What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-09 compared with 2021-05-10 · 336 added, 480 removed, 355 unchanged (70% of the section changed)

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Our Organization

We are a leading global investment firm with a focus on identifying and capitalizing on key secular trends in digital real estate.

We are headquartered in Boca Raton, Florida, with key offices in Los Angeles, New York, London and Singapore, and have approximately 300 employees.

We are a leading global investment firm with a focus on identifying and capitalizing on key secular trends in digital infrastructure.

We are headquartered in Boca Raton, Florida, with key offices in New York, Los Angeles, London and Singapore, and have approximately 300 employees.

Effective June 22, 2021, we changed our name to DigitalBridge Group, Inc.

(formerly Colony Capital, Inc.) and trade under the ticker symbol, DBRG, signifying our transformation to digital infrastructure.

We have elected to be taxed as a real estate investment trust (" REIT") for U.S.

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federal income tax on income earned through our taxable subsidiaries.

In light of our ongoing digital transformation, we will continue to evaluate whether we will maintain REIT status for 2021 or future years.

In light of our digital transformation, we will continue to evaluate whether we will maintain REIT status for 2021 or future years.

We also operate our business in a manner that will permit us to maintain our exemption from registration as an investment company under the 1940 Act.

We conduct substantially all of our activities and hold substantially all of our assets and liabilities through our Operating Company.

At March 31, 2021, we owned 90% of the Operating Company, as its sole managing member.

Effective April 1, 2021, Thomas J.

Barrack Jr., our former Executive Chairman, having completed the transformational plan for the Company set in motion two years ago, has transitioned to a Non-Executive member of the Company's Board of Directors, and the position of Executive Chairman has been eliminated.

We conduct substantially all of our activities and hold substantially all of our assets and liabilities through our operating subsidiary, DigitalBridge Operating Company, LLC (the "Operating Company" or the "OP").

At June 30, 2021, we owned 90% of the Operating Company, as its sole managing member.

Having completed the transformational plan for the Company set in motion two years ago, Thomas J.

has stepped down as Executive Chairman of the Company effective April 1, 2021.

In July 2021, Mr.

Barrack resigned from his position as a member of the Company's Board of Directors.

Barrack's decision was not the result of any disagreement with the Company on any matter relating to its operations, polices or practices.

Nancy Curtin, a long-time member of the Board and most recently the Lead Independent Director, transitioned to independent, non-executive Chairperson of the Board effective April 1, 2021.

Our vision is to establish the Company as a leading owner, operator and investment manager of digital infrastructure and real estate.

Our vision is to establish the Company as a leading owner, operator and investment manager of digital infrastructure.

We are currently the only global REIT that owns, manages, and/or operates across all major infrastructure components of the digital ecosystem including data centers, cell towers, fiber networks and small cells .

At March 31, 2021, the Company has $46 billion of assets under management ("AUM"), including both third party capital and the Company's balance sheet, of which $32 billion is dedicated to digital real estate and infrastructure.

With the Company's ongoing digital transformation, the Company currently conducts business through five reportable segments, as follows:

At June 30, 2021, the Company has $48 billion of assets under management ("AUM"), including both third party capital and the Company's balance sheet, of which $35 billion is dedicated to digital real estate and infrastructure.

The Company currently conducts its business through four reportable segments, as follows:

• Digital Investment Management ("Digital IM")— This business encompasses the investment and stewardship of third party capital in digital infrastructure and real estate.

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• Digital Other— This segment is composed of equity interests in digital investment vehicles, the largest of which is the Company’s investment and commitment to the DCP flagship funds.

This segment also includes the Company’s investment and commitment to the digital liquid strategies and seed investments for future digital investment vehicles.

• Wellness Infrastructure— This segment is composed of a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings, and hospitals.

The Company earns rental income from senior housing, skilled

nursing facilities and hospital assets that are under net leases to single tenants/operators and from medical office buildings which are both single tenant and multi-tenant.

In addition, certain of the Company's senior housing properties are managed by operators under a RIDEA (REIT Investment Diversification and Empowerment Act) structure, which allows the Company to gain financial exposure to underlying operations of the facility in a tax efficient manner versus receiving contractual rent under a net lease arrangement.

This segment also holds other wellness infrastructure-related assets, principally equity interests in and the management contract of NorthStar Healthcare, Inc.

("NorthStar Healthcare"), a non-traded REIT sponsored by the Company.

• Other— This segment is primarily composed of the Company's interest in CLNC.

The Company expects to monetize the remaining assets in its Other segment as it completes its digital evolution.

This segment also includes the

Company’s investment and commitment to the digital liquid strategies and seed investments for future digital investment vehicles.

• Other— This segment is composed of the remaining non-digital equity investments, primarily our interest in BrightSpire Capital, Inc.

BRSP), that are not substantially available for immediate sale and are expected to be monetized over an extended period beyond the near term.

Digital Transformation

During the first quarter of 2021, the Company successfully exited its hotel business, and continues its process of actively monetizing a substantial majority of its OED investments and its Other IM business, both of which reside in its Other segment, as discussed further below.

The disposition of the Company’s hotel business and the continued efforts to monetize the Company’s OED investments and Other IM business represent strategic shifts in the Company's business that are expected to have a significant effect on the Company’s operations and financial results, and accordingly, have met the criteria as discontinued operations.

In 2021, having successfully exited its hotel business, the Company is continuing the process of monetizing the remainder of its non-digital businesses to complete its digital transformation.

This includes the Company's Wellness Infrastructure segment, and a substantial majority of the Company's other equity and debt ("OED") investments and its non-digital investment management ("Other IM") business, both of which reside in the Other segment.

The completed and pending dispositions of the Company’s hotel business, OED investments and Other IM business, and Wellness Infrastructure segment represent strategic shifts in the Company's business that are expected to have a significant effect on the Company’s operations and financial results, and accordingly, have met the criteria as discontinued operations.

For all current and prior periods presented, the related assets and liabilities, to the extent they have not been disposed at the respective balance sheet dates, are presented as assets and liabilities held for disposition on the consolidated balance sheets and the related operating results are presented as loss from discontinued operations on the consolidated statements of operations (refer to Item 1.

"Financial Statements" of this Quarterly Report).

Accelerating the Monetization of OED and Other IM

Having successfully exited its hotel business in the first quarter of 2021, the Company is continuing its efforts to accelerate the monetization of a substantial majority of its OED investments and Other IM business.

These assets consist of non-digital real estate, real estate-related equity and debt investments, and management of the Company's private real estate credit funds and CLNC.

In consideration of a potential monetization, the Company reassessed the carrying value of these assets based upon estimated recoverable values.

As a result, the Company recognized an aggregate write-down in asset values of $420.3 million, of which $121.2 million was attributable to the OP, recorded within impairment loss, equity method loss and other loss in discontinued operations (Note 7 to the consolidated financial statements).

In April 2021, the Company and CLNC agreed to terminate the management agreement for a one-time termination fee of $102.3 million in cash.

The transaction closed on April 30, 2021, resulting in the internalization of CLNC's management and operating functions (the "CLNC Internalization"), with certain employees previously dedicated wholly or substantially to CLNC becoming employees of CLNC.

In connection with the CLNC Internalization, CLNC's board of directors ceased to include Company-affiliated directors on CLNC's board of directors upon expiration of their terms in May 2021.

The Company also entered into a new stockholders agreement, pursuant to which the Company agreed, for so long as the Company owns at least 10% of CLNC's outstanding common shares, to vote in CLNC director elections as recommended by CLNC’s board of directors at any stockholders' meeting that occurs prior to CLNC's 2023 annual stockholders' meeting.

In addition, the Company is subject to customary standstill restrictions, including an obligation not to initiate or make stockholder proposals, nominate directors or participate in proxy solicitations, until the beginning of the advance notice window for CLNC's 2023 annual meeting.

The Company currently holds a 36.1% equity ownership in CLNC and is prohibited from acquiring additional CLNC shares.

