <unk>.

Investment grade cloud players and as you can imagine other parts of the world, maybe not U S pensions, but certainly Asian pensions, Australia in pensions.

Middle Eastern sovereign wealth funds between Asia, and the Middle East and Australia, we're finding that there's a lot of appetite for high quality, yielding asset and again the entry price would be the same as it was when we initiated that continuation fund as vantage STC sits in a continuation fund already and so.

We've got very strong momentum there part of my team is in Australia. This week fundraising and semi team next week as is in Asia.

My team is in the Middle East So we're constantly fundraising Eric it's really candidly our strength.

It's why we feel really confident about the 2023 guidance that we've laid out and once again that guidance is eight plus billion of new fundraising just to be entirely clear with everyone.

We have an expectation that we're going to beat that target.

Thats the update on two of those and by the way if we if.

If we sell a stake in vantage STC again call. It if we sell what Jackie.

Telegraphing, we might sell half that stake, which would take us from 12% to about 6% you want to give us the math on that.

Yes, sure. So we're a little over 13% ownership advantage FCC now.

And under GAAP.

Considerations, we would get to below.

Nine.

5% to.

The deconsolidation our position obviously well.

Be opportunistic with with any any sort of bump recapitalization there.

Gotcha. That's helpful. Thank you both.

And just one more for me Mark.

There's been some debate in the fixed income community. So maybe you could help clear the air around the outlook for Brazil within your portfolio just based on where the bonds are traded earlier. This year. So maybe maybe you can just give us an update on their cash flow and growth outlook and the performance of that fairly large portfolio asset.

Would be helpful. Thank you.

Yes, sure. We're certainly under no obligation to talk about that asset, but I really like you Eric.

But anyway.

[laughter], we're forecasting roughly five 5% to six 8% organic net growth this year had seo.

We had a very very strong fourth quarter.

Strongest revenue bookings in the company's history in 2022, and the strongest quarter of net installs in the company's history in Q4.

We have spent the last two years rebooting the management team.

Candidly redoing the back office systems, which needed.

A lot of work and repair we've put more capex into the physical plant just renovating certain routes and building redundancy and strength of our $120 million invested in the last few years that was.

At our election, it was discretionary capex to make sure. The network is strong and then we've got a best in class sales team led by Andreas Orlando. So we've made all the right moves we're starting to see the results.

And we're very confident.

In that company.

The routes that <unk> has and the customers that has a pretty indelible really difficult to replicate what <unk> has on a nationwide basis.

So we know in time.

The network wins, and we know the quality of the cash flows and the quality of the customers win.

I think the business had a set of headwinds we knew that when we underwrote. The deal we had a battle plan to fix it and Thats, what <unk> been focused on for the last better part of three quarters since the second quarter last year. It's one of the boards that I personally sit on and investors can can go to sleep at night, knowing that I'm very involved in that business day to day with Steve Smith and I quite enjoy.

And I like the management team and I know, where we're going and it's headed in the absolute right direction and the financial performance will show that this year.

So great. Thanks, Mario strong conviction strong conviction in the bonds.

Perfect.

JP update.

Thanks, Eric.

Thank you.

Our next question is from the line of John Atkin with RBC capital markets. Please go ahead.

Thanks, So just two questions.

On capital formation can you talk a little bit about how your discussions with.

With investors has changed just given what's going on in kind of the macro economy and why.

Financing costs, and just overall capital markets conditions.

And are you expecting to get largely kind of repeat investors.

Or folks that are that are new to the family or a new digital just trying to get a sense of.

How do you get to that target.

How the discussions maybe this year might be different from what you've had in prior cycles and then on the simplification of the capital structure. I think you kind of alluded to this earlier, but maybe just to repeat what are the procedural milestones to keep in mind that might influence the timeline around around deconsolidation.

Let me take the easier one.

Which is deconsolidation I think we just laid that out.

We've got teams in place right now.

We're talking to investors on both assets I think data bank sort of comes first.

Vantage FCC comes second we've committed to deconsolidation both of those assets this year.

