Greetings. Welcome to today's DigitalBridge Group, Inc. Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] And please note that this conference is being recorded. I will now turn the conference over to Severin White. Thank you. You may begin.

Good morning, everyone. And welcome to DigitalBridge's fourth quarter and year-end 2021 earnings conference call. Speaking on the call today from the company is Marc Ganzi, our President and CEO; and Jacky Wu, our CFO. I will 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, including the effect of the COVID-19 pandemic on those areas may be considered forward-looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed on this call is as of today, February 24, 2022 and DigitalBridge 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 Form 10-K to be filed with the SEC for the year ending December 31, 2021. Great. So we are going to cover our standard agenda; Marc will start with our 2021 year-end review. Jacky will cover our quarterly and annual financial results as well as update our forward guidance. And then Marc will look forward to the year ahead and 2022 before wrapping up with some key takeaways followed by Q&A. We’ve finished the quarter with some of our strongest results to date. And we’re incredibly excited about what lays ahead in 2022. So let’s get started. With that, I will turn the call over to Marc Ganzi, our President and CEO. Marc?

Thanks, Severin. I’d like to start by thanking everyone for their continued interest and attention today, especially new investors that are just learning about DigitalBridge for the first time. I’ll get into more detail later on the three key areas, how we finished the mission in our rotation to digital. How DigitalBridge is emerged as the partner choice to institutional capital and now we've continued to invest in high quality digital assets in 2021. The key on the right hand of the slide is how we've successfully checked all the boxes on our key goals for 2021. Just like in 2020, we've delivered on our commitments to you, our investors. And that's the key continuing to deliver on promises for you. This is essential and critical as we continue to build trust. And most importantly, as we accelerate into the next phase of our business plan. Next slide, please. As we look back at 2021, I think the biggest takeaway for us is we really did finish the mission, rotating over $78 billion in assets under management and under three years. We call this our diversified to digital rotation. And we did it ahead of schedule by over a year and on budget, once again, delivering for you, our investors. Not only did we rotate assets, we recast our corporate balance sheet substantially reducing our corporate liabilities, as well as rotating our governance with a new Board that's diverse and steeped in digital expertise. We relaunched midyear as DigitalBridge, returning back to our heritage as the leading global digital infrastructure firm. And as we enter 2022, we're now able to focus 100% of our energy on digital, where we have long had a history of operating and investing successfully for over 25 years, building great digital infrastructure, assets and platforms.…

Thank you, Marc. And good morning, everyone. As a reminder, in addition to the release of our fourth quarter and full year 2021 earnings, we filed the supplemental financial report this morning, which is available within the shareholder section of our website. Starting with our fourth quarter results on Page 12, the company finished the year with a strong quarter and seen rapid growth in digital segments, driven by successful fundraising in digital investment management and by tuck-in acquisition and organic growth in digital operating. With the digital transformation complete, our financial reporting will be streamlined in 2022 following the sale of the legacy wellness infrastructure business, which is expected to close this quarter. AFFO per share has reached an inflection point this year, and we expect even more positive momentum as we march through 2022 as I will later discuss. We successfully rotated over $78 billion of AUM, everyone now at $45 billion of all digital AUM today. And we are excited to be entirely focused on our high growth digital business this year. The company is strong and healthy, driven by our asset light investment management business that generates high-quality long-term fee earnings, as well as a transformed corporate capital structure after reducing corporate debt by 80%, and significantly reducing borrowing costs. For the fourth quarter, reported total consolidated revenues were $256 million, which represents a 65% increase from the same period last year. Total company adjusted EBITDA was $21 million on a pro rata basis, which improved from $18 million last quarter, and from a $2 million loss, the same period last year. The continued adjusted EBITDA improvement was primarily driven by successful fundraising in our high margin Digital IM business including DBP II, which officially closed at $8.3 billion in December. AFFO was a $5 million…

