Greetings, and welcome to the DigitalBridge Group, Inc. Second Quarter 2022 Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Severin White, Managing Director, Head of Public Investor Relations for DigitalBridge Group. Thank you. You may begin.

Good morning, everyone, and welcome to DigitalBridge's Second Quarter 2022 Earnings Conference Call. Speaking on the call today from the company is Marc Ganzi, our CEO; and Jacky Wu, 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 the financial performance may be considered forward-looking and such statements may 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, August 4, 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 filed with the SEC and in our Form 10-Q for the quarter ended June 30, 2022. Great. So we're going to start by covering our quarterly agenda. Marc will outline some of the key drivers of our upgraded road map in the first section and then get into our 2Q business update in section 2. Jacky will cover our financial results in section 3, and then Mark will wrap up with some interesting case studies on how DBRG is executing the digital playbook, followed by Q&A. We made some great progress towards our 2022 goals from generating initial commitments to our new strategies to leading some of the most important digital infrastructure transactions this year. So let's get started. With that, I'll turn the call over to Marc Ganzi, our CEO. Marc?

Thanks, Severin. Before we get into the Q2 quarter business update and financials, I wanted to take investors through our upgraded strategic road map and explain how it's going to create and drive strong value creation for them over the next few years and beyond. It's a road map, but as you can see in the middle of this slide, it was unlocked earlier this year with the repurchase of a minority stake in our Investment Management platform and our related transition to a traditional C-Corp. Those were seminal decisions that allowed us to leverage our comparative advantage, which is centered around our long history of operating and successfully investing institutional capital across the digital infrastructure ecosystem. These are decisions that will enable us to achieve accelerated growth in our highly scalable Investment Management platform. As you can see on the right, this is our growth engine: doubling our AUM over the next few years by extending new and existing investment offerings. When you complement that with the steady growth that we're seeing in our digital operating assets, it's a unique profile that's built on giving you, our investors, access to what we think are the most compelling investment platform and opportunities at scale in the digital infrastructure sector today. Let's explore our growth profile in greater detail on the next slide, please. When investors ask me, where are you going to create the most shareholder value over the next few years, with total conviction I can say, this is it. Doubling FEEUM in our IM platform and deploying that capital intelligently and prudently into the kind of high-quality, signature investments you've seen us make already this year. That is what generates returns for our investors. We invest, own and operate in platforms that are growing and that have long-dated…

Thank you, Marc, and good morning, everyone. As a reminder, in addition to the release of our second quarter earnings, we filed a supplemental financial report this morning, which is available within the Shareholders section of our website. Starting with our second quarter results on Page 18, the company continues to see strong year-over-year growth, driven by successful IM fundraising. For the second quarter, reported total consolidated revenues were $289 million, which represents a 22% increase from the same period last year, driven by continued expansion in AUM and FEEUM. GAAP net income attributable to common stockholders was a $37 million loss or $0.06 per share, representing a $104 million increase compared to the same quarter of last year. Total company adjusted EBITDA was $31 million, which grew from $15 million in the same period last year as we continue to see growth in our high-margin digital IM business. Distributable earnings was $8 million as recurring cash flows continue to be positive in the second quarter, accelerated by the Wafra transaction, which closed in May and significantly reduced corporate debt servicing as we rotate out of our legacy capital structure. We expect this measure to grow as we fundraise and close on our recently announced AMP Capital transaction. Digital AUM was $48 billion in the second quarter, which grew by 37% from $35 billion in the same period last year. As Marc mentioned, we have continued our strong growth trajectory and will be over $65 billion of AUM on a pro forma basis, including the recently announced pending transactions. Moving to Page 19. The company continued to grow IM revenue and earnings, driven by higher levels of fee-earning equity under management. The year-over-year comparison was impacted by onetime catch-up fees received during DBP II fundraising last year, which, when excluded,…