I've given you a June 30 timeline on the data Bank fund raising that's when the subscription period ends and that continuation fund.

And we've got 22 logos in there in the data room doing the work.

$600 million is the target.

<unk> commitments right now are almost quadruple that just to give you a sense of our conviction level around the data bank process.

The vantage FCC process sell down there just started.

And there it's a combination as I said sovereign wealth funds pension funds, particularly Japanese Korean and Australia and pension funds roughly about 14 logos have been invited to look at that and whats also interesting right now.

You follow a fund raising.

Jonathan Youll know that there are literally hundreds of billions of dollars sitting on the sidelines and secondary funds.

Folks that do secondaries like partners group Blackstone Ardian, who are quite expert at that are also looking at the opportunity. It's a really high quality set of assets.

And what I've always found in my line of work Jonathan is when there's hundreds of billions of dollars sitting on the sidelines chasing very few deals that are of high quality.

Usually you win so we've got secondary folks looking at it as well.

Not at a discount to be clear and.

Our conviction level around just the quality of the vantage assets is quite strong. So I can't give you a specific timeline, we haven't put a timeline on that process, yet, but again, we have guided that we will get both of these assets. The consolidated and look at the end of the day people need to understand the motivation of the deconsolidation I think.

We've been hearing from investors that they want us to simplify the business and by deconsolidation and moving the two operating assets to I am.

It's going to be met with them.

A lot of.

A lot of support.

I'm not doing it because investors are telling us we need to do it I'm doing it because I know we have to delever, our business and I think some of the comments that Jackie made about leverage earlier today are absolutely seminal to what we're doing on maintaining high liquidity liquidity on getting our target leverage sub four times.

As fast as we can and by having low leverage and high liquidity. That's how you play a market like this network for me back in 2002, and 2003 and that worked for US in 2009 and 2010, it's a playbook that works so.

We want to be known as the digital infrastructure investment with low leverage a lot of liquidity and firepower to go play offense, which we absolutely 100% intend to do.

Let's switch gears to your first question fundraising.

And what's going on there.

We had about 80 investors Jonathan in our second fund <unk> partners too.

We launched our new digital rich partner strategy.

We've already been out talking to those investors are fun to investors over the last 120 days.

Pleased to say out of those 79 investors.

One of those investors have said no to our next strategy that's pretty stunning.

No I don't expect we will get 100% renewal on those investors, but we are anticipating about an 80% renewal rate.

On that $8 3 billion of capital, but also accepting that the denominator effect will make checks about 20% to 30% smaller.

So where does that lead us if you run that calculus at a 25% smaller check and an 80% take rate.

Still have some fundraising to do.

So we've been doing that we've.

We've been out for the last 120 days were.

We're in dialogue with 200, new logos, that's not a typo 200, new investors, we have outreach to.

Verbally indicated they have interest of about $30 billion.

Keep in mind, we've got 17 salespeople globally, Kevin Smith, and Leslie gold into the best in the business, We fund raised $24 seven.

We have very sophisticated back office tools that enable us to predict what investors are doing where are they in the process. What's the probability that they get through diligence whats the probability that get to IC and whats the probability that they get to yes. So.

We put that all into the into the supercomputer and we get a pretty good outcome for fundraising. This year now a lot can happen we accept that the environment is incredibly turbulent it's choppy investors have choices, but we also know that investors are not walking away from digital infrastructure Jonathan.

Not walking away from renewable energy and they're not walking away from credit.

Renewables digital infrastructure and credit are the strategies that are working that is where investors are putting capital to work.

Had successful fund raising in January we've had successful fund raising in February we're obviously not at Liberty to report those results until the next quarterly earnings, but again I want to be clear with everyone on the phone today, we have very strong conviction around what we're doing in fundraising and we've got the data and the dialogue.

And the sales team to support that so again I think if youre, taking anywhere anything away from this call.

You have somebody who has a lot of conviction in our fundraising now based on the various.

Various discussions we have going on.

Does that help Jonathan.

Yes, it does thanks very much.