Accelerating the Monetization of Wellness Infrastructure, OED and Other IM

In the second quarter of 2021, the Company started the process to dispose of its Wellness Infrastructure business along with other non-core assets, all of which are held by its subsidiary, NRF Holdco, LLC ("NRF Holdco").

The Wellness Infrastructure business is composed of senior housing, skilled nursing facilities, medical office buildings, and hospitals.

Other assets and obligations held by NRF Holdco include primarily:

(i) the Company's equity interest in and management of its sponsored non-traded REIT, NorthStar Healthcare Income, Inc.

(NorthStar Healthcare"), debt securities collateralized largely by certain debt and preferred equity within the capital structure of the Wellness Infrastructure portfolio, limited partner interests in private equity real estate funds;

and (ii) the 5.375% exchangeable senior notes, trust preferred securities and corresponding junior subordinated debt, all of which were issued by NRF Holdco who acts as guarantor.

In June 2021, the Company entered into a definitive agreement with a third party to sell a substantial majority of its OED investments and Other IM business, composed of the Company's interests in various non-digital real estate, real estate-related equity and debt investments, and the Company's general partner interests and management rights with respect to these assets.

The aggregate sales price is approximately $535 million, subject to customary adjustments, including adjustments if consents with respect to certain assets cannot be obtained.

Consummation of the sale is subject to customary closing conditions, including regulatory approvals and third party consents, but no financing conditions.

During the six months ended June 30, 2021, taking into consideration the agreed upon sales price and/or estimated recoverable values for the OED, Other IM and Wellness Infrastructure assets that are classified as held for disposition, the Company wrote down the carrying value of these assets by $538 million in aggregate, of which $277 million was attributable to the OP, recorded within impairment loss, equity method loss and other loss in discontinued operations (Note 11 to the consolidated financial statements).

Internalization of BRSP

In early April 2021, the Company and BRSP (formerly Colony Credit Real Estate, Inc.

or CLNC) agreed to terminate the BRSP management agreement for a one-time termination payment of $102.3 million in cash.

The transaction closed on April 30, 2021, resulting in the internalization of BRSP's management and operating functions (the "BRSP Internalization"), with certain of the Company's employees previously dedicated wholly or substantially to BRSP becoming employees of BRSP.

In connection with the BRSP Internalization, BRSP's board of directors ceased to include Company-affiliated directors upon the expiration of such directors' terms in May 2021.

The Company also entered into a stockholders agreement with BRSP, pursuant to which the Company agreed, for so long as the Company owns at least 10% of BRSP's outstanding common shares, to vote in BRSP director elections as recommended by BRSP’s board of directors at any stockholders' meeting that occurs prior to BRSP's 2023 annual stockholders' meeting.

Except as aforementioned, the Company may vote its shares in its sole discretion in any votes of BRSP’s stockholders.

The Company currently holds a 36.1% equity ownership and is prohibited from acquiring additional BRSP shares.

Exit of the Hotel Business

In March 2021, the Company completed the previously announced exit of its hotel business, which represents a key milestone in the Company’s digital transformation.

In March 2021, the Company completed the sale of its hotel business.

Pursuant to an agreement entered into with a third party in September 2020 (as amended in October 2020, February 2021 and March 2021), the Company sold five of the six hotel portfolios in its Hospitality segment and its 55.6% interest in a portfolio of limited service hotels that was acquired through a consensual foreclosure in July 2017 (the "THL Hotel Portfolio") in its Other segment, composed of 197 hotel properties in aggregate.

The remaining portfolio in the Hospitality segment is in receivership and the remaining interests in the THL Hotel Portfolio will continue to be held by investment vehicles currently managed by the Company.

The remaining portfolio in the Hospitality segment is in receivership and currently under contract for sale by the lender, while the remaining interests in the THL Hotel Portfolio continue to be held by investment vehicles managed by the Company.

Two of the hotel portfolios that were sold in the Hospitality segment were held through joint ventures in which the Company held a 90% and a 97.5% interest, respectively.

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Significant Developments

In the first quarter of 2021 and through the date of this filing, significant developments affecting our business and results of operations included the following.

Through the date of this filing, significant developments in 2021 affecting our business and results of operations included the following.

• In July 2021, our corporate credit facility was terminated and replaced with $500 million aggregate principal amount of Series 2021-1 Secured Fund Fee Revenue Notes issued by subsidiaries of the OP (the "Co-Issuers"), composed of:

(i) $300 million aggregate principal amount of 3.933% Secured Fund Fee Revenue Notes, Series 2021-1, Class A-2 (the “Class A-2 Notes”);

and (ii) up to $200 million Secured Fund Fee Revenue Variable Funding Notes, Series 2021-1, Class A-1 (the “VFN Notes” and, together with the Class A-2 Notes, the “Series 2021-1 Notes”).

The VFN Notes allow the Co-Issuers to borrow on a revolving basis.

Net proceeds from the securitized financing facility will be used for acquisition of digital infrastructure investments, funding of commitments to sponsored funds, redemption or repayment of other higher cost corporate securities, and/or general corporate purposes.

The issuance of the Series 2021-1 Notes represents a key milestone for the Company on a number of fronts:

▪ Longer-duration financing — We effectively refinanced our corporate credit facility and extended the maturity of our revolving credit from 2022 to 2026.

▪ First-of-its-kind securitization backed by investment management fees.

▪ Lower cost of capital — Successful rotation from “diversified to digital” has positioned us to issue securitized notes with a high-quality digital collateral base, which lowers our effective cost of capital.

▪ Greater flexibility — This new financing structure, which we intend to continue to utilize as it grows, creates greater flexibility around capital allocation and corporate liability management, including our ability to retire higher cost debt or securities and eventually pay regular dividends on our common stock.

• In July 2021, we issued notices of redemption for all of our outstanding 7.5% Series G preferred stock with total liquidation value of $86.25 million, to be settled in August 2021 using proceeds from our securitized financing facility, which will lower our cost of corporate debt by approximately 350 basis points.

Digital Business

• We completed the add-on acquisition of zColo's remaining five data centers in France for $33 million in February 2021.

• In February 2021, we held a first closing of DCP II, our second digital opportunistic fund, with total callable commitments of $4.2 billion, inclusive of $120 million of our commitments as general partner and limited partner.

• We held a first closing of DCP II, our second digital opportunistic fund in February 2021.

As of August 5, 2021, total commitments was $6.6 billion, inclusive of $135 million of our commitments as limited partner and general partner.

• Our DataBank subsidiary completed its restructuring in the second quarter of 2021 and expects to elect REIT status for the 2021 taxable year, resulting in a write-off of $66.8 million of net deferred tax liabilities.

• In February 2021, we completed the add-on acquisition of zColo's remaining five data centers in France for $33 million.

• We acquired additional build-out of expansion capacity within the Vantage SDC portfolio, including lease-up of the expanded capacity and existing inventory, for aggregate payments of $73.6 million.

Non-Digital Assets

• In the first quarter of 2021, we are accelerating the monetization of our OED investments and Other IM business.

This included termination of the CLNC management contract on April 30, 2021, for which we received a one-time termination fee of $102.3 million at closing.

• In consideration of potential monetization of the OED investments and Other IM business, these assets were written down by $420 million in aggregate across our loan portfolio, equity investments and real estate assets, of which $121 million was attributable to the OP.

For all current and prior periods presented, these assets and corresponding liabilities are presented as held for disposition, and the related operating results are presented as discontinued operations (Notes 7 and 14 to the consolidated financial statements).

• In the first half of 2021, we determined we would accelerate the monetization of our remaining non-digital assets in Wellness Infrastructure, OED and Other IM.

• In June 2021, we entered into a definitive agreement to sell a substantial majority of our OED investments and Other IM business, including our general partner interests and management rights with respect to these OED assets.

The aggregate sales price is approximately $535 million, subject to customary adjustments.

• During the six months ended June 30, 2021, based upon the sales price for the OED assets and Other IM business, and potential recoverable values of the Wellness Infrastructure assets, the carrying value of these assets were written down in the aggregate of $538 million, of which $277 million was attributable to the OP.

• On April 30, 2021, we terminated the BRSP management contract, which resided in the Other IM business, for a one-time termination payment of $102.3 million at closing.