Thanks, Jacky. So as we look forward to 2022 in the year ahead, I wanted to set the table by addressing some of the key variables affecting a pretty dynamic macro business environment today. It's important to note, by the way that we're always monitoring these factors and planning ahead. This management team has been through many cycles. And that experience informs our preparation, how we invest in our management of our digital businesses. Inflation is the first variable that everyone is talking about. There was bound to be an impact from all the excess capital into the global financial system. That's shown up for us primarily in two areas. One, higher raw material construction cost, and two, higher labor costs to build or install fiber towers and datacenters. On balance, we've maintained our development yields by passing through these increased costs, via our contracts with customers so it has not materially impacted our expected returns. The silver lining on this is as owners of digital real estate, we benefit to some degree from higher inflation as the value of our underlying assets increases nominally. Secondly, supply chain, where it's quite common to hear about bottlenecks in the system for certain specialty parts that are disrupting entire supply chains. We've seen that backup, for example, in power generators. We've weathered this headwind by leveraging our scale, committing to for purchasing contracts that have kept us largely on schedule. And we're also expecting this to dissipate as an issue as the worst of COVID begins to subside. We all hope. Next is geopolitics. Look, with Eastern European in the news, in terms of our impact our businesses are power and utility costs in Europe, are 100% pass throughs to our customers. So any flare ups in prices do not materially impact…

Thank you. At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ric Prentiss with Raymond James. You may proceed with your question.

Thanks. Good morning, everyone. Busy day. So appreciate all your comments and your prepared remarks. Marc, on your comments you're planning ahead pays dividends. And one of the questions we get a lot is are you guys going to reinstitute a dividend?

Yeah. So it absolutely is our intention to turn back on a di minimis dividend. I think I was pretty clear about that last year. We continue to see opportunities, Ric, for the incremental cash that we have on our balance sheet to redeploy that we think in higher returning objectives and opportunities. So, we will turn back on the dividend this year. And we will absolutely look to harvest as much cash as possible. I think one of the things, Ric that I see is, I see the world, perhaps a little bit differently than others. I think we've been very cautious about how we use capital off our balance sheet and how we put it to work. I've been long saying that, you know, asset values are quite high, but we see things changing a bit and we see opportunity. So I believe there will be tremendous opportunity this year to deploy cash into high return opportunities. And we're already seeing some of that. We can't sort of front run, but we're doing right now. But I will tell you that everything that we sort of predicted in being conservative, and not overpaying for assets is, I think going to be the right call at the end of the day. So we will turn it back on. It'll be incredibly small. Because I think that sitting on our cash right now will prove -- and will prove to be the right decision.

You tells me you're not going to sit on it, you're just not going to deploy it in dividends. You're going to put it to work on growth aspects.

That is correct. Yes.

What other questions we get a lot, and I don't think it affects your shareholder base as much is, as you press the gas on the successful raising of funds on the digital investment side that calls into question, the ability to keep REIT status. Update us a little bit about how you think about REITs status, in what that means to your shareholder base and how you think about it?

Well, look, since Jacky and I got the chair here about 18 months ago, nothing has changed. We've taken an incredibly pragmatic approach to the REIT. And at the same time, we've also measured that against the fact that we have told you and our investor base that we're going to grow. The great thing about having two powerful business models, one digital operating and one digital IM is that we can grow both of those business segments as fast as we wish. Now what I say is, and I think Jacky would agree with me, the investment manager businesses wildly exceeded our expectations. Our ability to a, Ric, deploy capital. B, our ability to raise capital, and then see create new ideas around IM, and grow our leadership position as what we believe is the best provider of capital to digital infrastructure businesses globally has really taken flight. And so as we measure all of that, that vertical is growing very fast, way faster than I think you'd anticipated, and that candidly our management team and anticipate as well. It doesn't preclude us from not staying REIT. But it also has a stark reminder that if you continue to grow your TRS, your tax free subsidiary, and you move to a point where that business just gets to a place where it's hard to maintain the REIT. Once again, we'll sit down, we'll have a conversation with our investors with you guys and tell you where we're going. At the end of the day, there's not a material impact to our tax if we decide to do REIT. And I don't think it diminishes or disturbs what we're building. And so I've gotten pretty comfortable with those two roads both are good roads for us. Staying REITs a good road for us. And if we're continuing to blow out earnings in terms of where we're going in IM and the balance sheet assets can't keep up with that then we'll cross that bridge when we get there. But I'm very confident that we're doing what is right for investors, which is delivering growth, delivering revenue delivering earnings that are all digital based. And that's what investors have signed up

And more operational questions, last one for me the buy versus build. Clearly skewing more towards the build versus the buy. Can you elaborate a little bit on how fast the pacing can occur in building, given the supply chain and other items you mentioned?