Thank you.

Our next question is from the line of Jade Rahmani with <unk>. Please go ahead.

Thank you very much.

A question about fundraising does digital infrastructure fall within that real estate or infrastructure.

Because of that.

Resignation make any difference in terms of the outlook.

It's infrastructure right I mean, you go back to Digirad partners strategy, one and strategy to I would say strategy one jade.

25% of the capital was coming from real estate buckets.

You pivot to strategy to $8 3 billion about 10% of that capital came from real estate allocators.

And as we look forward and think about what we're doing with the new strategy I think it's pretty much all enter at this point I don't think real estate investors.

Looking at our series of fund products as a as real estate I think it's the conversations we have jade or with the head of infrastructure. The <unk> of real assets I mean, our connectivity with investors now is pretty strong.

And I think what we've found is that our home our home for our capital.

His infrastructure unless of course route raising money for credit.

We're out raising money for.

Venture growth strategy.

Our liquid securities products those are different those are obviously different conversations but in our core digirad partner's flagship strategy, it's real assets and underneath that it's intra.

So does that create an opportunity to broaden our focus to overall infrastructure.

It would be synergies in front or anything with respect to all the Lps youre talking to or do you think thats more of a risk could dilute your focus.

No I think look we obviously are.

Very skilled at fund raising we've almost tripled the size of our fundraising team I mentioned on the call.

We did invest a lot in SG&A last year, because we are building a growth engine Jay to get to 150 billion of assets under management.

I'm guiding to.

$2 $75 million to $290 million of FRE in 2025, and the way we get there is by fund raising and the way we get there is building scale in our credit products building scale in our core product certainly <unk> is a big part of our growth strategy as well we.

We like the digital plus strategy, we like what we're doing there.

Certainly like the team we have in place there in terms of digital logistics and renewable energy, there's a lot of room for us to grow there we picked up five world class fundraisers from Infra bridge, bringing our total to 17 people globally and they've got a bunch of logos that we didn't have and we've got a bunch of logos. They didn't have so the.

<unk> in the infra bridge deals are yet to be entirely apparent to the street Jade, but I can tell you.

We're fully integrated day, one jacki, Lou and Ben Jenkins, and Liam did a great job integrating that team into our operations of the day, we closed everybody was on the same.

Same page for fund raising asset management and back office and accounting and so we're hitting the ground running on <unk> took a little longer than we would've liked to have closed the transaction, but it really just gave jackie more time to integrate the.

The back office side indicated Liam and been more time to integrate the investment management team. So clearly strong synergies and fundraising now much bigger team.

A lot of interest in what we're doing not just in <unk> partners and our flagship strategy, but also some of the other co investment vehicles and other strategies that we have going on right now where we think we are in the right place. We've got the right dialogue going announced the time now to close some capital, which I think we will just albeit at slightly smaller check sizes. This year.

Thanks, and just the last question on the overall environment does rationalization, that's playing out in the tech sector more broadly.

Create any flow through impacts to the underlying businesses.

So the growth rate and have any.

Impact on LP appetite to invest in this space.

So look what we have is the results from the fourth quarter, which we shared from you today organic growth in 2022 is at record levels across fiber towers small cells and data centers.

Certain datacenter verticals are growing faster than another I think I highlighted this in my PTC conversation, Hawaii, we see private cloud being massively on the rise and certainly renewable powered private cloud is on the rise because of.

Just cyber security attacks people wanting that tier five security that switch has and certainly theres been no abatement in leasing advantage I mean surreal out least equinix in the at least digital Realty last year on the public cloud side. So we've got the right Ceos, who have got the right management teams and.

Certainly they've got access to capital we did a very good job securitizing most of our portfolio companies as I highlighted in our earnings deck.

By having only one covenant Jade.

Just a <unk> ratio and no cash traps that those securitizations are companies are minting free cash flow and so what we're doing is harvesting cash down at those 27 digital infrastructure companies, we're reinvesting back into the businesses not pushing dividends out to Lps.