Consequently, the Other IM goodwill balance of $81.6 million was fully written off as the remaining value of the Other IM reporting unit represented principally the BRSP management contract.

This resulted in a net gain of $20.7 million, recognized within other gain (loss) in discontinued operations.

• In March 2021, we sold five of the six hotel portfolios in our Hospitality segment and our 55.6% interest in the THL Hotel Portfolio in the Other segment, generating net proceeds of $45.6 million.

The transaction was valued at $2.8 billion, including aggregate selling price of $67.5 million and the buyer's assumption of $2.7 billion of investment-level debt.

• In April 2021, we received proceeds from a sale of the two largest assets securing our Irish loan portfolio, which were applied to repay $265 million of outstanding principal on our loan receivable and extinguish the full $155 million of debt financing the portfolio.

The remaining one hotel portfolio is in receivership and currently under contract for sale by the lender.

• In April 2021, we received proceeds from a sale of the two largest assets securing our Irish loan portfolio, which were applied to repay $305 million of our outstanding loan receivable and extinguish the full $155 million of debt financing the portfolio.

This removed all encumbrances on the remaining assets in the portfolio.

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The Irish loan portfolio is composed of distressed loans that were previously acquired at a discount.

• For all current and prior periods presented, all non-digital assets that have been disposed or subject to planned dispositions and their corresponding liabilities are presented as held for disposition, and the related operating results are presented as discontinued operations (Notes 11 and 12 to the consolidated financial statements).

Results of Operations

The following table summarizes our results from continuing operations by reportable segment.

Excluded are discontinued operations (Note 14 to the consolidated financial statements) which generated loss from discontinued operations attributable to Colony Capital, Inc.

of $125.2 million and $228.5 million in the three months ended March 31, 2021 and 2020, respectively.

(In thousands) Total Revenues Income (Loss) from

Continuing Operations Income (Loss) Attributable to Colony Capital, Inc.

from Continuing Operations

Three Months Ended March 31, 2021 2020 2021 2020 2021 2020

Digital Operating $ 189,202 $ 45,167 $ (62,844) $ (18,295) $ (8,793) $ (3,418)

The following table summarizes our consolidated results of operations by segments.

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Continuing Operations

Total revenues

Digital Investment Management $ 46,873 $ 20,849 $ 26,024 $ 77,993 $ 40,148 $ 37,845

Digital Operating 189,093 42,021 147,072 378,295 87,188 291,107

Digital Other 1,720 663 1,057 2,860 823 2,037

Wellness Infrastructure 93,543 144,679 (41,210) (66,288) (32,906) (49,938)

Other — — — — 814 (814)

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(499) 4,340 (4,839) (1,380) 9,050 (10,430)

Selected Balance Sheet Data

The following table summarizes key balance sheet data by reportable segment, excluding balances held for disposition (Note 7 to the consolidated financial statements).

Real Estate, net Loans Receivable Equity and Debt Investments Debt, net

(In thousands) March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020

$ 237,187 $ 67,873 169,314 $ 457,768 $ 138,023 319,745

Income (loss) from continuing operations

Digital Investment Management $ 15,786 $ 2,424 $ 13,362 $ 23,449 $ 4,654 $ 18,795

Digital Operating (10,850) (21,262) 10,412 (75,110) (39,677) (35,433)

Digital Other 13,280 12,292 988 20,943 9,257 11,686

Other 45,983 (324,456) 370,439 16,393 (334,361) 350,754

Amounts not allocated to segments (60,376) (62,195) 1,819 (128,191) (119,591) (8,600)

$ 3,823 $ (393,197) 397,020 $ (142,516) $ (479,718) 337,202

Net income (loss) from continuing operations attributable to DigitalBridge Group, Inc.

Digital Investment Management $ 12,100 $ 2,073 $ 10,027 $ 18,979 $ 4,083 $ 14,896

Digital Operating (376) (4,277) 3,901 (10,450) (7,803) (2,647)

Digital Other 5,424 10,723 (5,299) 9,187 8,481 706

Wellness Infrastructure 3,223,574 3,338,085 48,449 47,233 69,359 61,790 2,873,579 2,920,030

Other 41,606 (292,254) 333,860 14,842 (301,176) 316,018

Amounts not allocated to segments (52,828) (54,192) 1,364 (112,421) (104,009) (8,412)

Total $ 7,702,711 $ 7,809,964 $ 85,272 $ 84,030 $ 777,819 $ 876,703 $ 6,877,291 $ 6,872,350

$ 5,926 $ (337,927) 343,853 $ (79,863) $ (400,424) 320,561

(1) Includes elimination of fee income earned by Digital Investment Management from managed investment vehicles consolidated within Digital Operating and Digital Other.

Revenues increased $169.3 million quarter-to-date and $319.7 million year-to-date, or over 200%.

The increase reflects growth in our digital businesses:

• Digital Operating— acquisition of Vantage SDC's 12 hyperscale data centers (13% DBRG ownership) and zColo's 44 colocation data centers (through our subsidiary, DataBank, 20% DBRG ownership);

• Digital Investment Management— fundraising for our second flagship digital infrastructure fund, DCP II, and co-invest capital raised alongside our balance sheet investment for new acquisitions in Digital Operating .

Income (loss) from continuing operations

Continuing operations generated net income in the second quarter of 2021 and net losses in all other periods.

The second quarter of 2021 benefited from a $66.8 million net deferred tax benefit at our DataBank subsidiary, driven by the write-off of deferred tax liabilities as DataBank completed its restructuring to qualify as a REIT in the second quarter and expects to elect REIT status for the 2021 taxable year.

Our Digital Operating segment generally records net losses, reflecting the effects of depreciation and amortization.

In 2020, the large net loss arose from $254.5 million of impairment charge on our equity investment in BRSP.

Key components of revenue and income (loss) from continuing operations are addressed in more detail in our discussion of consolidated results of operations below.

Consolidated Results of Operations

Comparison of Three Months Ended March 31, 2021 to Three Months Ended March 31, 2020

Three Months Ended March 31,

(In thousands) 2021 2020 Change

Comparison of Three and Six Months Ended June 30, 2021 to Three and Six Months Ended June 30, 2020

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Property operating income $ 188,985 $ 42,017 $ 146,968 $ 377,987 $ 87,166 $ 290,821

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Fee income 45,157 20,173 24,984 74,600 39,251 35,349

4,133 5,525 (1,392)

Other income 1,726 3,581 (1,855) 3,008 7,700 (4,692)

Total revenues 237,187 67,873 169,314 457,768 138,023 319,745

Property operating expense 77,140 18,055 59,085 157,002 34,961 122,041

132,264 83,477 48,787

Interest expense 37,938 20,852 17,086 77,718 39,936 37,782

72,485 63,441 9,044

Investment and servicing expense

8,108 5,732 2,376

Investment expense 5,871 2,010 3,861 12,764 4,739 8,025

Transaction-related costs 64 89 (25) 1,682 681 1,001

Depreciation and amortization 138,229 36,680 101,549 277,654 74,823 202,831

170,967 76,236 94,731

Impairment loss — 12,297 (12,297) — 12,297 (12,297)

15,232 48,532 (33,300)

Compensation expense 56,465 44,628 11,837 135,218 82,684 52,534

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Other income (loss)

Other loss, net (8,714) (9,703) 989

Equity method losses (18,908) (11,879) (7,029)

Other gain (loss), net (27,041) 1,254 (28,295) (36,391) (1,971) (34,420)

Equity method earnings (losses) 62,650 (316,516) 379,166 46,011 (326,864) 372,875

Loss before income taxes (71,416) (394,847) 323,431 (240,951) (486,601) 245,650

Income tax benefit 75,239 1,650 73,589 98,435 6,883 91,552

Loss from continuing operations (190,177) (154,199) (35,978)

Gain (Loss) from continuing operations 3,823 (393,197) 397,020 (142,516) (479,718) 337,202

Loss from discontinued operations (98,906) (2,325,796) 2,226,890 (580,166) (2,643,332) 2,063,166

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Redeemable noncontrolling interests 6,025 390 5,635 8,474 (158) 8,632

2,449 (548) 2,997

Investment entities 36,616 (470,052) 506,668 (319,246) (491,801) 172,555

Operating Company (14,980) (225,057) 210,077 (42,876) (264,658) 221,782

Net loss attributable to Colony Capital, Inc.