Thanks, Jacky. One question we've gotten this quarter, particularly in light of the new signature transactions we've signed, is how do you create value and generate differentiated returns? The simple answer is, we are specialists. We are business builders in digital infrastructure. And while our business model is investment management focused, we are not your traditional financial buyer, splitting an unlevered return into debt and equity components. What we do have is a platform strategy, proven playbooks that we've developed and refined over the past 3 decades, and I want to walk you through a few recent examples so you have context for how we approach value creation. I'll cover our framework briefly, starting with establishing the right platform. This is critical. In my experience, if you get the assets and the team right from the start, the degree of difficulty goes way down. We spend a lot of time upfront making sure we have the right setup from the start. That means buying high-quality assets that can handle our second stage, transform and scale. This is where we buy and build. You've heard me say it before. You have to pair capital with the right business plan, almost always investing in both greenfield projects and bolt-on M&A. Finally, stage 3. You've heard me say it before, follow the logos. We follow logos to support the continued growth with our customers. As they build networks to meet increasing demand, we follow them and we build facilities for them. So let's cover a few case studies where you can see the strategy in action. Next slide, please. First, Vantage Data Centers. Most of you know Vantage, which today is one of the leading global hyperscale data center companies, operating state-of-the-art facilities on behalf of the world's largest technology and cloud companies.…

[Operator Instructions]. Our first question comes from the line of Michael Elias with Cowen and Company.

I have two just to start. You talked about the challenging macro environment, but you had really strong bookings within the data center business. I'd love to get a sense for what you're seeing in your pipeline across the verticals of digital infrastructure that you operate and just given what's happening with the macro. And then I have a follow-up.

Yes. Thanks, Michael. So yes, look, it was a tremendous second quarter in terms of new bookings. What was also quite interesting is that the backlogs of our data center businesses have continued to climb year-over-year. So second quarter backlogs in terms of pipeline growth, which is leases that have not been yet executed but are in what I would call diligence or discussions, those pipelines are up over 128% year-over-year. So there's not only just profound movement in bookings, but there's also been a profound movement in the pipelines. So that's obviously quite strong. We've had similar growth in our pipelines in fiber and towers as well. BTS backlogs are up close to almost 30% globally. That's -- we've got 8 tower companies around the world. So some of that is stronger in certain regions versus others. But very strong demand here in the U.S. for BTS, very strong demand for BTS, as we discussed, in Southeast Asia. And so those 2 markets are really sort of our leading indicator markets for build-to-suit. And then on the fiber side, we've just seen a return of the hyperscalers needing more data center connectivity. That's been one of the fastest-growing verticals in terms of new bookings, but also pipeline and enterprise customers have returned back in 2022. So positive net bookings but also positive forecast and pipelines in the fiber business, mostly in Beanfield and Idea. So it's been an incredible quarter. And it's hard, right, because you've got this macro that's difficult to understand. You've got some businesses declining, you've got some businesses talking about job layoffs. We're trying to hire people. We're trying to keep people digging ditches. We're trying to keep people stacking towers and turning on data center capacity. So it's really interesting that our business, the digital infrastructure world, continues. And we saw that in the dotcom crash. We saw that in the mortgage crisis, people continue to need digital infrastructure irrespective of the macro setup and thesis.

Awesome. And then just my second question would be, it looks like in your guidance, you're still expecting a contribution to the Operating business on the EBITDA side from to-be-determined M&A. Could you just give us an update on what you're looking to add on that side of the business? And as part of that, earlier this year, you had mentioned that you were seeing hairline cracks form in valuations, which was presenting a window of opportunity. Just love to get an update on what you've seen on the private market valuation front since you made those comments.

Yes. Look, so we're beginning to see valuations come down. That shouldn't surprise I think anybody. I think deals that we saw that were -- bankers were expecting 30x have now come into the mid-20s range fiber deals that people thought were going to trade at 22 to 24 moved down into the low to middle-teens. And so we're seeing a re-mark-to-market, and we're seeing a correction in private M&A multiples largely because there's less liquidity and less people hunting. I mentioned in my commentary, our ability to land Switch and GD Towers was a function that our lenders showed up for us, we have the capital, we have the conviction and we could act quickly. And I think those results speak to why we're the leaders in what we do. And to be honest, the public guys were kind of on the sidelines. They couldn't get Switch done and they couldn't get the GD Towers portfolio done. So we got that done. And in fact, I would offer to you, if you look at recently what American Tower did with CoreSite, they had to go out and find private capital, to go finance CoreSite. We don't have to do that. We have that capital at our discretion so we can move quicker. Look, the balance sheet-light model, people are going to have to get used to it, right? It takes time. It's a different form of how you can own digital infrastructure. And we think this is a smarter way to own it. As my CFO reminded me yesterday, we actually don't have maintenance CapEx in our numbers. When you're running an Investment Management business where your average -- weighted average fund is 11 to 12 years, that's actually longer than a data center lease or a fiber lease that's 5 to 10 years long. So we think the durability of the cash flows in this asset-light model are really strong. The resilience of our business model was proven out this quarter. And now we're in a mode where we're raising capital, we're playing offense and our underlying portfolio companies are performing. This is a really good setup. We have room for optimism, and we believe that we can execute strongly through this macro setup. This is, I think, where investors need and want to be.