This is the right moment to reinvest in new towers, new data centers, we're seeing higher rents datacenter rents are up 12% in the public cloud they are up 6% globally and so we're seeing higher rents and were seeing better returns on a single tenant basis. So we are fully funded business plans for 2023.

We do see capex being trimmed by the mobile carriers.

We do see Capex being trimmed in enterprise spend and we do see capex being trimmed and cloud.

But all that being said all of our business plans are pointed to very strong high single digit low double digit organic growth next year. So.

This is the narrative Jade that played out in <unk> in 2010 for us.

We had strong liquidity, we lowered our leverage we had fixed debt in the form of securitized debt and enable us to play offense, we're running that same playbook not just at one company like we did a global tower partners, but we are running that playbook at 27 companies. So youre getting a force multiplier of digital bridge Youre getting global scale as Severin said five continents, we're operating.

Today.

It's a truly a remarkable business and.

We're going to see the benefits of having scale, having strong liquidity and having great customer relationships, we anticipate a very strong 2023.

Thank you.

Thank you. Our next question is from the line of Mike Ellis with Cowen and company. Please go ahead.

Great. Thanks for taking the questions two if I may.

First just as we think about the <unk>.

Incremental capital that you are looking to deploy.

I know you talked about the verticals that you are looking to invest in but maybe if you could just double click on the geographies that are focus I believe you flagged Asia earlier on the call just thinking about how youre prioritizing deploying capital across regions and then my second question for you would be one of the key themes at least for the data center space has been a rise in pricing Mark could you just talk.

<unk> two driven in part by supply chain and then also.

Total occupancy now any color on how you see pricing evolving across the verticals of comp and if you think that could be a further tailwind for your business. This year.

Yeah.

As always Michael good questions very thoughtful let's.

Let's try to take the second one first because it's top of mind.

Our business plans in 2023 are not predicated on higher pricing the customers.

Let me repeat that.

We're not predicating our growth results on just making our customers pay more that's a bad playbook.

And I run that playbook, and a $2 300, I don't know 10.

When the markets turn and get good customers don't come back to you.

So we tend to be very pragmatic about how we price we don't want to gouge, we certainly don't want to be someone who shapes. The price and then the customer gets angry and win their capital structure recovers and they've got more liquidity.

And their capex spending accelerates, we get left behind I've watched other publicly traded digital infrastructure companies do that.

And they will admit they one minute today, but back then who would have admitted they suffered for it. So we've learned from that path right and you've got to always look at the past and look at these down cycles and this is where you pick customers up you don't step on them.

And I am very clear about this with all of our 2007 Ceos, There's a right way to behave there is a right way to treat your customers and there is a reason why we had incredible growth.

And the dot com crash and the mortgage crisis, because we knew how to play those cycles. We're doing the same thing today.

We're putting customers first we're taking care of them and the growth rates will follow yes, we have moved up pricing I don't want you to walk away from the conversation, saying, we Havent moved tower rents up we have move data center routes up fiber.

<unk> fiber rents actually stayed pretty static and small cell pricing has stayed pretty static but in towers and data centers in select verticals in select markets, where we have a unique permitting position or we have a unique power position, Michael we are pricing that space Accordingly, as one would expect.

So I do see good growth in 'twenty three it won't be as good as the growth was in 'twenty two.

Looking at the January leasing results from all the portfolio companies, let's say, we're on plan, mostly a little bit slightly ahead of plan, but.

You can't read much Michael in the first quarter I think the fund conversation, we're going to have is over the summer.

Checking in with us at the at the sort of half Paul Wright halfway through the race, where are we I think when we're out at your conference.

In Boulder or some of the other summer conferences it'll be interesting to check and then figure out where are we against plan how's leasing where rates, whereas capex spending those are all things that we're going to monitor pretty closely.

The good news is I get to talk to you four times a year like this and so I'm always pretty transparent with you and I'll share with you what I'm hearing.

That makes sense.

Absolutely I appreciate those comments and then just any color on geographies, where we focus on deploying the capital yes, yes. So look I mean, we're always shifting a little bit right. There was if you look at Digirad partners one in distribution partners too.

