DigitalBridge Group (NYSE: DBRG) showed progress towards its goal of becoming an alternate investment management firm, focusing on digital infrastructure. For 1Q23, consolidated revenues were $250 million, up seven percent over $233 million in 1Q22. The year-over-year increase was driven mainly by increases in fee income from higher fee earning equity under management (FEEUM) in its Investment Management segment and a contribution from continued growth in Operating Segment revenues.
Investment Management fee income grew 36 percent YoY to $59 million and fee related earnings were up 40 percent YoY to $35 million. The Operating Segment encompasses DBRG’s ownership in two data center companies, DataBank and Vantage Stabilized Data Centers. Operating Segment revenues declined 25 percent and earnings dropped 23 percent YoY due to lower DBRG ownership of businesses in this segment from a year ago. During 2022, the company reduced its ownership stake in DataBank from 22 percent to 11 percent. Excluding the impact of the ownership reduction, consolidated revenue was up 14 percent and Adjusted EBITDA was up 12 percent.
The company closed the quarter with FEEUM of $28 billion, up 47 percent from $19 billion in 1Q22. DRBG grew its digital assets under management (AUM) to $69 billion, up 40 percent YoY and is on track to meet its goal of $100 billion AUM by 2025.
The company’s Investment Management portfolio encompasses more than 25 companies in four asset classes (towers, data centers, fiber, small cell/edge infrastructure) operating on five continents. DBRG says that its portfolio companies continue to deliver positive performance through a combination of strong organic and investment-led growth. Monthly recurring revenues were up YoY across the board: 26 percent among towers, 10 percent for data centers, 14 percent with fiber companies and 5 percent among small cell and edge infrastructure players.
DBRG says that in 2023, it will deploy $7.6 billion in success-based capital expenditures among its portfolio companies. Of the total, North America will receive the biggest share with $3.2 billion going to towers, data centers, fiber and in-building systems. Another $2.7 billion will be spent in Europe to enhance data centers and fiber networks. Latin America is slated to receive $1.0 billion for towers and data centers. The balance of $700 million is allocated to Asia for data centers and edge infrastructure expansion.
DBRG CEO Marc Ganzi reiterated his priorities for the company for 2023. Ganzi talks about how DBRG is well-positioned to take advantage of escalating demand for data storage and processing capacity and high-speed connectivity. He says the company has the necessary digital infrastructure to meet that demand. He aims to position the company as a digital infrastructure specialist, and to execute on a “simple, high growth” operating model.
Ganzi says the company is on track to raise $8 billion in new capital from limited partners that will be used to acquire new high-value assets. He plans to deconsolidate the Operating Segment by selling off most of the remaining ownership share in DataBank and Vantage SDC, and to run DBRG solely on an Investment Management model. DBRG earns fees for investing and managing that capital on behalf of its LPs.
DBRG is committed to supporting the portfolio companies through sustained investment so that these companies can focus on meeting customer needs, according to Ganzi. He points out that all the portfolio companies are performing at, or above, plan with long-term leasing agreements in place and sizable backlogs of new business.
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