Looking forward to seeing you guys in Boulder next week.

Our next question comes from the line of Richard Choe with JPMorgan.

I just wanted to follow up and see, given the inflationary environment and a lot of talk on pricing, what segments or digital infrastructure assets do you think have the most pricing power going forward?

Well, look, right now, I think the data center sector has experienced, Richard, the highest increase in price per megawatt and then price per rack. We've seen that globally across Vantage, DataBank, AtlasEdge and Scala. All those businesses have reported not only positive up net bookings, but they've also seen increase in price per metric. And I think that's been -- to be honest with you, it's been as low as 10% and it's been as high as 20%. So -- and that is a function of, I think, obviously, not only a lack of supply in terms of where hyperscalers can go. I think this notion of outsourcing has been more amplified in the last 2 quarters. I believe, Richard, over the next 4 quarters, that will continue to be amplified. I think we see the scarcity in will serve letters, the scarcity in permits, the scarcity of land. We see that more pronounced in Europe than in North America and Asia, but we have a very strong footprint in Europe. We have a massive pipeline of opportunity in Europe that we're executing on, and we got there early. We got the power. We got the will serve letters. We got the permits. A lot of that foundational groundwork we did 3, 4 years ago is now coming home to bear fruit for us. And the same thing in the U.S and the same thing in Canada and the same thing in Asia and certainly what we're seeing in Latin America as well and recently lighting up Johannesburg, where we lighted up 100 megawatts for a couple of hyperscale tenants there. So really feel very strong about our pricing power in the data center business. I would say towers, just interestingly, we came out of a conference with one…

Our next question comes from the line of Dan Day with B. Riley Securities.

Thanks for the update on the longer-term guidance. It's very helpful. So clearly, a focus here on scaling the IM platform. And I think there's an ongoing debate right now among the public asset managers out there around the best way to divvy up the carried interest between shareholders and employees. A lot of them have started to give more carry to employees to use FRE margins that way. A lot of times, the stocks just don't get the credit from the carrier. So just if you could remind us what the corporate share carry interest right now is in your funds and then whether you think that might change over time.

Yes. Look, I think we've demonstrated that we feel very comfortable about the split between where the carried interest goes to our investment team and where it goes to you, our public shareholders. I mean historically, we've kind of been in this either 60-40, 65-35, 70-30 split depending on the product and the team. We feel very comfortable with our splits. We think it's in range with where the market is. And obviously, the Street has not given us credit for carried interest yet. We do have a lot of capital at work. As I mentioned earlier, our funds are performing and they're performing exceptionally well. So we do believe that at one point in time, the analyst community will give us credit for carry. Heretofore, they have not. We did reference an exit inside the quarter, that will trigger carried interest for Fund I. We're not at liberty to give specific details on that today, but I would say it was a very, very positive result for the company. And most importantly, it demonstrates our ability to return carried back to public shareholders which is sort of us portending what's coming in the future. We have other assets where we've got a lot of interest in. We're going to continue to raise capital. We're going to continue to sell assets. This is part of the business model that we're in. And we're really pleased with what happened in this quarter, proving out the concept that we could return carry back to public shareholders.

Yes. And Dan, and no matter what split, and obviously, Marc gave the range of it, but we love the alignment between the balance sheet, the GP and our employees, right? So as we do well, as we build up our track record, as we make money for our limited partners, the GP with its share of the carried interest, obviously, wins out and you, as a common shareholder, will win out. So we love that alignment, and we're sticking to it.