Yeah, we've been monitoring that carefully. I think you and I talked about it over the summer at your conference, Ric. We haven't seen a significant disruption to our supply chain. Now, whether that's luck or good planning, we could debate that intensively. Maybe we'll do that at your conference when I see you in a couple of weeks. But look, what I would say is, we believe we have some of the best CEOs in the sector. It's not accidental when you've got Steve Smith, Alex Gellman, Raul Martynek, [Indiscernible] and in some of the other great leaders we have. They plan for this. They purchase years in advance. So whether it's steel or generators, or whether it's connectors, or whether it's optical light switching gear, we've been ahead of that curve. When you manage $50 billion of assets globally, and you've got massive purchasing power, we can stand with vendors and say, look, we need to get to the frontal line. And we've been able to do that. So what surprised me in looking back, Ric in 2021 is our supply chain was not impacted. If you look across all of our business units, very few companies missed their new construction budgets. And most importantly, we also, what was very interesting is we came in under CapEx, so our budgeted CapEx spend for ’21 against what we actually spent looking across all of our portfolio companies, we actually came in under budget, I did not expect that. I expected us to have to spend more money to execute our greenfield business plan in 2021. So the setup is good for ‘22. We've just like, as Jacky said, we came out of our budgeting cycles, we know what's happening. We're touching these portfolio companies every week, we're getting KPIs and dashboards, we have granular data down to the datacenter down to the tower, down to the ultimately to the new fiber routes that we're building. And we have strong control of our costing, which is a function of us having incredibly good back office systems, which that's something we started doing back in 2003. So having good control the data, and having those metrics at our fingertips has been helpful. But I don't know, Jacky, you're looking at the dashboards alongside of me. I mean, anything that I missed in terms of what Ric just said?

No, I think you said it spot on. Ric, we definitely did say that set, talk about that and your conference last year. So we're proud of our CEOs for weathering this. And this has just proven that our industry in our sector is just really recession resilient, COVID pandemic resilient, and now, inflation resilient.

Great. Appreciate it, guys. Look forward to see you again in person, while we pulled off to live was last year in-person and looking forward to everybody getting back together.

Likewise. Thanks, Ric.

Stay well.

Our next question comes from the line of Colby Synesael with Cowen & Company. You may proceed with your question.

Hi, this is Michael on for Colby. Two questions, if I may. First, as we think of your pipeline for additional on balance sheet M&A. Now how would you rank where you're seeing the greatest opportunities across the verticals of digital infrastructure? And then second, with public -- evaluations for public companies contracting, and it's these various headwinds. Just wondering if you've already begun to see any contractions in private multiples. And if not, does this change the way that you think about potential take privates? Thank you.

So let's stack rank the priorities for the balance sheet right now. We are still very much focused on supporting our edge compute business databank. We announced the acquisition of the four campuses from CyrusOne in Houston, that comes with a strong pipeline of hyperscale leasing. So we're pretty remain very bullish around that vertical. I'd say the secondary priority is hyperscale. We will continue to add hyperscale campuses to our balance sheet this year. Whether it's through Vantage or through other acquisitions of hyperscale campuses. We've begun to see pricing move into a zone where we feel like we can deploy the balance sheet and we feel like it can be accretive to you our shareholders. I'd say number three, we've continued to look at mobile infrastructure. So whether that's towers or buying easements underneath that mobile infrastructure, that for us feels very balance sheet correct. And we're looking at that. And then the fourth vertical that we spend some time on and that I liked quite a bit is buying, long haul fiber routes and owning those long haul fiber routes in partnership with some of our bigger customers. It's a big idea, we started working on last year, it's beginning to gain some good traction. We think there's going to be a really good opportunity ahead own good long haul dark fiber or sub-oceanic fiber. And to be able to buy it effectively at the right price to get the right cap rate and get the right yields. We think those are opportunities our investors are going to really like and resonate with. As it relates to private market multiples, yes. We've begun to see a retreat in private market multiples, and that creates two outcomes. One, we're seeing auctions get pulled. We've seen a couple of recent middle market deals get pulled because the sponsor wasn't getting the right price. Or it trades in a trade slightly at a below expectation of where they thought it was going to trade. Look, the whole world thought everything was for sale 30 times, that just doesn't exist anymore. The market is reset. My suspicion is after today, it'll further reset. And, we have some -- as we discussed in our prepared remarks, there are real headwinds out there. And in kind, it does take private market multiples a quarter two to catch up to the public comp set. So we'll just have to be patient wait and see. The key to this is always about being pragmatic, being patient, and making sure we take our shots with our balance sheet capital accounts. And that's what I've been doing for 25 years. And we will continue to do that. I feel really good about the setup for ‘22. And I feel really good about the setup and weaponizing our balance sheet and using it correctly.