<unk> partners, one we put 20% of the fund in the Latam, we put about 40% to 45% in Europe and about 30% to 35% in the U S.

Then that shifted in fund two we decided to go we sort of took risk off in Europe .

Put about 30% to 35% there we moved up in the U S and Canada to close to $42, 43%. We did very little in Latin America about 5% and we did 20% in Asia. So Asia was a big part of our strategy and our <unk> partners too.

I think for this year from an allocation perspective as I highlighted on the call today I like what we're seeing in Asia. There is some technicals there that we like and so we're going to continue on the same cadence in Asia.

Seeing good opportunities, we're seeing a lot of our customers are looking to sell infrastructure and keep in mind a lot of.

Carriers sold their infrastructure, Michael 15 years ago in the U S and Europe . They started selling five six years ago and Asia is kind of the last big theater, where youre going to see a lot of infrastructure to be sold so I think Thats me telegraphing that a little bit Im still a little risk off on Europe I think the way we play Europe is through dislocation I think you've seen a couple of fiber fiber.

To the home bankruptcies in the last two to three weeks.

We've been looking around some of those so in Europe , we're going to be a little more opportunistic I don't think we pay up for high quality platforms in Europe I think in the U S. It's business as usual I think we've been pretty consistent across the last two funds about what we've done in the U S and we like the U S. We like the technicals, it's our home market we.

We like some of the things we're seeing in Canada, I wouldn't give up on investing in Canada, and then I think in Latin America.

As they start to emerge from some of the recessions they had five six years ago.

We do like some of those markets, but again.

A very limited amount of capital I don't see us going crazy in Latam, but I think the big winners in over the next two years for us will be here in our home market and in Asia are really the two standout areas for geography Michael.

Awesome really appreciate the color Marc. Thank you, yes. Thank you Michael appreciate it.

Thank you. Our next question is from the line of Sandy.

B Riley Securities. Please go ahead.

Yes. Good morning, guys I appreciate you taking the questions. Thanks for all the color on the deconsolidation Databank advantage I think.

The other piece of this simplification pie that we spent less time on it.

Some of the noncore assets you plan to do best like the bright spire shares some of the other.

They're kind of legacy colony capital stuff, just kind of laying around so.

Any update on the timeline.

For divestiture are those is that going to be a 2023 event would that have any impact on the <unk> guide that you gave.

I think we've been pretty pretty clear about that as well.

This will be the year that we had finished divesting of all the noncore assets that timeline remains unchanged.

That cash can be put to good work on on digital I am M&A and that's what we intend to do rotating out of stuff that.

It doesn't have an IRR high yield so we'll focus on that and.

And then it also gives us the opportunity to put more capital into our new funds because that's working.

That is clearly the right strategy for US is to continue to invest in digital so.

I think what Youll see is by the end of this year and incredibly clean.

Low levered set.

Sector focused.

Asset manager.

Thats, putting up incredibly strong.

Sorry numbers and.

And our goal is as usual is to is to beat our guidance I think thats something that management team is.

<unk> long had a rich history of doing is beating our guidance. So.

But look on bright spire, Jackie has been running with that and I'm sure Jackie any incremental color you want to give on bright spire.

Yeah sure. So we've always said, we'd be irresponsible sellers, but mark really said its non core and our focus this year is to be.

Be opportunistic what's selling.

Divesting those to the degree it makes sense for our shareholders and the price that we're going to get for it but.

And then the other on our legacy colony assets really the principal one is the seller's note associated with health care, which we.

We will continue to work with high gate to to to monetize that where appropriate and the other investments are pretty much gone. So we're really left with just those two.

Okay.

Thank you and then.

I appreciate the color on the common stock repurchases in the fourth quarter.

Just wondering if you could give an average purchase price on those <unk>.

B, how active you've been after quarter end and if you have been active in 'twenty three so far whether thats been the common the preferreds or mix and how much is on the authorization as of today.