Net loss attributable to DigitalBridge Group, Inc.

(122,744) (2,024,274) 1,901,530 (369,034) (2,366,433) 1,997,399

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Net loss attributable to common stockholders $ (141,260) $ (2,042,790) 1,901,530 $ (406,066) $ (2,404,423) 1,998,357

$ (264,806) $ (361,633) 96,827

Property Operating Income and Property Operating Expenses

Three Months Ended March 31,

(In thousands) 2021 2020 Change

Property operating income:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Digital Operating

Wellness Infrastructure 86,214 138,249 (52,035)

Other — 555 (555)

Property operating income

Lease income $ 173,859 $ 30,823 $ 143,036 $ 347,474 $ 63,999 $ 283,475

Data center service revenue 15,126 11,194 3,932 30,513 23,167 7,346

188,985 42,017 146,968 377,987 87,166 290,821

Property operating expenses 77,140 18,055 59,085 157,002 34,961 122,041

Digital Operating $ 79,862 $ 16,906 $ 62,956

Wellness Infrastructure 52,400 66,567 (14,167)

Other 2 4 (2)

$ 132,264 $ 83,477 48,787

Digital Operating— Amounts in the first quarter of 2021 include Vantage SDC, acquired in July 2020 and zColo, acquired in December 2020.

Wellness Infrastructure— Property operating income decreased $52.0 million, of which $21.7 million is attributed to the conveyance of a 36 property senior housing operating portfolio to the lender in August 2020, and sales of six net lease properties during 2020.

Other factors contributing to the decrease include:

(i) $22.4 million write-off of straight-line rent receivable on our UK net lease senior housing portfolio based upon current assessment of collectability, while we engage in ongoing negotiations with the tenant to restructure the lease;

(ii) a decline in occupancy across our senior housing operating portfolio due to restrictions on new admissions in an effort to contain COVID-19;

and (iii) acceleration of above-market lease intangible following a lease restructuring.

These decreases were partially offset by a gross-up of resident fee income following the conversion of six properties from a net lease portfolio to a senior housing operating portfolio in April 2020.

Property operating expenses decreased $14.2 million.

The conveyance of the senior housing operating portfolio to the lender and the disposition of properties as noted above reduced expenses by $16.3 million, absent which property operating expenses would have increased $2.1 million.

The increase was driven by a gross up of expenses following the net lease to senior housing operating conversion of six properties and incremental costs incurred in our senior housing operating facilities in response to COVID-19.

The incremental COVID-19 related costs were partially abated by government stimulus funding under the CARES Act Provider Relief Fund, reflected in other income.

Other— Amounts represent a net lease property that is in receivership.

Amounts are higher in 2021 as it includes the operating results from 12 hyperscale data centers in the Vantage SDC portfolio, acquired in July 2020 and 44 co-location data centers held by zColo, acquired in December 2020 and February 2021.

On a same store basis, there was an increase in property operating income and expense quarter-to-date and year-to-date, reflecting an increase in rentable square footage and a higher utilization rate.

Additionally, higher power costs were incurred in connection with inclement weather conditions, with the incremental cost billed to our tenants.

Interest Income

Interest income was largely consistent between the periods.

While there was additional interest income in the first quarter of 2021 from new loans originated in the digital segment in the fourth quarter of 2020 and drawdown of the credit facility provided to NorthStar Healthcare in April 2020, this increase was largely offset by lower interest income on available cash as proceeds from the sale of our light industrial business in December 2019 have since been redeployed.

Fee income is earned from the following sources:

Three Months Ended March 31,

(In thousands) 2021 2020 Change

Digital Investment Management segment

Institutional funds and other investment vehicles $ 29,443 $ 18,944 $ 10,499

Other segment

Institutional funds and other investment vehicles 757 1,618 (861)

Non-traded REIT—NorthStar Healthcare 2,769 4,431 (1,662)

Other 710 135 575

Subtotal — Other segment

Interest income was $0.8 million lower quarter-to-date and $1.7 million lower year-to-date.

There was additional interest income in 2021 from new loans originated or acquired in the digital segment, primarily warehousing for a future digital credit investment vehicle.

However, this increase was largely offset by lower interest income on available cash as proceeds from the sale of our light industrial business in December 2019 have since been redeployed.

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Digital Investment Management

Management fees

$ 39,727 $ 18,599 $ 21,128 $ 67,466 $ 36,545 $ 30,921

Incentive fees

4,489 — 4,489 5,083 — 5,083

Digital Investment Management— Fee income was $10.5 million, driven by the first closing of DCP II in February 2021, and to a lesser extent, fees from co-investment capital raised for the acquisitions of Zayo by DCP I in March 2020 and Vantage SDC in July 2020.

Other— Fee income from the non-digital investment management business was $1.9 million lower, attributed to a decrease in fees from NorthStar Healthcare based upon a lower net asset value ("NAV") fee base beginning December 2020.

Other income decreased $1.4 million, attributed primarily to lower due diligence cost reimbursements from our sponsored private funds, partially offset by government stimulus funding under the CARES Act Provider Relief Fund.

Other fee income

941 1,574 (633) 2,051 2,706 (655)

$ 45,157 $ 20,173 24,984 $ 74,600 $ 39,251 35,349

Fee income was higher by $25.0 million quarter-to-date and $35.3 million year-to-date.

The increase was driven by:

(i) fundraising for DCP II beginning November 2020, partially offset by lower fees from DCP I in 2021 as the fee base changed from committed capital to net contributed capital following the closing of DCP II;

and (ii) incentive fees earned based upon the performance of third party accounts managed by our digital liquid securities team.

The decrease in other income can be attributed primarily to lower cost reimbursements from our investment holding entities.

Interest Expense

Three Months Ended March 31,

(In thousands) 2021 2020 Change

Investment-level financing:

Digital Operating $ 31,132 $ 9,402 $ 21,730

Wellness Infrastructure 32,705 43,952 (11,247)

Other — 405 (405)

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Investment-level financing — Digital Operating

$ 29,272 $ 8,170 $ 21,102 $ 60,404 $ 17,572 $ 42,832

Corporate-level debt 8,666 12,682 (4,016) 17,314 22,364 (5,050)

$ 37,938 $ 20,852 17,086 $ 77,718 $ 39,936 37,782

Net decrease in interest expense of $9.0 million is attributed to the following:

Digital Operating— The $21.7 million increase is attributed to interest expense on debt financing on Vantage SDC and zColo portfolios, acquired in July 2020 and December 2020, respectively.

This was partially offset by lower interest expense on the DataBank portfolio as a result of:

(i) a decline in LIBOR as all of DataBank's debt was variable rate prior to refinancing through its March 2021 securitization transaction;

and (ii) meaningful reduction in its weighted average interest rate post-securitization from 6.1% per annum as of December 31, 2020 to 2.4% per annum as of March 31, 2021.

Wellness Infrastructure— Interest expense was lower by $11.2 million as a result of:

(i) decrease in LIBOR on predominantly variable rate debt;

(ii) debt repayment upon certain sales of net lease properties in 2020;

and (iii) conveyance of underlying collateral to lender in satisfaction of $157.5 million of outstanding debt principal in August 2020.

Other— This represents interest expense on a net lease property that is in receivership.

Corporate-level Debt— Interest expense decreased by $1.0 million as there was no outstanding balance on our corporate credit facility during the first quarter of 2021.

This was partially offset by a net increase in interest expense on our senior notes, with a higher rate on the new exchangeable notes issued in July 2020 relative to the convertible notes that were substantially repurchased in the third quarter of 2020 and fully repaid in January 2021.

Investment and Servicing Expense

Investment and servicing costs were $2.4 million higher, primarily related to management fees paid to Vantage for the day-to-day operations of Vantage SDC, and fees paid for transitional services in connection with the zColo portfolio, both of which were partially offset by costs incurred in the prior year in connection with the conversion of a net lease portfolio to a senior housing operating portfolio in our Wellness Infrastructure segment.