Perfect, thank you.

Our next question comes from the line of John Atkin with RBC Capital. You may proceed with your question.

Thanks very much. So I was interested in actually the comment you just made Marc. Any more detailed observations on asset values in fiber towers or datacenters or other infrastructure on deals that you've just sort of seen in the market if the U.S. towers or really any region or asset class? Any trend line that you've seen year-to-date, given the tremendous transaction volume and things that have happened with respect to cost of capital have multiple, gone in any particular direction that you have found noteworthy? And then a question on the 2023 and 2025 guidance? Seems like you increased it by similar amounts for each period. But given the implied or given a capital raising piece that you've been able to put up seems like your 2025 guide might be a bit conservative. Am I looking at that correctly, or is there something that I'm missing? Thanks.

Yeah, thanks. Let me start with the first part. And then I'll come to the second part, which always makes my Head of Public IR really nervous. So the first part is, we're 50 plus days into the year. My observations are somewhat regional and somewhat asset based. I would say, and U.S. towers, we haven't seen any diminishing multiples on private market transactions, that that asset has held in pretty good. I think on hyperscale data centers, asset values are probably holding in. I would say in retail colo or Edge colo, we see those transaction comps tightening up a little bit. And we're talking about, where we saw a pretty heavy comp set between 28 and 31 times, I think that marketplace is starting to move back into a more mid-20-ish sort of orbit. Fiber deals has been pretty interesting. There's been one deal that we know private that got done. It got done at a pretty attractive price. It was a fibre to home over builder in the Midwest, and it traded in a range that probably year ago would have traded in the mid-20s, traded into the high-teens. So we saw some degradation there. And then we saw two processes get pulled because the pricing expectations weren't met. So maybe a little bit of the sparkles coming off the shine there with fibre. But I think you know, datacenters, it's depends on what asset class you're in, and what's the weighted -- average duration of your customer leases. And then I think in U.S. towers it's holding in. I think in Europe, we've seen towers trade off their peaks. The days of tower deals getting done, they're at 28 to 29 times EBITDA I think are probably maybe behind us. But I still see a lot…

And Jonathan, on those longer term plans. Look, you're right, but if you look at our recent track record, and frankly, our long-term track record with Marc said, those numbers do look conservative. But we try to be pragmatic with our longer term guidance. It's certainly not sandbagged. If we hit these numbers, it's a great day. And frankly, working for more for two years, we're always going to try to do better than that. And that's our commitment to shareholders and trying to maximize our value. And we will try to have an amazing day by beating them. So, that's our goal. And that's our commitment as a management team.

And we like beating. That’s something we like to do. I think we've demonstrated a pretty good track record around that. And I'm very excited about the things we're doing. I think we're doing things that are challenging. We're doing things that are unique, we're doing things that other management teams are not doing. And that's exactly what gets I think, Jacky, and I'm motivated at the end of the day is waking up and then doing things the other management teams just aren't capable of doing.

Lastly, what drove the sequential increase in share count it was larger than normal, anything to call out?

The only thing is really our convertible notes that was already in the money. So some of that was tendered. And that was it.

Thanks so much.

Thanks, Jonathan. Hope to see you soon. Come visit us.

Our next question comes from the line of Eric Luebchow with Wells Fargo. You may proceed with your question.

Hi, good morning, everyone. Thanks for taking the question. So Marc, just wondering your operating businesses is just U.S. based assets today? Do you have any thoughts on maybe adding some balance sheet exposure internationally, primarily developed economies like those in Europe and towers or datacenters or fiber? And if you did go that route, maybe how do you hedge out some of the FX risk in such a strategy? And then, the second question Marc was around just the general datacenter demand environment. I believe you said Vantage would do 200 megawatts last year. We heard about some really large deals getting executed in Q4. So maybe what's your outlook this year from a datacenter perspective, both for hyperscale and enterprise? And do you feel pretty comfortable that, as you mentioned before, you can kind of keep returns in line despite higher supply chain costs. Thanks.

