DigitalBridge Completes Deconsolidation of Vantage SDC

Rhea-AI Summary

DigitalBridge Group, Inc. (NYSE: DBRG) has finalized its corporate transition to a pure-play alternative asset manager dedicated to digital infrastructure. The company achieved a key 2023 simplification initiative, including de-leveraging of the balance sheet. DigitalBridge no longer holds a controlling financial interest in Vantage SDC and will deconsolidate Vantage SDC effective December 31, 2023. The company's CEO, Marc Ganzi, expressed satisfaction with the transition, emphasizing the alignment with investment partners and the focus on driving long-term returns in the digital infrastructure sector. The company's equity investment in Vantage SDC represents a 12.8% ownership interest and will be carried under Investments on the company's balance sheet.

Insights

Financial Analyst

The strategic move by DigitalBridge Group, Inc. to deconsolidate Vantage SDC aligns the company's operations with a focused business model as a pure-play alternative asset manager in digital infrastructure. This transition is significant for stakeholders as it suggests a strategic pivot towards a less capital-intensive management model, potentially improving the company's return on equity and enabling more predictable revenue streams from management fees. The de-leveraging of the balance sheet, as mentioned, can be interpreted as a positive signal to the market, indicating a reduction in financial risk and an improvement in the company's credit profile.

The shift in ownership interest, from 13.1% to a diluted 12.8%, albeit minor, could have implications for the company's influence over Vantage SDC and its future earnings potential from this investment. Investors should monitor how this change affects DigitalBridge's investment income and whether the company can leverage its operational expertise in digital infrastructure to enhance the value of its remaining stake in Vantage SDC.

Market Research Analyst

As DigitalBridge Group, Inc. refines its business model, it is essential to consider the broader market implications of a company specializing in digital infrastructure. The sector is witnessing a surge in demand due to the exponential growth of data consumption and cloud services. By focusing on digital infrastructure, DigitalBridge may capitalize on this trend, positioning itself to benefit from long-term structural shifts in the economy. However, the company's success will heavily depend on its ability to manage and grow its portfolio effectively within a highly competitive landscape.

Additionally, the deconsolidation of Vantage SDC allows DigitalBridge to streamline its reporting structure, which could enhance transparency for investors and potentially attract a more focused investor base interested in pure-play asset managers. The long-term impact of this transition on the company's market valuation will hinge on its operational performance and ability to unlock value from its investments in a niche but rapidly expanding market.

Economist

The simplification initiative by DigitalBridge Group, Inc., including the de-leveraging of its balance sheet, is a strategic decision that reflects a broader economic trend of firms seeking to optimize capital structure to enhance shareholder value. By reducing leverage, the company may lower its cost of capital, which is particularly pertinent in an environment of rising interest rates. This move could also signal confidence in the company's cash flow generation capabilities, as a leaner balance sheet often requires robust operating cash flows to meet financial obligations.

Moreover, the focus on digital infrastructure as a standalone business reflects the sector's resilience and growth potential, even in the face of economic uncertainties. The operational simplification may provide DigitalBridge with the agility to respond to market opportunities and challenges, which is crucial in a sector characterized by rapid technological advancements and shifting regulatory landscapes.

Finalizes Corporate Transition to Pure-Play Alternative Asset Manager Dedicated to Digital Infrastructure

Achieves Key 2023 Simplification Initiative Including De-Leveraging of Balance Sheet

BOCA RATON, Fla.--(BUSINESS WIRE)-- DigitalBridge Group, Inc. (NYSE: DBRG) (“DigitalBridge” or the “Company”) today announced that following the execution of a series of agreements, including the conversion of certain earnout payments to investors in Vantage SDC (Stabilized Data Centers) to equity interests in Vantage SDC and the modification of certain governance rights of Vantage SDC in connection therewith on December 31, 2023, DigitalBridge no longer holds a controlling financial interest in Vantage SDC and will deconsolidate Vantage SDC effective December 31, 2023.

Marc Ganzi, CEO of DigitalBridge, said, “I am pleased to report that today we are a pure-play alternative asset manager, fully aligned with our investment partners to drive long-term returns powered by the secular demand for digital infrastructure and our history of building value in the sector. With the deconsolidation of Vantage SDC, we achieved a key 2023 objective, simplifying our business profile and reporting structure, while continuing to maintain financial exposure to Vantage SDC’s high-quality data center assets serving key power-constrained North American markets.”

Vantage SDC was the sole remaining asset in the Company’s Operating segment, which will be discontinued, with investment management as DigitalBridge’s sole line of business as of December 31, 2023. The Company’s equity investment in Vantage SDC, representing a 12.8% ownership interest (diluted from 13.1% as part of this transaction and excluding interests held by limited partners in vehicles managed and consolidated by the Company) will be carried under Investments on the Company’s balance sheet.

Vantage SDC is a portfolio of 13 hyperscale data centers serving 4 North American markets and is managed and operated by Vantage Data Centers.

About DigitalBridge

DigitalBridge (NYSE: DBRG) is a leading global alternative asset manager dedicated to investing in digital infrastructure. With a heritage of over 25 years investing in and operating businesses across the digital ecosystem including cell towers, data centers, fiber, small cells and edge infrastructure, the DigitalBridge team manages ­­$75 billion of digital infrastructure assets on behalf of its limited partners and shareholders. Headquartered in Boca Raton, Florida, DigitalBridge has key offices in New York, Los Angeles, London, Luxembourg and Singapore. For more information, visit: www.digitalbridge.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and contingencies, many of which are beyond our control, and may cause actual results to differ significantly from those expressed in any forward-looking statement. Factors that might cause such a difference include changes to the level of demand for digital infrastructure, anticipated changes in our financial reporting following the deconsolidation of Vantage SDC and other risks and uncertainties, including those detailed in DigitalBridge’s Annual Report on Form 10-K for the year ended December 31, 2022, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, and its other reports filed from time to time with the U.S. Securities and Exchange Commission. All forward-looking statements reflect DigitalBridge’s good faith beliefs, assumptions and expectations, but they are not guarantees of future performance. DigitalBridge cautions investors not to unduly rely on any forward-looking statements. The forward-looking statements speak only as of the date of this press release. DigitalBridge is under no duty to update any of these forward-looking statements after the date of this press release, nor to conform prior statements to actual results or revised expectations, and DigitalBridge does not intend to do so.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240110553989/en/

INVESTOR RELATIONS

Severin White

Managing Director, Head of Investor Relations

+1 212.547.2777

severin.white@digitalbridge.com



PRESS & MEDIA

Joele Frank, Wilkinson Brimmer Katcher for DigitalBridge

Jon Keehner / Sarah Salky

+1 212.355.4449

dbrg-jf@joelefrank.com

Source: DigitalBridge Group, Inc.

FAQ

What is the corporate transition of DigitalBridge Group, Inc. (NYSE: DBRG)?

DigitalBridge Group, Inc. (NYSE: DBRG) has finalized its corporate transition to a pure-play alternative asset manager dedicated to digital infrastructure.

What key initiative did DigitalBridge achieve in 2023?

DigitalBridge achieved a key 2023 simplification initiative, including de-leveraging of the balance sheet.

What is the company's equity investment in Vantage SDC?

The company's equity investment in Vantage SDC represents a 12.8% ownership interest and will be carried under Investments on the company's balance sheet.