Digital Operating— The increase of $21.1 million quarter-to-date and $42.8 million year-to-date is attributed to additional interest expense incurred on debt financing the Vantage SDC and zColo portfolios, acquired in July 2020 and December 2020, respectively.

This was partially offset by lower interest expense on the DataBank portfolio as its March 2021 securitization transaction meaningfully reduced its cost of debt.

DataBank's weighted average interest rate was 6.1% per annum as of December 31, 2020 and 2.4% per annum as of March 2021 post-securitization.

Corporate-level Debt— Interest expense decreased $4.0 million quarter-to-date and $5.1 million year-to-date as there was no outstanding balance on our corporate credit facility in 2021 until the last week of June 2021.

This was partially offset by a net increase in interest expense on our senior notes, with a higher rate on the new exchangeable notes issued in July 2020 (5.75% per annum) relative to the convertible notes that were substantially repurchased in the third quarter of 2020 and fully repaid in January 2021 (3.875% per annum) .

Investment Expense

Investment expense was $3.9 million higher quarter-to-date and $8.0 million higher year-to-date.

The increase was related primarily to management fees paid to Vantage for the day-to-day operations of Vantage SDC beginning the second half of 2020, and fees paid in 2021 for transitional services in connection with the zColo portfolio.

Transaction-Related Costs

Transaction-related costs were $2.7 million compared to $0.6 million for the three months ended March 31, 2021 and 2020, respectively.

The higher costs in the current period are primarily related to an unconsummated deal and ongoing corporate restructuring transactions.

Transaction-related costs were generally in connection with unconsummated investments and ongoing corporate restructuring transactions.

Depreciation and Amortization

Increase in depreciation and amortization expense is primarily related to real estate and intangible assets from acquisitions of Vantage SDC in July 2020 and zColo in December 2020 and February 2021.

The increase was partially offset by decreases due to the effects of lower real estate basis after impairment charges and sales of properties in our Wellness Infrastructure segment.

Increase in depreciation and amortization expense is primarily related to real estate and intangible assets from acquisition of Vantage SDC and zColo.

Impairment Loss

These are impairment charges on real estate in our Wellness Infrastructure segment.

Impairment of $15.2 million in the first quarter of 2021 reflects primarily a write-down to net sales proceeds on a medical office building and two portfolios of net lease skilled nursing facilities, all of which were sold in April 2021.

In the first quarter of 2020, the aggregate impairment of $48.5 million was related to a portfolio of senior housing operating facilities and net lease skilled nursing facilities resulting from shortened hold period assumptions in contemplation of underlying debt that was at risk of default.

The senior housing portfolio was subsequently conveyed to the lender in August 2020 in settlement of the debt.

Impairment was recorded on the corporate aircraft in 2020 to reflect its recoverable value prior to its sale to a third party in January 2021.

Compensation Expense

The following table provides the components of compensation expense:

Three Months Ended March 31,

(In thousands) 2021 2020 Change

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Cash compensation and benefits $ 40,426 $ 37,603 $ 2,823 $ 103,306 $ 71,242 $ 32,064

Equity-based compensation 7,773 7,025 748 23,679 11,442 12,237

Carried interest compensation (33) — (33)

Incentive and carried interest compensation 8,266 — 8,266 8,233 — 8,233

$ 56,465 $ 44,628 11,837 $ 135,218 $ 82,684 52,534

Total compensation expense was $40.6 million higher, driven by significant severance payments, including acceleration of equity-based compensation in the first quarter of 2021, and compensation costs associated with data center employees of the new zColo portfolio.

Total compensation expense was $11.8 million higher quarter-to-date and $52.5 million higher year-to-date, driven by significant severance payments, including acceleration of equity-based compensation in the first quarter of 2021, and compensation costs associated with data center employees of the new zColo portfolio in 2021.

Additionally, there was $8.2 million of compensation accrued in 2021, representing approximately 60% of incentive fees earned and unrealized carried interest from our managed accounts and sponsored investment vehicles that are shared with certain employees.

Unlike incentive fee and related compensation which have been earned, unrealized carried interest and corresponding compensation amounts are subject to adjustments each period, including reversals, until such time they are realized, based upon the cumulative performance of the underlying investments of the respective vehicles that are carried at fair value.

Administrative Expenses

Administrative expense decreased $10.6 million, largely attributable to lower costs related to legal and professional services in the current period.

Administrative expense increased $15.7 million quarter-to-date and $5.7 million year-to-date, attributable largely to placement fees incurred in fundraising for DCP II in the second quarter of 2021, administrative costs associated with our new zColo portfolio and growth in our Digital Operating business, and costs incurred in connection with our investor conference in June 2021.

Settlement Loss

Settlement loss recognized in the three months ended March 31, 2020 represents the initial fair value of the settlement arrangement with Blackwells, plus the reimbursement of legal costs incurred by Blackwells.

Settlement loss recognized in 2020 represents the initial fair value of the settlement arrangement with Blackwells and the reimbursement of legal costs incurred by Blackwells.

Refer to additional discussion in Note 13 to the consolidated financial statements.

Equity Method Losses

The increase in equity method losses can be attributed primarily to a higher loss from our investment in CLNC due to its recognition of restructuring costs in the first quarter of 2021, primarily composed of the $102.3 million termination fee payable to us and other associated costs.

This loss was partially offset by an unrealized gain based upon a higher valuation on an equity method investment that is accounted for under the fair value option.

We recorded other net loss of $8.7 million and $9.7 million for the three months ended March 31, 2021 and 2020, respectively.

While the settlement liability to Blackwells increased $12.7 million in the first quarter of 2021, driven by the increase in CLNY stock price, this was offset by fair value gains on marketable equity securities held by our consolidated digital liquid securities funds.

In contrast, in the first quarter of 2020, fair value losses were recorded on marketable equity securities of consolidated funds and there was a remeasurement loss on a GBP denominated loan receivable in our Wellness Infrastructure segment as a result of the financial market distress and appreciation of the USD in March 2020.

Income Tax Benefit

We recognized income tax benefit of $25.8 million and $5.6 million in the three months ended March 31, 2021 and 2020, respectively, driven by deferred tax benefit recognized on net losses from our DataBank subsidiary, which was higher in 2021, including the zColo business that was acquired in December 2020.

Additional deferred tax benefit was also recorded in 2021, arising from significant severance costs.

Income (Loss) from Discontinued Operations

Three Months Ended March 31, 2021 Three Months Ended March 31, 2020 Change

(In thousands)

Other Hotel Total Other Hotel & Industrial Total Other Hotel & Industrial

Property operating income $ 21,169 $ 122,106 $ 143,275 $ 28,352 $ 218,490 $ 246,842 $ (7,183) $ (96,384)

Interest income 4,132 — 4,132 30,262 17 30,279 (26,130) (17)

Fee income 15,962 — 15,962 18,377 — 18,377 (2,415) —

Other income 8,260 22 8,282 136 62 198 8,124 (40)

Revenues from discontinued operations 49,523 122,128 171,651 77,127 218,569 295,696 (27,604) (96,441)

Property operating expense 13,253 112,829 126,082 12,612 169,016 181,628 641 (56,187)

Interest expense 15,700 62,318 78,018 10,002 52,377 62,379 5,698 9,941

Transaction-related, investment and servicing costs 5,894 1,794 7,688 4,711 1,560 6,271 1,183 234

Depreciation and amortization 11,670 7,668 19,338 13,062 48,194 61,256 (1,392) (40,526)

Impairment loss 108,528 — 108,528 86,373 252,363 338,736 22,155 (252,363)

Compensation and administrative expense (1)

Equity Method Earnings (Losses)

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Digital Investment Management $ 11,202 $ 158 $ 11,044 $ 11,007 $ 161 $ 10,846

Digital Other 6,396 7,782 (1,386) 9,172 8,247 925

Other 45,052 (324,456) 369,508 25,832 (335,272) 361,104

$ 62,650 $ (316,516) 379,166 $ 46,011 $ (326,864) 372,875

Expenses from discontinued operations 175,602 187,019 362,621 129,042 525,957 654,999 46,560 (338,938)

Digital Investment Management— Unrealized carried interest was recognized in the second quarter of 2021 in relation to our general partner interests in the DCP funds and a Vantage SDC co-invest vehicle.

