DigitalBridge Group (NYSE: DBRG) continues to revamp and simplify its digital infrastructure business. The company’s business segments are showing growth, despite macroeconomic headwinds. Its Operating segment with balance sheet investments in DataBank and Vantage Stabilized Data Centers reported consolidated revenues of $225 million, up 16 percent YoY and Adjusted EBITDA of $91 million, a 13 percent increase from 3Q21. Growth was spurred by additions of a Houston data center at DataBank and the opening of the Vantage SDC’s CA-22 data center in Santa Clara, as Inside Towers reported.
DataBank operates 69 data centers in 26 edge markets in the U.S. In the quarter, DigitalBridge closed the first stage of its DataBank recapitalization, sold a 35 percent equity interest for $1.5 billion and reduced its ownership to 13 percent. This transaction allows DigitalBridge to move DataBank off its balance sheet and into the Investment Management portfolio. This step is part of DigitalBridge’s capital formation and investment simplification strategy. It expects a similar move with Vantage SDC as it attracts investment capital from various sources.
The company’s Investment Management segment has interests in 20 portfolio companies in four global regions comprising roughly 30,000 active tower sites, more than 135,000 fiber route-miles, over 100 data centers, 95,000+ small cells and over 100 edge infrastructure facilities. In aggregate, these infrastructure classes topped $50 billion in assets under management, a 33 percent increase from the $38 billion in 3Q21.
DigitalBridge earns fees from these investments that it makes either on its own but increasingly with or on behalf of investor partners. IM’s annualized fee revenue for the quarter was proforma $235 million, more than double the $106 million in 3Q21. This figure counts the purchase of the global infrastructure business from AMP Capital, announced in April. IM’s annualized fee related earnings doubled from $60 million in 3Q21 to proforma $123 million, exceeding the company’s $120 million midpoint of 2022 FRE guidance.
Monthly recurring revenues grew on a YoY basis across all infrastructure segments, as shown in the chart, driven by secular trends of escalating demand for high-speed mobile and broadband data connectivity across all global markets.
Marc Ganzi, DigitalBridge CEO, said “During the third quarter, we continued to form capital around great companies and investment strategies, delivered attractive outcomes for our investors, and further simplified our business and capital structure. Despite macro headwinds, our portfolio companies continue to demonstrate strong growth, highlighting the resilience of the digital infrastructure sector.”
The company is expecting growth to continue, both organically and through strategic investments. It has a pool of capital for investment and relationships with key investor partners to pursue opportunities as they arise. Management reaffirmed its goals of reaching $100 billion AUM, and growing IM annualized fee revenue and annualized FRE at a 35 percent CAGR by 2025.
By John Celentano, Inside Towers Business Editor
Reader Interactions