Thanks, Eric. You must be ghosting my emails. I was like exchanging emails with Surya last night and I asked him if he could do 400 megawatts of leasing and he sent me an emoji crying. Seriously, I think on the hyperscale side, we hopefully will do much of the same of what we did last year. We just barely came in under 200 megawatts of total leasing at Vantage globally, I think it was 195 or 196. We are forecasting a slight increase on that probably 10% up in terms of total megawatts leased. And the pipeline is robust. Our pipeline is over 800 megawatts of opportunity between the U.S., Asia and Europe. There are some big chunky deals out there, you are correct. And we don't see any sign of abatement. And that's why we're really excited about adding more Vantage campuses to our balance sheet. Your second comment is interesting. We've actually -- we built a really sizable business in Europe, nine campuses now for Vantage Europe. They're now reaching a maturation point where it does make sense if the values are correct from a fairness perspective, that we can begin adding some European hyperscale campuses for our balance sheet. So that's something Jacky and I started working on last year with Surya in the boards, of the two different boards, the DigitalBridge board and the Vantage board. And we like what we see there. And we do want to add some European exposure. And we want to be exposed to digital infrastructure in Europe that has CPI index leases, we think that's the best way to help fight against inflation, and certainly help offset some of those FX exposures, particularly where we're Euro denominated against the dollar. To that end, we've looked at a lot of tower assets. Jacky and I have -- and we continue to look at some tower assets in the European theater, to add to the balance sheet, it's something that we think makes a lot of sense. But once again, making sure we have the appropriate duration of contracts, and the appropriate CPI increases. So I'm not trying to telegraph where we're going. But I will tell you, we've -- as this management team has always told Eric, we do the work first. So last year, we did the work. We did a lot of work around bringing in European assets to our balance sheet. And we've gotten comfortable with that underwriting, and there's a little more work to do. But we're getting, a comfortable and b, closer to being able to take a few shots on goal.

And Eric, the only thing I would add is we do have a hedging program. I would say that if we focus it around more -- if there is cash to be distributed back to the U.S., and we'll focus our efforts on that and timing appropriately. But it's not going to be -- we try not to get too chewed or intelligent what hedging other than just safeguarding any cash that gets the screw back to U.S. And make no mistake, any business that we have in Europe or in other countries. First and foremost, our view is that the best return is going to be reinvested back into the business. So whether it's datacenters, or whether it's power growth, the new builds, first and foremost, would do that and reinvest it back into the business which will not trigger an acquisition.

Yeah, got it. Just one follow up. Jacky, maybe if you could tell me about the digital operating guide, kind of what is implied in there that's more organic versus some of the announced tuck-ins and transactions. And I think the acquisition of a small interest from a minority shareholder, if you could maybe, kind of break that down in terms of what the outlook is for 2022?

Sure, so in terms of both DataBank and Vantage, we continue to see core organic growth rates in the low to mid-single digits. So that's purely an organic side. Obviously, it's anchored by escalations, that we've got contractual in there at the least level, and then the rest is already acquisitions that were already done this year, that's going to be run rated out next year. So all what we've gotten there guidance is really what we've got contracted today from the acquisition of CA22, which obviously we have a run-rate benefit year-over-year on that, that was that tuck-in acquisition Vantage. And then we've done some additional augmentations that DataBank specifically around Salt Lake City as well as Minneapolis, St. Paul.

Yeah, that's right. I think Eric, we brought on at DataBank, we have new inventory coming in, Salt Lake 5, and 6 is getting built. MSP 3 is being finished. We'll start Indy 3, Atlanta 3, Las Vegas 1 is about to be finished and Chicago 5. So a lot of really great tethered expansion happening in DataBank. And that's really going to fuel the organic growth side. The leasing pipeline at DataBank has never been bigger. Coming into the first quarter of the year, we have over a sales pipeline over $27 million in potential new organic bookings. And this comes off the heels of core revenue growth at the databank portfolio of about 7.8%. And then EBITDA growth of about 6.8%. That's before the colo. And now that the colos fully integrated, we'll be reporting full numbers for the entire company next year. So the setup on DataBank is really strong for organic bookings. And most importantly, as we bring on new inventory inside of core markets, that fuels leasing activity for 2022. We're pretty excited about that.