Such carried interest is subject to adjustments each period, including reversals, based upon the cumulative performance of the underlying investments of these vehicles that are measured at fair value, until such time the carried interest is realized.

Digital Other— Equity method earnings represent our share of earnings, principally from our limited partner interests in DCP I and beginning 2021, DCP II.

The earnings of the DCP funds include unrealized fair value changes on their respective underlying investments.

Other— The large equity method loss in the Other segment in 2020 was driven by $254.5 million of impairment charge on our equity investment in BRSP (excluding amounts associated with BRSP shares and units held by NRF Holdco that is presented as discontinued operations).

Additionally, our share of BRSP's net losses was higher in 2020 as a result of the economic effects of COVID-19.

We also recorded net losses from BRSP in 2021, attributable largely to BRSP's restructuring costs, including the termination fee that was paid to us.

These net losses from BRSP were reduced by $54.8 million and $17.8 million of basis difference year-to-date 2021 and 2020, respectively, allocated to investments that were resolved or written-down by BRSP during these periods (Note 5 to consolidated financial statements).

Separately, the Other segment also realized a gain from partial sale of an equity investment in the second quarter of 2021, having recorded unrealized gains in the first quarter to reflect an increase in the value of the investment.

Other Gain (Loss)

The large other loss in 2021 can be attributed to a write-off of an equity investment that was determined to be unrecoverable.

We also recorded a loss from increases in value of the Blackwells settlement liability in all periods based upon an increase in the DBRG stock price, which was more pronounced in 2021.

The Blackwells liability was settled in June 2021 (refer to Note 13 to the consolidated financial statements).

These losses were partially offset by fair value increases in our marketable equity securities, held primarily by our consolidated digital liquid securities funds, in all periods except for the first quarter of 2020.

Income Tax Benefit

The large income tax benefit in 2021 arose primarily from a $66.8 million net deferred tax benefit at our DataBank subsidiary, driven by the write-off of deferred tax liabilities as DataBank completed its restructuring to qualify as a REIT in the second quarter and expects to elect REIT status for the 2021 taxable year.

Additional deferred tax benefit was also recorded in relation to significant severance costs incurred in the first quarter of 2021.

Loss from Discontinued Operations

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Revenues $ 209,953 $ 309,472 $ (99,519) $ 476,730 $ 752,230 $ (275,500)

Expenses (460,568) (2,388,190) 1,927,622 (963,144) (3,250,254) 2,287,110

Other income (loss) 175,614 (237,708) 413,322 (73,565) (122,381) 48,816

Gain on sale of real estate 391 45,359 45,750 7,932 — 7,932 (7,541) 45,359

Other gain (loss), net (200,683) 3 (200,680) 3,375 2,861 6,236 (204,058) (2,858)

Equity method earnings (losses) (92,611) — (92,611) 109,170 — 109,170 (201,781) —

Income (loss) from discontinued operations before income taxes (418,982) (19,529) (438,511) 68,562 (304,527) (235,965) (487,544) 284,998

Income tax benefit (expense) 2,613 (1,524) 1,089 (16,482) 2,589 (13,893) 19,095 (4,113)

Income (loss) from discontinued operations (416,369) (21,053) (437,422) 52,080 (301,938) (249,858) (468,449) 280,885

Income (loss) from discontinued operations attributable to:

Noncontrolling interests in investment entities (302,387) 3,370 (299,017) 35,116 (31,485) 3,631 (337,503) 34,855

Noncontrolling interests in Operating Company (10,863) (2,328) (13,191) 1,674 (26,696) (25,022) (12,537) 24,368

Income (loss) from discontinued operations attributable to Colony Capital, Inc.

Income tax expense (23,905) (9,370) (14,535) (20,187) (22,927) 2,740

Loss from discontinued operations (98,906) (2,325,796) 2,226,890 (580,166) (2,643,332) 2,063,166

Loss from discontinued operations attributable to noncontrolling interests:

Investment entities 43,387 (453,660) 497,047 (260,464) (460,905) 200,441

Operating Company (13,623) (185,789) 172,166 (30,531) (216,418) 185,887

Loss from discontinued operations attributable to DigitalBridge Group, Inc.

$ (128,670) $ (1,686,347) 1,557,677 $ (289,171) $ (1,966,009) 1,676,838

The results in this column represent the operations of substantially all of the OED investments and Other IM business in the Other segment, composed of non-digital real estate, real estate-related equity and debt investments, fee income from CLNC and the Company's private real estate credit funds and co-investment vehicles, and underlying compensation and administrative costs for managing these non-digital investments and investment vehicles.

The Other segment generated loss from discontinued operations of $416.4 million compared to income from discontinued operations of $52.1 million in the three months ended March 31, 2021 and 2020, respectively, attributed primarily to the following:

• Asset values were written down by $420.3 million in the aggregate in the first quarter of 2021 (of which $121.2 million was attributable to the OP) based upon estimated recoverable values considering a potential monetization of the OED investments and Other IM business.

This amount is composed of $108.5 million of impairment loss on real estate and investor relationship intangible asset, $108.0 million of impairment and unrealized fair value loss on equity investments (recorded in equity method earnings), and $203.8 million of unrealized fair value loss on loans receivable and investment in a third party fund (recorded in other loss).

In contrast, impairment loss was $86.4 million in the first quarter of 2020, with $79.0 million attributed to the Other IM goodwill and remainder to OED real estate assets.

• Total revenues were $27.6 million lower, driven by the following:

• Interest income decreased $26.1 million as a number of loans were placed on nonaccrual beginning the second and third quarters of 2020 due to increased uncertainty over collectability resulting from the COVID-19 crisis, and additionally, loans were sold or repaid during 2020;

• Fee income decreased $2.4 million due to a decrease in CLNC stockholders' equity fee base following the onset of COVID-19 and continued liquidation of credit and opportunistic funds over time;

partially offset by

• Higher other income, representing a higher gross up of income and compensation expense on CLNC equity awards (Note 17 to consolidated financial statements), as discussed below.

• Higher operating expenses further compounded the decrease in revenues, notably the following:

• Interest expense was $5.7 million higher, attributed primarily to profit allocation to a participating mortgage debt that is recorded as interest expense, based upon the returns from a sale of two loans receivable that closed in April 2021;

• Compensation cost was higher as 2021 included an acceleration of equity based compensation on CLNC equity awards that fully vested upon termination of the CLNC management contract in April 2021, while compensation expense in 2020 had been reduced by a reversal of equity based compensation on CLNC awards and a reversal of unrealized carried interest compensation.

• In contrast, 2020 included a $106.1 million gain from the sale of an equity investment, partially offset by a reversal of unrealized carried interest allocation from our sponsored credit funds.

The gain on sale is subject to tax, resulting in additional income tax expense in 2020.

Hotel and Industrial

The bulk industrial portfolio recorded net income of $0.5 million in the first quarter of 2020 and was sold in December 2020.

The hotel business generated net loss of $21.1 million and $302.4 million in the three months ended March 31, 2021 and 2020, respectively, a $281.4 million decrease in losses.

Results in 2021 reflect the hotel operations through mid-March for the THL Hotel Portfolio and five of the six portfolios in our Hospitality segment prior to their sale in March 2021.

The one remaining hotel portfolio is currently in receivership.

The significant net loss in 2020 was driven by $252.4 million of impairment charges resulting from shortened hold period assumptions.

In 2021, a gain of $45.4 million was recorded from sale of the hotel business based upon final proceeds and carrying values at the time of sale, attributed largely to debt extinguishment.

Discontinued operations represent primarily the operations of the following businesses:

(1) Wellness Infrastructure;

(2) opportunistic investments in our OED portfolio;

(3) credit investment management business in Other IM;

and (4) our hotel business that was disposed in March 2021, except for one hotel portfolio that is in receivership and under contract for sale by the lender.