Awesome. Just one more for me. You've talked about taking the preferred shares out. I guess should we be thinking about that being like the use of balance sheet capital? Or should that be like you layering on more debt, like the securitizations you did to effectively replace that in the capital structure? And then I guess just related, how do you think about the total debt that this business -- corporate level debt, I should say, that this business can hold? Is it some multiple of debt, like 23, digital operating EBITDA plus FRE? Or is there some other way you're thinking about the debt level?

Yes, sure, Dan. We break it out to a couple of different ways to look at it. So if you look at an asset-light Investment Management, principally an asset-light investment management model, you back out the preferred equity as well as the non-recourse debt that sits at the DataBank and Vantage books and records, we're at sub 3x net debt-to-EBITDA leverage level. And I would say that, that leveling is short of or on par with other alternative asset managers. So we're really right on par with that. And I would say that 3x -- 3x to 4x type of leverage is optimal for us as an asset-light alternative asset manager, as the highest growth alternative asset manager out there. And so yes, we will look at a mix principally off of just pure retirement of those preferred equity stakes to be able to delever our balance sheet. But at the end of the day, we're always going to look at what the best return for our shareholders is. And we do believe that digital acquisition, digital M&A continues to be the best use of capital because of the fact that it's going to give us not just long-term fee streams for a long period of time, but the secular tailwinds in the industry itself is born on the best use of our cash. So to the degree there's opportunities there, we'll do that. If not, then we will be very opportunistic with optimizing our capital structure.

I think also, Jacky, another -- yes, just one add-on to that is, I think we've given you pretty strong guidance about where we're going in the next 3 years. This tripling of our ability to raise capital is a really important moment in time for the company. We have a lot of confidence and conviction around that. I think we've always been clear. When we've put up fundraising targets, we always candidly repeat them. We've given a very clear guide on where the Investment Management platform is going over the next 3 years. What's interesting is Jacky and I created the first securitization related to an investment management business of last year. That was a really successful securitization. Like other securitizations, we have an accordion feature, and we have the ability to tack on to that existing trust. So as you think about the trajectory of the capital that we're forming and as you look at the total FEEUM growth over the next 3 years and you look at the multiple where we did that first securitization, one can logically assume we could take on more securitized debt. Now certainly, as we retire preferreds, a good opportunity there could certainly be to take up more securitized debt, which has a lower cost and, most importantly, has no covenants, except maybe one, which is a DSCR ratio. The simplicity of the capital structure gets easier. I actually think, as Jacky does, we can delever. At the same time, we can tack on our existing trust because as we continue to grow long-term revenue streams in the Investment Management platform, you also have the ability to take on additional leverage in that trust. But at the same time, we're paying down prefs, which are typically costing us 7%, 8%, but mark-to-market, more like all-in yield 9% to 10%, there's an awesome accretion trade here, which creates more free cash flow, which is something that Jacky and I are both focused on, which is continue to grow free cash flow and to grow the earnings potential of this business.

Our next question comes from the line of Jon Atkin with RBC Capital Markets.

You talked about data center pricing. Just interested in any commentary you have around targeted development yields and has that kind of moved in line with pricing or held steady? And then secondly, on towers, given Germany and then earlier, Telenet and then Edgepoint, it's kind of shifted the geographic mix that you have. How does that affect your thinking on geographic focus for tower transactions going forward?

Well, look, I think on the single-tenant development yields for data centers, they really haven't moved that much, Jonathan. I think whilst we've been able to get higher pricing, construction costs have moved up. So what we've tried to do is align that cost and increase in the facilities and then to align that with the right rental rate so that we're getting to all-in about the same yield. So single-tenant yields based on certain geographies can be as low as 7%, they can be as high as 9% to 11%, like in Latin America. It's just very geographic dependent, it's customer dependent. And it's also whether it's an edge facility or whether it's a hyperscale facility, we're seeing slightly different yields as well. So I like the yields. I like where we're at in the data center space. Our construction pipeline has moved up over 136% year-over-year. So we've got more shovels in the ground, and we're lighting up more capacity this year versus last year. So we're seeing no demonstrative change there. I'd tell you, it's been net now an increase and yields have moved up slightly. I'd say on the tower side, we're very happy with the partnership with Deutsche Telekom. We look at that on an adjusted Q4 run rate TCF multiple or Q1 run rate TCF multiple when we're going to close, it's effectively a 22 to 23x TCF deal given the amount of towers and the amendments that are going on and the lease up that's happening there. So I feel that's a really good price. But arguably -- sorry, not arguably, the most high-quality tower portfolio in Europe. This is, for us, the sort of diamond asset in Europe. And I think on -- when you hear about private U.S. multiples still for…