Thank you, guys.

Thanks, Eric.

Our next question comes from the line of Richard Cho with JPMorgan. You may proceed with your question.

Hi, I just wanted to follow up a little bit on the environment for digital investment management. The growth numbers are strong for ‘22 to ‘23 and ‘25. But with higher rates and a little pullback in liquidity, what gives you the confidence that the amount of funds going into the business will continue given the volatility that we're seeing. Thank you.

Yeah. Thanks. It's a very thoughtful question, Richard. Look, I've spent the last 60 days traveling around talking to LPs part of our theme of getting back out there and connecting with our LPs. And a couple themes have popped up to the surface in these discussions. One, our investors, which is over 200 private investors globally, pension funds, endowments, insurance companies, they are looking to reallocate their portfolio. Irrespective of inflation or interest rates rising, these professional organizations, Richard manage billions of dollars of capital. Their job is to be an asset allocator. And every endowment or pension or insurance company, we see, they all say the same thing. We're under allocated to digital infrastructure. We're overweight private equity, we're overweight real estate, we're overweight, liquid securities, but we're always underweight digital infrastructure. And so when we launch new products like credit and core, and we think about turning the page next year, and looking at our next fund, these are the areas where we see huge opportunity, and they see opportunity. So they come to us and say, where should we be allocating capital in 2022? And we say, look, in this environment, you want to be a defensible, which is our SAF fund, our core fund. And B, you want to be in credit, why you want to be in credit? The credit cycle is changing. And I mentioned a couple of processes where sponsors went out Richard, to go sell a company, they didn't get the result, and they need growth capital. We've originated seven loans, all of those seven loans are to digital infrastructure companies that seek growth capital. We've already realized two of those loans in excess of 11%. And that TAM is growing. And we're the only firm in the globe this focus…

Great. And given the cash, I guess, on the balance sheet or liquidity available, and then also the funds in the management business, it seems like you're in a better position with maybe some disruptions going forward with -- versus competitors or deals that you're in. Can you talk to us a little bit do you think you're a net winner here or you have exposure in terms of overall market risk?

Yeah, thanks. So look, we're sitting on a little over $900 million in cash today. Wellness will close in literally a couple of days. And then plus our BFN, it kind of pulls us to a $1.2 billion to $1.3 billion of liquidity. And we have our Brightspire position. So we've been very careful Richard, about harvesting cash right now because we do think things have turned. And, we looked at a lot of balance sheet opportunities, a lot of balance sheet assets last year. I was pretty vocal that they were passes for us. That worked for other people. We understand why it worked for other people to buy the assets they bought, but it didn't work for us. And it didn't work for the return profile that I think investors why they buy DigitalBridge shares is because they know our track record of 20 plus years and what our returns are. Now we're in a position where we do see hairline fractures in valuations. We do see public multiples retreating in some of these different datacenter businesses our fiber businesses our groundless businesses, there's been a pretty sizable contraction. And the windows beginning to open where we see opportunity. And I think by being once again by being ultimately a good steward of the balance sheet and being prudent in how we deploy that balance sheet last year, we've taken our shots where we have good ball control. And we've taken our shots that are candidly going to be accretive. I mean California 22, the Houston acquisition DataBank, all of those are creative to where we trade. And so I think we're telegraphing to where we're going in ‘22. And once again, this is a management team that has a lot of confidence in what we're doing. And we feel very -- we feel very strongly that we're going to be able to execute our plan this year. And on the pricing in terms, we want to do that. That's important.

Thank you.

Thanks, Richard.

Our next question comes from the line of Dan Day with B. Riley. You may proceed with your question.

Yeah, Morning, guys. Thanks for taking my questions. Just one for me on the high end side. Obviously, nice to see the range of the guidance and the discussion around the new fund types. That's really exciting. Just with all that in mind, I wanted to ask about the blended management fee how that is expected to evolve overtime, a little shy of 1% in the fourth quarter? I'd imagine some of these products might have a lower management fee, some might have a little bit higher than you're kind of flagship private equity funds. So just any commentary around that and longer term where the FRE margin can go, whether 60%-65% over time. And how do you think about that, thanks.