Results from discontinued operations reflect the sale of our hotel business in March 2021 and monetization of various properties in our Wellness Infrastructure segment in the first six months of 2021.

Losses in all periods are driven by significant impairment expense and decreases in asset fair values, particularly in the second quarter of 2020.

In 2021, the write-down in asset values was based upon either pending sales price or estimated recoverable values in a monetization of our OED, Other IM and Wellness Infrastructure portfolios.

In the second quarter of 2020, our determination to accelerate our digital transformation necessitated an assumption of accelerated monetization of all of our non-digital businesses in estimating recoverable values and in combination with the negative economic effects of COVID-19, resulted in significant write-down in asset values.

Further discussion on the monetization of our discontinued businesses is included above under " —Business.

Assets Under Management and Fee Earning Equity Under Management ("FEEUM")

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FEEUM (2) (In billions)

Type Products Description March 31, 2021 December 31, 2020 March 31, 2021 December 31, 2020

Type Products Description June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020

Third Party Managed Capital

Institutional Funds Digital Colony Partners opportunistic strategy Earns management fees and potential for carried interest $ 10.7 $ 9.3 $ 7.1 $ 7.0

Institutional Funds Digital Colony Partners opportunistic strategy Earns management fees and potential for carried interest or incentive fees $ 12.4 $ 9.3 $ 8.6 $ 7.0

Liquid securities strategy 0.6 0.5 0.5 0.4

Other Investment Vehicles Digital real estate and infrastructure held by portfolio companies and co-invest vehicles Earns management fees, business service fees and potential for carried interest 19.5 18.8 5.4 5.4

Other Investment Vehicles Digital co-invest vehicles Earns management fees, business service fees from portfolio companies, and potential for carried interest 10.3 9.9 2.8 2.6

Digital real estate and infrastructure held by portfolio companies 10.3 8.9 2.6 2.8

Subtotal — Third Party Managed Capital

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Digital Other 0.2 1.1 NA NA

Total — Digital IM

32.0 30.0 12.9 12.8

Total Digital 34.9 30.0 14.5 12.8

Third Party Managed Capital 9.8 13.4 5.1 7.2

Institutional Funds Credit funds, opportunistic funds, value-add funds and other co-investment vehicles Earns management fees from all managed funds 6.6 7.4 4.4 4.6

Retail Companies NorthStar Healthcare Earns management fees 3.3 3.4 0.7 0.7

Public Companies Colony Credit Real Estate, Inc.

NYSE-listed credit REIT — 2.6 — 1.9

Earned management fees (prior to April 30, 2021)

Subtotal — Third Party Managed Capital

9.9 13.4 5.1 7.2

Balance Sheet Capital (3)

2 unchanged sentences

Other—OED 1.3 3.3 NA NA

Total — Other IM

14.2 21.9 5.1 7.2

Total Company—Third Party and Balance Sheet Capital $ 46.2 $ 51.9 18.0 $ 20.0

(1) Third party AUM is composed of assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations.

Third party AUM is based on the cost basis of managed investments as reported by each underlying vehicle as of the end of the reporting period and may include uncalled capital commitments.

The Company's calculations of third party AUM may differ from other asset managers, and as a result, may not be comparable to similar measures presented by other asset managers.

Total Other 13.5 21.9 5.1 7.2

Total Company $ 48.4 $ 51.9 $ 19.6 $ 20.0

(1) AUM is composed of (a) third party managed capital, which are assets for which the Company and its affiliates provide investment management services, including assets for which the Company may or may not charge management fees and/or performance allocations;

and (b) assets invested using the Company's own balance sheet capital and managed on behalf of the Company's shareholders.

Third party AUM is based upon the cost basis of managed investments as reported by each underlying vehicle as of the reporting date and may include uncalled capital commitments.

Balance sheet AUM is based upon the undepreciated carrying value of the Company's balance sheet investments as of the reporting date.

The Company's calculation of AUM may differ from other asset managers, and as a result, may not be comparable to similar measures presented by other asset managers.

(2) FEEUM is equity for which the Company and its affiliates provide investment management services and derive management fees and/or incentives.

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Balance sheet AUM reflects generally the OP's share of net book value of the respective segments, determined based upon undepreciated carrying value of assets, and where applicable, after impairment charges that create a new basis for the affected assets, in all instances, net of liabilities.

(4) Except for Wellness Infrastructure, which includes NorthStar Healthcare, a substantial majority of the remaining non-digital AUM represents assets held for sale and discontinued operations.

(5) Reflects termination of our management agreement with CLNC on April 30, 2021.

Total FEEUM decreased $2.0 billion to $18.0 billion at March 31, 2021.

While Digital FEEUM increased $0.1 billion, the overall decrease reflects the termination of our management agreement with CLNC on April 30, 2021, for which we received a one-time termination fee of $102.3 million, and lower asset values within our institutional funds.

The following discussion summarizes key information on our Digital and Wellness Infrastructure reportable segments.

(4) All of the remaining non-digital AUM represents assets held for disposition and discontinued operations.

Total FEEUM decreased $0.4 billion from December 31, 2020 to $19.6 billion at June 30, 2021.

• Digital FEEUM increased $1.7 billion, attributable to fundraising for DCP II, partially offset by a decrease in DCP I FEEUM as the fee base of DCP I changed from committed capital to net capital contributions following the closing of DCP II.

• However, the overall decrease in FEEUM was driven by the termination of our management agreement with BRSP in April 2021, for which we received a one-time termination fee of $102.3 million.

The following discussion summarizes key information on our Digital reportable segments.

Digital Investment Management ("Digital IM")

This business encompasses the investment and stewardship of third party capital in digital infrastructure and real estate.

The Company's flagship opportunistic strategy is conducted through Digital Colony Partners ("DCP") and separately capitalized vehicles, while other strategies, including digital credit and public equities, are conducted through other investment vehicles.

The Company's flagship opportunistic strategy is conducted through DCP and separately capitalized vehicles, while other strategies, including digital credit and public equities, are conducted through other investment vehicles.

The Company earns management fees, generally based on the amount of assets or capital managed in investment vehicles, and has the potential to earn carried interest based upon the performance of such investment vehicles subject to achievement of minimum return hurdles.

In February 2021, we held a first closing of DCP II, our second digital opportunistic fund, with total callable commitments of $4.2 billion, inclusive of $120 million of our commitments as general partner and limited partner.

We held a first closing of DCP II, our second digital opportunistic fund in February 2021.

As of August 5, 2021, total commitments was $6.6 billion, inclusive of $135 million of our commitments as limited partner and general partner.

Fee Earning Equity Under Management

We have $12.9 billion of Digital IM FEEUM at March 31, 2021.

Digital IM FEEUM was $14.5 billion at June 30, 2021.

Refer to further details in " —Assets Under Management and Fee Earning Equity Under Management.

Operating Performance

Results of operations of our Digital IM segment were as follows:

Three Months Ended March 31,

(In thousands) 2021 2020

Results of operations of our Digital IM segment is summarized below:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Total revenues $ 46,873 $ 20,849 $ 26,024 $ 77,993 $ 40,148 $ 37,845

Net income 15,786 2,424 13,362 23,449 4,654 18,795

Net income attributable to Colony Capital, Inc.

• Fee income from our Digital IM business is trending positively in 2021, with fees from the first close of DCP II in February 2021 and new co-invest capital raised for various acquisitions during 2020, and reflects the significant growth in our Digital IM FEEUM from $7.7 billion at March 31, 2020 to $12.9 billion at March 31, 2021.

Net income attributable to DigitalBridge Group, Inc.

12,100 2,073 10,027 18,979 4,083 14,896

• Fee income from our Digital IM business is trending positively in 2021 following fundraising for DCP II and other vehicles which co-invest with our balance sheet, and reflects the significant growth in our Digital IM FEEUM from $7.8 billion at June 30, 2020 to $14.5 billion at June 30, 2021.

Refer to further discussion of fee income in " —Results of Operations."