Yes sure. It was basically at around 13 blocks and we will continue to work with our board to see where it makes sense to be more opportunistic with taking the rest of it.

Taking the rest of it from a share buyback perspective.

Okay. So just to be youre, not commenting on any any repurchase activity after quarter end Thats fine. If you are I just wanted to make sure.

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

Great Alright, guys. Thanks for taking the questions. So I got it.

Yes. Thank you.

Thank you. Our next question is from the line of Richard Choe with Jpmorgan. Please go ahead.

Hi, I wanted to follow up on the potential investments in Asia.

Do you see more opportunity with towers data centers or fiber.

And would it be mainly carrier sales are investing companies are thinking about building.

Wanted to get a little more color there.

Yes. Thanks, Richard look you wouldn't be surprised to hear this but it is a little bit of everything right.

Some of these are our carrier partnerships like we have with Deutsche Telekom like we have with Liberty.

Europe . Some of these are straight acquisitions. Some of these are divested assets.

Potentially a carrier divesting of their long haul Suboceanic network.

It could be.

Data centers, where we're working with a specific customer.

It could be.

It's a variety of things I don't want to get too specific because it's obviously a pretty strategic we like to kind of run dark and silent and then when we make our move we announced the deal but.

As I've said before Richard the playground in Asia is very fertile it's fertile from a customer perspective from a carrier perspective.

It's extremely hurdle from a fund Raisings perspective, we're seeing incredible interest in what we're doing because we didnt raise a lot of capital Richard in fund, one and fun too.

Out of Asia, and we're seeing a lot of interest in what we do is Asian investors as you know Richard tend to be pretty conservative.

They looked at our first strategy they looked at our second strategy. They generally like to invest in later generation strategies and so the big kind of 'twenty three surprise for us will be the fund raising in Asia and we now have three full time salespeople in Asia, which we had literally a year ago, we had none.

And there are three absolute Rockstar fundraisers, so we wound up having literally not a strong presence in that region to having a leading presence in that region from a fund raising perspective I'm pretty excited I've taken two trips to Asia in the last 90 days I will take two more trips to Asia in the next 120 days and we're pretty well.

We're pretty buoyant about what we're seeing there from a pipeline perspective from a fund raising perspective.

Singapore Office of 17 fulltime investment professionals now so were.

So we feel like we've got the right team on the street right opportunity set and we've got the right capital formation and those are the ingredients you need to be successful.

Great.

You've mentioned this.

That's in parts.

The Q&A, but just to circle back I think there's some perception that U K, a very premium multiple for switch and it seems like given how it's performed.

Maybe it's not nearly as high as people assume any kind of update there that you can provide that I wanted to clarify on that.

<unk>.

Yes look I gave a pretty pointed speech in Hawaii about that Richard you should you should go check that out because it's pretty it's pretty detailed but I'll give you. The highlights of that speech, which is we're three years ahead of leasing where we thought we'd be that's kind of all you got to know.

We thought we were going to do 16 megawatts, we did 77 megawatts.

And the pipeline has quadrupled since we bought the company.

And we just it's one of those stories Richard that it's sometimes a company just performs better when it's private versus being public.

They were constrained of capital as you know being a public company.

The management team had a tough time it is not a business you can run quarter to quarter, just not built for public market cadence.

And bringing it private allowed the company to make the right investments the right long term decisions.

And it's paid off really well for US we just had a board meeting this week and the results are pretty outstanding. We're in this business for nowhere near 30 times anymore, whoever is putting out that narrative.

Just doesn't have the right information and I'll leave it there.

Business is performing well.

Renewable energy for the for the major Fortune 100 enterprise companies for the U S government and for cloud players.

It's not a nice to have it's table Stakes.

Guys want to be in data centers, where theres, a 100% renewable energy and last thing I would just say is switches in places.

Where.

What are the alternative to markets that are now shut down and have no power. So you know.

For example, Grand Rapids has turned out to be a nice alternative to northern Virginia.

Reno is the alternative to Silicon Valley, Austin, Texas, as the alternative to Dallas and Houston.