Thanks. Yeah, you're right. So new products coming online, credit and staff do have a lower fee sort of profile. Those strategies typically, are kind of in the 90 to 100 basis point range. And that's I think what you should expect. We do have other strategies that are in flight. And we anticipate bringing in more capital into our liquid portfolio, we have some co-investments we're doing right now, that will generate some new TAM. And obviously, ventures will get launched later in the year that has a higher fee profile. But by and large, you're thinking about it the right way. I think the real key here is profitability. So if you listen carefully in our prepared remarks, we talked about building the right teams to go out and capitalize on these new opportunities. So we spent that G&A last year to put the right teams in place to go out on the field to compete and win. So what we do anticipate is while we build out these new strategies, we anticipate even margins moving up over time, because we've hired the key -- the key to these new strategy is hiring the senior people. Guys like Matt Evans, and Peter Hopper, and Alex Villela, and Dean, they don't come cheaply. And so getting the right product heads around the strategies, and then filling out the teams a lot easier. But I feel good about our ability to increase margins in the back half of this year. And certainly, Jacky, in ‘23 and ‘24 as we bring on other new strategies and products, we see the EBITDA margins improving in our own business greatly. I don't know Jacky, if you have additional color.

That's right, Dan. So in our guidance we've assumed -- and if you look our historical IMF rate average is 95 bps, so we're maintaining that throughout the forecast in the guidance period. And as Marc said, 90 to 100 bps is where we're seeing these products at so we're maintaining that IMF rate. And with respect to margins, if you look at our 2022 guide, the conversion rate excluding our capture fees that was mostly incurred in 2021, we’re converting EBITDA at a 90% plus rate. So that's going to drive margins continue to drive margins higher. And certainly as the new products come online, as more discussed that's going to -- flow straight down to EBITDA.

Awesome. I appreciate the commentary there. Wanted to ask one other one. I think a common question I get when I'm talking to people, is what's the value of the combination of the investment management side with the digital operating side? I guess, people that I talked to have seen the devaluation that some of these independent investment managers have gotten in the public markets and have asked me like, wouldn't it make more sense for this thing to sort of just trade on a standalone basis or split the two up? So I think I know the answer to this. But if you could just talk about the platform approach between and the synergies between the digital operating side and high end side. And, what do you see is the value of combining these two together?

Yeah, look, I think that the great part about having the digital operating business is as we build assets, and we develop assets in the investment management side of the business, where you can be perhaps a little more forgiving and Greenfield. As those assets mature, we bring them onto balance sheet when they're prepared to harvest. And it really creates a great pipeline of opportunity where you can bring strong, long duration contracted assets that have fixed escalators or CPI escalators. And so have a little bit of growth left where you can bring them on a balance sheet, where they're truly appreciated by our investor base. None of that happens without the IM platform. There's a symbiotic relationship between the two, they work together. It is one global investment team, by the way. All the new opportunities come into the IM business. And as we work our way through our investment allocation strategy, ultimately, at the end, the balance sheet has the opportunity to look at everything, if it's gone through that asset allocation strategy. So we feel pretty lucky to have arguably the best farm club in the world, using a baseball analogy, that we can go out and curate over $7.8 billion of new projects this year on a global basis. That is just something once again that other management teams can't do. Our global reach our access to capital allows us to harvest those ideas, and then ultimately bring them back home to balance sheet where we get to create those long-term predictable earnings that I think investors really appreciate about DigitalBridge.

Great, thanks. And then last one for me. Just a quick one on Brightspire stake. I think they reported, I think they said they might be interested in purchasing some of their shares back maybe taking out in quarter hold of your ownership of it. Just curious how you think about how and how price sensitive you are in selling that stake? Like would you sort of prioritize the liquidity of one big chunk there? Are you looking to get sort of closer to book value as you divest that stake?

Yeah, once again, there's a boring answer. Pragmatic is the right word, I think Jacky and I've taken. We love what Michael is doing. Brightspire is performing exceptionally well. We think they've got a lot of runway ahead of them. When the windows exist, where we think we're getting fair value, we'll entertain selling the stakes right now. Jacky, and I don't need the cash today. So we're enjoying his dividends, it helps fuel some of the things that we're doing. So once again, we're going to be active listeners, and when we when we do need the cool liquidity the good thing is we got a great partner Michael who's performing really well for us. And if we can get fair value for our stake, which we continue to have a sizable stake then we'll look to continue to in an orderly fashion unwind our stake in Brightspire. But make no mistake we're really happy with Mike on the team and Andy and everybody there. They're doing a great job and we want them to continue to keep doing what they're doing.