Just while we're on towers, LatAm and that latest tranche with [indiscernible], any sort of comments given the valuation was a little lower than the ranges that you pointed out? And you obviously know that market extremely well, going back to some of your prior stints. But thoughts on Brazil and why that may or may not have made sense for your strategy?

Yes. Look, we looked at it. That tower portfolio got looked at about 3 or 4 times. And each time, it didn't work for us. And it certainly probably won't work for Jeff. Jeff has a different set of underwriting requirements. And Jeff is a friend, and I think a lot of SBA and I think they run a world-class organization. I think for what we're doing at Highline, we've made different decisions. And it's not to suggest that our decisions are more correct than his decision. I think they just felt like that particular portfolio was right for them. And we've done some other things in the market that were candidly in the same price range, if not even lower. So we're finding value in Brazil right now. I think there's obviously a pretty material disconnect with what's happening in Brazil today. And so we still think that wireless market is tremendous. I mean you're looking at the most important social media market on the planet in terms of adaptation to social media applications and how much time that economy spends on their phone. Brazilians spend more time on their phone than almost any other country. So that mobile economy and that migration of 5G is going to happen. While there certainly is a lot of inflation happening in Brazil, there's a disconnect with the reais. There's a very important political election campaign coming that's currently priced into the currency. That dislocation creates a window of opportunity. We see it as opportunity. I think Jeff and the management team at SBA also feel the same way. They think that Brazil represents a very strong opportunity today, and we would agree with SBA on that.

Got it. And then maybe just on the venture fund, it's a relatively newer vehicle, but the types of things that you've been working at and maybe just double clicking on that a little bit to provide a little bit of context as to where you may be headed there.

Yes. Thanks. Well, look, Alex and the team are doing a great job. We made a really important play into private enterprise 5G networks by taking a leadership stake in Salona networks. We then took a stake in Leading Edge, which we think will be the preeminent edge data center platform in Tier 2 and Tier 3 markets in Australia. And we've looked at a few other things, and we've kind of liked -- the resetting of pricing in Silicon Valley has been good for us. We haven't pulled the trigger on anything, but there is definitely a mark-to-market in what I would call later-stage growth venture capital-type money. So we look at it as mid- to late-stage growth capital. It's pretty exciting. Our pipeline is pretty full. We're obviously out forming capital around that strategy right now, much like we did with credit and core, and those strategies are now realizing a lot of success. And I think I'd just put a pin in this by saying, look, we understand the physical layer of digital infrastructure, I think, better than any other management team on the planet. Where we're really focused on in ventures, Jonathan, is what I'd call the metaphysical level of infrastructure, which is that software-defined layer between ultimately the user and the hard infrastructure. That's a massive, massive amount of white space. And so we're out looking at different ideas, different business models in that space. We recognize the importance of software-defined networks and how the cloud interfaces with actually hard infrastructure into that virtualized ability to dial up capacity quickly and efficiently. There's a lot of different business models around that. That is where the investment team is focused right now is in the software-defined layer of infrastructure. And so almost think of it as like SaaS -- digital SaaS is infrastructure. We're looking at that heavily, and we think there's a lot of opportunity sitting there. And look, at the end of the day, any investment we make in ventures has to tie back to our physical infrastructure. The company has to either touch our infrastructure or they have to use our infrastructure. That's one of the core guiding principles an investment committee. And when we sit at an investment committee and we look at new deals and say, look, are they using our infrastructure? It's got to be pretty simple. It's got to work within our ecosystem. And the good news is most start-ups are using our infrastructure, whether it's fiber from Zayo, it's data center services from DataBank, where they're somehow touching an ExteNet or Boingo indoor system. Our infrastructure goes a lot of places and a lot of people use it and a lot of startups use it and certainly, a lot of software-defined companies are using our infrastructure. So far, it's working really well and it makes a lot of sense in our ecosystem.