So we're in really good high growth markets, we own the land we control our real estate.

We are fully permitted for the next 11 million square feet of data center space and we have one five gigawatts of unused power. So the combination of having a lot of land.

A lot of rentable square feet, and a lot of power and being unconstrained.

Has put us in a huge advantage in some of these markets and so that's why the business is crushing it today and so we're going to we're going to continue to see outperformance of that asset I'm really excited about what we're doing in switch in that the blueprint for potentially what we do in private cloud in Europe , and what we do in Asia. So.

We're not stopping there we think there's like <unk> like we did with vantage, we took vantage to Europe , we took advantage to Asia.

The market for private tier five.

Renewable power data centers is a really interesting product and so we're looking at that into the future where do we take switch next.

Great. Thank you.

Youre welcome. Thank you Richard.

Thank you. Our next question is from the line of Matt Mcclintock.

With Deutsche Bank. Please go ahead.

Hey, guys. Thanks for taking the question. Thank you for squeezing me in this late but just two quick ones. If I could first on infra bridge. If you could just talk about some of the incremental infrastructure opportunities in the mid market. The deal opens up for digital bridge and maybe some of the near term synergy. It provides your iam business.

And then just secondly, maybe for Jackie the targets you put out.

Slide corporate overhead goes from 50 mill this year to about $40 million in 2025 at a time when we're obviously seeing meaningful inflationary headwinds in the business is scaling. So I'm just wondering if you could talk about your confidence level and actually shrinking those corporate overhead costs. Thanks.

Yes.

Well look I think Jackie and I are in the in.

In the corporate overhead discussions together, the CEO and the CFO have put out a guide that we're going to take 10 million of costs out of the business. This year.

We've already taken steps to do that.

You'll see it on a run rate impact by the fourth quarter, but.

It's just taking prudent measures in a variety of directions.

We're trimming some of our investment.

Investment team were trimming some of the back office team Jackie has done a great job, we're getting really good synergies now in terms of the financial reporting on the fund accounting side, we had some duplication of efforts there when we did the merger a couple of years ago, and I give credit to Jackie and his team. They are pulling a lot of cost out of the back side of the business and we think we can continue to pull more cost out of the business.

Bonuses are down year over year, we didn't get it done so youll see compensation is going to be down year over year and it starts with the CEO taking.

Taking a much lower bonus and I took the your previous and it's just setting a tone with investors that that's the right thing to do this management team is all about doing right by shareholders ever since Jackie and I took on this task of putting these two companies together and coming up with a new narrative.

Dead serious about taking cost out of the business and youre going to see that this year from us a very strong commitment.

To bring back.

The earnings potential of the business I talked about profitability, we will be very profitable this year.

As Jackie will tell you about catch up billings and other fund products, taking the cost out of the business. The new fundraising comes on at an incredibly high margin, we're not adding people right now that's the important thing you need to know we added all the people last year.

So thats why youre seeing.

A lot of confidence in the mat and the margin increase.

Certainly looking forward to talking to you next Monday at your conference and going even deeper on this but.

I don't think people are fully grasping what we've done here.

Look at the $22 two a theme that we generated last year and you look at the sort of midpoint of our guide of $38 billion of PM next year.

What we're talking about growing fee by 78% year over year I don't know of another asset manage on the planet that is telling investors, they're going to put up 78% growth next year, we are.

Can't say that strong enough like this team is dead serious about where we're going.

We put the right pieces in place in 'twenty two.

And once we're deconsolidation will have leverage in the same zone as other alternative asset managers and we're going to keep taking leverage down. So we're doing all the right things and the results are going to follow this year.

And I'm happy to go as Jack and are happy to discuss guidance and rapid goes deeper as you wish on any of those numbers not.

Lost your first question because I was so absorbed in the SG&A cuts in the taking 10 million of costs out of the corporate overhead what was the first question.

[laughter] nor is it was just around <unk>, just wondering the incremental infrastructure opportunities in the mid market and maybe some of the near term he energy the deal provides.

Well look the immediate synergies is in middle market infra.