Awesome. Well, congrats again on the guidance raise. And best of luck moving forward.

Thank you.

Thank you. Really appreciate the support.

Our final question comes from Jade Rahmani with KBW. You may proceed with your question.

Thank you very much. A follow up on investment management. CBRE, which is a very large commercial real estate services firm mentioned on their call that infrastructure is a priority. Now they didn't parse it between broader infrastructure and digital infrastructure. But wondering if you see them or firms like them as a potential partner that could generate revenue, service --revenue generating services, given DigitalBridge’s overall expertise and operational know how. And these services would extend beyond investment management fees and balance sheet investments. So a way to broaden the DigitalBridge platform and provide yet further value.

Thanks, Jade, great question. And Bob Selenic’s [ph] a good friend and a partner of ours. And Jacky and I are sitting here smiling because they're great -- they're such a great firm and, and we have a lot of connectivity them. First of all, we're their partner in digital infrastructure investing. So all of the investment work that CBRE does, CBRE Caledon, which is their investment manager out of Toronto. We brought them into the digital infrastructure space. And I just can only say they've been a fantastic partner and then a bunch of deals with us. So I will continue to work very closely with CBRE. We find that they're a value add partner. And we really enjoyed the partnership. So we'll continue to bring new ideas to them and we'll continue to grow our assets under management with them. Second Jacky, we also have a partnership with CB. You want to talk about that in terms of what you're doing in the back office side?

Yeah, sure. CBRE is our partner on a lot of the fund accounting fund reporting across our funds. So as we continue to grow and scale CBRE has been growing and scaling with us on the vendor side. So we're very pleased with the partnership there. And as Mark said, they're a good friend and a good stakeholder.

Thanks very much. Secondly, and I'm not sure if it was asked earlier. But how much equity capital are you targeting for deployment from the balance sheet into digital operating in 2022?

We are not guiding that at this point, which is why our guidance for 2022 excludes on new M&A platforms. And as Marc said, we will continue to do what makes sense for our shareholders. If the price is right the opportunity is right, and we get the best returns that yield good cash flow, then we're good. But otherwise, we're not guiding that at this point.

Okay, but the right side of the balance sheet do you believe is -- where do you want it to be?

Do you mean, in terms of in coal indebtedness, and where we have net leverage right now?

Yes, yes. Do prioritize new investments from the balance sheet over any debt repayment or things of that nature?

Thank you. That's helpful. Go ahead, Jacky.

Yeah, well always compare the two. But obviously, we love digital infrastructure. And to the degree we find the right price. Ad we'll prioritize that. But if not, then we'll be opportunistic with continuing to offer -- to look towards our target capital structure and we pay some higher price cost of debt.

Thank you very much.

Thanks, Jade.

At this time, we have reached the end of the question-and-answer session now. And I’ll turn the call back over to Marc for any closing remarks.

Yes, thank you. Well, first of all, thanks to the analyst community. We appreciate your thoughtful questions and your continued interest and coverage in the company. We're very, very excited. I think that's an overused word for today's call. But there's a lot going on here. And in conclusion, I want to just say a couple of closing comments. We have worked really hard to get to this place. And we appreciate the trust that you've given Jacky, myself and Severin. And we're looking forward to launching here in ‘22. And moving forward in this pure digital model. And the simplicity of what we built is I think what should really make investors excited. Two businesses that are scaling, two businesses that are performing. And most importantly, our ability to form capital and execute ideas quickly. This is really the hallmark of the investment thesis of DigitalBridge, and why we're excited to accelerate in the build. So we appreciate the thoughtfulness. It's a dialogue. We welcome all of you down here to South Florida. It's a nice time of the year to come visit us. We encourage investors and analysts alike to come spend more time with us. There's a lot going on here. We're happy to be transparent, but we're excited about the simplicity and the go forward growth strategy of what we're doing here at DigitalBridge. Thanks, everyone for your support. Have a great day.

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.