Our next question comes from the line of Rick Prentiss with Raymond James.

Thanks for the deck and the upgraded road map. Looking at Slide 23, I think it's an important slide. I agree, I don't think the market's giving you credit yet for the performance fees. But probably a large part of that when we consider that comp group of the alternative asset managers is they obviously have a lot longer history of the exits showing folks the performance fees. You've got your first exit event coming up. You said you can't provide anything yet. When do you expect and what do you expect you could provide us with the Wildstone transaction to start putting the dots on the scatter diagram of demonstrating performance?

Yes. Well, Rick, what I would just turn you to is the base of our financials. Since we've announced the transaction on Wildstone we did fair value that onto our books. So you'll see that mark up in carried interest in the base of our financials, which obviously was positive. So I think that, that will be helpful.

Can you envision providing...

Jacky, what he's trying to do is give you the breadcrumbs, Rick, on the trail. So you'll figure that out sometime today, and then you'll e-mail us later and say, oh, I found it. Look, this is simple, Rick. It's -- I've been investing other people's capital for 28 years. We have an enormous track record and great returns over those 3 decades, generating a lot of profit interest for other LPs and other GPs and of course, for ourselves along that road. As I mentioned before, both of our funds are performing incredibly well. We do mark our funds quarter-to-quarter. Both Fund I and Fund II in our flagship series, both had outstanding quarters. And net-net, the portfolio continued to move up. It didn't move down. So when you're managing close to pro forma for GD Towers and Switch, over $70 billion of assets, there's a lot of carry embedded in there. Folks will have to extrapolate what they think is reasonable in terms of the multiple that we can achieve. But we know we're sitting on eventually an arsenal of carry and public investors are going to get the benefit of that over the next 5 to 7 years. So not baked into our guidance, it's not in our numbers. Maybe after 3 or 4 carry events, we'll start maybe perhaps forecasting carry more frequently. But if people can't walk away from this quarter and understand that this business is performing well. Our portfolio companies are performing well. We've demonstrated our ability to actually return capital to investors in Wildstone and trigger a carry event for public investors. I mean we're laying it all out there. This should be -- we hope it should be easy for investors to understand, if it's not, call us. Schedule time with us. We'll make it easy for you. We know we're now on the right road map. And this was an incredibly successful quarter from our perspective, proving out key concepts that we knew were really important, the performance of balance sheet capital, the performance of our fund capital, our ability to do big deals and most importantly, our ability to be ahead of fundraising in an environment where you're going to -- not everyone is going to have those kind of results. We feel like we did everything that was asked of us in the quarter and then some, and I think that will continue throughout the rest of this year.

Yes. And even the Wildstone is the first -- like you said, the first monetization out of one of our funds today, but Marc and Ben have had a long history of monetizations and making money for investors. So that's the foundation of this company and its people matter.

Follow-up on a previous question as well. On the debt level. I appreciate that color on where you think debt should go. It does seem like there's a lot of kind of wacky numbers or different numbers out there in other data collection sets that suggest a much higher level of leverage for you guys compared to the alternative asset managers. Any thoughts about helping people clean that up or understand exactly the asset-light model and how it is being deployed and what the levels truly are?

Yes, sure, Rick. Look, the reality is if you look at -- there's 3 parts of that leverage. One part is the preferred equity. So some folks don't include that, but some folks do. It's kind of quasi-debt. That's 1 element of it. The second element is the non-recourse debt that's sitting at DataBank and Vantage. And so if we are focusing purely on the investment management business, and you back those 2 elements out, which we've already highlighted that, our emphasis going forward is a bit more towards investment management, that's asset light, does not require incremental debt or CapEx to achieve that plan. As well as the fact that we've said we want to optimize our capital structure and pay off and/or retire or trade down our preferred equity, then you will see that our alternative asset management business itself along with corporate implies a sub 4x leverage, and that would be right in line with other alternative asset managers.

Ladies and gentlemen, our next question comes from the line of Eric Luebchow Wells Fargo.