They have three people doing middle market digital infra and so they've got six investments.

50% of their latest fund is digital and so when you've got businesses like expedient never stream and they go from a bench of having three to 130 people to help them.

As you can imagine.

That team is pretty excited to be with our team because we're leaning in and we're helping on their investments and there's a ton of value add to be delivered there. So immediate synergies are on the investment team.

We talked about fund raising they had an excellent fundraising team I can't say enough about some of the fundraisers that we picked up Alice.

And Brian Lee in Asia, I mean, we picked up some really world class fundraisers I had the chance couple of weeks ago to be in Europe for 12 days fundraising saw 50 Lps of which half were in.

<unk> have our digital <unk> and it's just fantastic to have a bigger sales team and build them out and touch more clients, which is what we're doing right now so we're seeing already the paybacks on the.

On the fundraising side, Jackie you want to talk about what you're doing in the back office Jackie within for bridge, and where you see some of the cost synergies. There Youre well ahead of your plan and I think you've got a really targeted plan on how you get synergies there and then we can come back and talk about other investable asset classes and encourage go ahead Jackie.

Yes, sure. So I think when we first underwrote the deal we had FRE overlays.

Low to mid twenties.

Millions and we're now looking closer towards 30, and that's principally because of the fact that we've been able to plug and play and and have those funds really plug right into our back office and our scalable processes.

Market our first John .

Took over at colony and now digital bridge.

We had multiple ERP systems is now consolidate into one obviously if you look at the website, even just a couple of years back everybody in their neighbor was an MD and now we've effectively pruned down that got that top echelon pretty sizeable. So it's just working smarter and trying to be much more efficient with both processes and systems and also streamline.

Titling and and and and meritocracy and equity so those things have allowed us to not Miss a beat in terms of the amount of work that needs to go on but certainly it allows for us to be much more efficient with doing it.

That's awesome and I appreciate you guys, taking the questions and we'll see you next week Mark.

Looking forward to it.

For the invitation I appreciate it.

Thank you.

No further questions at this time I would like to turn the floor back volatile Marc Ganzi for closing comments.

Well, thank you and thank you all of you for your time today.

This is a pivotal moment in the company's history and we're at an inflection point and I think that inflection point is advantage our shareholders.

We've laid out guidance for next year. It is a guidance level that Jackie and I are very confident that we're going to hit next year, but most importantly, it's a guidance level that we believe we can exceed.

We prioritize taking down leverage we do not want to risk the companys balance sheet.

Theres, an easy temptation in these markets to take on more leverage do more M&A and for the sake of growth that's not what this management teams about.

We have the building blocks in place to go out and execute the way you want us to execute which is organic growth, which is where we achieve the highest returns are eight plus billion of capital formation. This year for a company of our size and the CAGR growth that we're going to deliver is industry leading.

We believe that $8 billion plus of capital will come on in incredibly high margins.

In addition to that we believe we will also continue to realize great investments, which we have not underwritten in our guidance as Jackie told you earlier the.

The 70 plus percent growth in <unk> will be industry, leading and.

And we have Supreme conviction around our ability to hit on those numbers.

22, 2% to 38 is a realistic target for us and my goal is to exceed and beat that as we've done with every metric we've put out in front of the street.

So look at the end of the day, it's about execution.

I think you've heard from us today in a very granular fashion, what we're doing out there in terms of capital formation.

How we're running our portfolio of companies with Prudence and at the same time growing from strength and playing offense with key customers.

And then last but not least preserving liquidity and deleveraging. The company. These are the things that matter.

You want to be with a wartime CEO , that's been there and done that before and with a trusted CFO that's been there and done it before Jack and I are very confident in what we're doing.

Stay with US we won't disappoint, we're going to have a good year, we're gonna go out and execute.

We appreciate your time and we appreciate your patience and your support of digit rich.

Have a great weekend and as always sovereign myself and Jackie are available to all of you at any time, if you want to have a conversation with us take care and we'll be in touch soon bye bye.

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

For your participation.

Okay.

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