So just curious, you mentioned the $60 million of digital M&A. Just wanted to confirm that was specific to the balance sheet. Are there opportunities maybe to add some additional IM platforms, either to expand into new geographies or maybe new product sets? You mentioned, I think, growth equity or traditional private equity in the past.

Yes. Thanks, Eric. Yes. So look, we look at that $900 million of firepower without any leverage, right? Assuming you could put 50-50 debt-to-equity leverage against that $900 million, you actually kind of amplify that to almost $1.8 billion of purchasing power. Now we do have 2 areas that we are refining our M&A plan. First and foremost, we do believe there are other investment managers out there that fit very nicely with what we're doing, whether they're doing middle market digital infrastructure, whether they're doing growth, private equity, where they touch telecom and infrastructure or media. There's a bunch of those targets out there, and I would tell you that those discussions continue to happen. And we've got a lot of really good targets that have really great people and they have very great ideas and are candidly not swimming in our swim lanes. So that's important. Finding other organizations that have great talent and that share kind of our view of how to invest, but don't invest in the places we invest, that's really interesting to us, and that's where Jacky and I have been spending our time over the summer is looking at those opportunities. And we think there is a nice pipeline of ideas around that, and we're moving down the path of executing on some of those things. At the same time, we've continued on Digital Operating to think about ways that we can obviously grow our Vantage portfolio. We've got a number of campuses that are maturing. We can certainly add more campuses this year and next year to the Vantage SDC portfolio. So we're looking at that very carefully. They've had a tremendous, tremendous year, Vantage SDC, and it's performed, I think, above our expectations. So we're looking at that to the extent that we can increase our exposure to hyperscale data centers in the U.S. and Canada and perhaps even look at some of our European assets, that's very interesting to us. So there's a lot happening there. At the same time, it doesn't preclude us from looking at other things in the ground lease buyout space, the tower space, wholesale fiber space, other data center businesses. There's a lot that we can do off the balance sheet. And so we're happy with our firepower. The return of capital from DataBank, the return of capital from warehousing transactions and credit in our core strategy, all that money is now coming back in the third quarter. So we're really happy about that. Jacky has now got strong liquidity, which allows us in this economic uncertain environment to play offense, and both he and I have a rich history of playing offense in previous downturns. So we're excited. We're working hard. It's been a really long summer. We got more work ahead of us. And I would say, strong expectation for us to announce something inside of this year, where we will put that $900 million of cash to work in strategic M&A.

Okay. And then just one last one, if I could. Just wondering what you're seeing in data center development around power procurement and availability. It seems like it's been an increasing challenge in Europe and even in Northern Virginia, where there appears to be a pretty significant transmission issue that Dominion Energy is trying to work through. So just wondering if you're seeing any material delays in bringing new capacity online from delays in power availability and whether that's having any impact on your ability to kind of deliver on your pipeline.

Sure. So let's hit the Northern Virginia issue on the head. We don't see any delays in delivery of space this year. We have gone all the way out into 2023 to see what workloads will be compromised or delayed. We don't see any compromise in our bookings in terms of who will get deployed. We do see delays. I think that's one of the key things that is coming out of it. '23 should have some delays, '24 should have some delays, but we do see things normalizing in '25 and '26. Someone had reported 2028. That's just false. They haven't done their homework. So look, Dominion is on it, the State of Virginia is on it, Loudon County is on it, the sector is on it. Yes, it was a bit of a wake-up call for the region. But what I can tell you is I do believe the sector has come together. I think the state is very focused on it. Certainly, the utility commission is focused on it. We're focused on it, and we don't see any compromise in deliveries this year. And perhaps there's some compromise in deliveries next year in '24, but net-net, it's still a great market, and it's a place I think all of our peers want to be. Other areas that concern us, look, we've told you for the better part of 2 years that the power grid in California is somewhat compromised. Pacific Gas and Electric really can't supply any material amount of new megawatts in the Santa Clara area or San Jose. Silicon Valley Power currently is constrained in terms of what they can deliver. The next upgrade to that grid is 2025. So Santa Clara has become a very capacity-tight market. Our renewal rates are holding in very…

Thank you. Ladies and gentlemen, this concludes our Q&A session and thus concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.