• Net income from our Digital IM segment is generally attributed 31.5% to Wafra, a significant investor in our Digital IM business effective July 2020.

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colocation assets in December 2020 for approximately $1.2 billion, an add-on acquisition of zColo's remaining five data centers in France for $33 million closed in February 2021.

• DataBank REIT Conversion— Our DataBank subsidiary is currently in the process of restructuring its operations in order to qualify as a REIT.

If DataBank satisfies the REIT qualification requirements, DataBank anticipates electing REIT status for U.S.

• DataBank REIT Conversion— In the second quarter of 2021, our DataBank subsidiary completed the restructuring of its operations to qualify as a REIT and anticipates electing REIT status for U.S.

federal income tax purposes for the 2021 taxable year.

Provided REIT status is elected, DataBank would generally not be subject to U.S.

federal income taxes on its taxable income to the extent that it annually distributes such taxable income to stockholders and maintains certain asset and income requirements.

As a REIT, DataBank would generally not be subject to U.S.

federal income taxes on its taxable income to the extent that it annually distributes such taxable income to its stockholders and maintains certain asset and income requirements.

However, DataBank would continue to be subject to U.S.

federal income taxes on income earned by any of its taxable subsidiaries.

In the second quarter of 2021, DataBank recorded a net deferred tax benefit of $66.8 million, reflecting primarily the write-off of its deferred tax liabilities.

• Vantage SDC— We acquired additional build-out of expansion capacity within the Vantage SDC portfolio in 2021, including lease-up of the expanded capacity and existing inventory, for aggregate payments of $73.6 million

Portfolio Overview

Our data center portfolio currently spans across 21 states in the U.S, with three in Canada, one in U.K.

Our data center portfolio currently spans across 21 states in the U.S, three in Canada, one in the U.K.

and five in France.

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

Number of data centers

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Max Critical I.T.

Square Feet 1,792 1,720

Square Feet or Total Rentable Square Feet 1,810 1,720

Leased Square Feet 1,439 1,386

% Utilization Rate 79.4% 80.6%

% Utilization Rate (% Leased) 79.5% 80.6%

Balance Sheet Information

The following table presents key balance sheet data of our Digital Operating segment:

(In thousands) March 31, 2021 December 31, 2020

(In thousands) June 30, 2021 December 31, 2020

Real estate $ 4,491,287 $ 4,451,864

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Debt 3,342,453 3,213,240

• Higher debt balance at March 31, 2021 reflects additional debt obtained through DataBank's securitization transaction, as described below.

At March 31, 2021, our data center business was financed by an aggregate $3.4 billion of outstanding debt principal, of which $2.8 billion is fixed rate debt and $0.6 billion is variable rate debt, bearing a combined weighted average interest rate of 3.04% per annum.

• Real estate balance increased, driven by the acquisition of zColo France and additional build-out in the Vantage SDC portfolio.

• Loan receivable represents a loan originated by DataBank to an owner/operator of edge modular data centers

• Higher debt balance reflects additional debt obtained through DataBank's securitization transaction, as described below.

At June 30, 2021, our data center business was financed by an aggregate $3.4 billion of outstanding debt principal, of which $2.8 billion is fixed rate debt and $0.6 billion is variable rate debt, bearing a combined weighted average interest rate of 3.05% per annum.

In March 2021, DataBank raised $658 million of securitized notes at a blended fixed rate of 2.3%, with 5 years maturity.

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Operating Performance

Results of operations of our Digital Operating segment are as follows.

Three Months Ended March 31,

(In thousands) 2021 2020

Results of operations of our Digital Operating segment is summarized below:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Total revenues $ 189,093 $ 42,021 $ 147,072 $ 378,295 $ 87,188 $ 291,107

Net loss (10,850) (21,262) 10,412 (75,110) (39,677) (35,433)

Net loss attributable to Colony Capital, Inc.

Net loss attributable to DigitalBridge Group, Inc.

(376) (4,277) 3,901 (10,450) (7,803) (2,647)

• Operating results in 2021 include results from the acquisitions of Vantage SDC in July 2020 and zColo in December 2020.

• Net loss is driven by the effects of depreciation and amortization expense, and also includes interest expense.

• 2021 includes the operating results from 12 hyperscale data centers in the Vantage SDC portfolio, acquired in July 2020 and 44 co-location data centers held by zColo, acquired in December 2020 and February 2021.

• Net loss is driven by the effects of depreciation and amortization, income tax and also interest expense.

Operating results excluding these items are presented below as earnings before interest, tax, depreciation and amortization for real estate ("EBITDA re ").

• The second quarter of 2021 recorded a lower net loss, benefiting from a $66.8 million net deferred tax benefit as discussed above.

EBITDA re generated by our Digital Operating segment is as follows.

A reconciliation of the most directly comparable GAAP measure to EBITDA re is presented in " —Non-GAAP Supplemental Financial Measures.

Three Months Ended March 31,

(In thousands) 2021 2020

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Total revenues $ 189,093 $ 42,021 $ 147,072 $ 378,295 $ 87,188 $ 291,107

Property operating expenses (77,140) (18,055) (59,085) (157,002) (34,961) (122,041)

Transaction-related and investment costs (6,445) (197)

Transaction-related costs and investment expense (5,255) (696) (4,559) (11,820) (1,013) (10,807)

Compensation and administrative expense (28,488) (10,464) (18,024) (54,435) (23,120) (31,315)

Other loss, net (349) — (349) (352) — (352)

EBITDA re —Digital Operating

$ 77,861 $ 12,806 65,055 $ 154,686 $ 28,094 126,592

The higher EBITDA re in the first quarter of 2021 reflects the addition of Vantage SDC and zColo, acquired in July and December 2020, respectively.

The higher EBITDA re in the first quarter of 2021 reflects the addition of Vantage SDC and zColo.

On a same store basis, EBITDA re was largely consistent quarter-to-date and year-to-date.

While there was an increase in revenues from a higher utilization rate, this was mostly offset by higher compensation and administrative costs as we ramped up resources to support the growth in our business, and additional costs were incurred in the restructuring of DataBank's operations for REIT qualification which was completed in the second quarter of 2021.

Digital Other

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The following table presents key balance sheet data of our Digital Other segment:

(In thousands) March 31, 2021 December 31, 2020

Loan receivable $ 31,663 $ 31,727

(In thousands) June 30, 2021 December 31, 2020

Loans receivable $ 47,540 $ 31,727

Equity investments

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Digital liquid securities strategy 149,613 223,176

• Loan receivable was originated in November 2020 and warehoused on our balance sheet for a future digital credit investment vehicle.

• We have been acquiring loans receivable that are warehoused on our balance sheet for a future digital credit investment vehicle.

• Equity investments represent primarily:

▪ our equity method interest in DCP I;

▪ our equity interest in the DCP funds;

▪ equity investments in our digital liquid securities strategy, of which $103 million in a third party mutual fund was liquidated in January 2021.

Remaining balance is composed principally of marketable equity securities held by two consolidated Company-sponsored open-end funds (our interests in the funds range between 24% and 55%).

• We have funded $140 million of our $190 million commitment to DCP I (including our $1.8 million investment as general partner that is reflected as an equity method investment in the Digital IM segment).

Wafra will be responsible for $17 million of our remaining commitment to DCP I.

No capital has been called by DCP II to-date.

Operating Performance

Results of operations of our Digital Other segment are as follows:

Three Months Ended March 31,

(In thousands) 2021 2020 Change

Interest income $ 690 $ 7 $ 683

Equity method earnings (losses) 2,776 465 2,311

Other gain (loss), net 3,188 (3,572) 6,760

Net income (loss) 7,869 (3,035) 10,904

Net income (loss) attributable to Colony Capital, Inc.

3,949 (2,242) 6,191

• Operating results include unrealized fair value changes in i) investments held by DCP I (reflected in equity method earnings);

and ii) marketable equity securities held by consolidated funds in the digital liquid securities strategy (reflected in other gain (loss), net).

Wellness Infrastructure

This segment is composed of a diverse portfolio of senior housing, skilled nursing facilities, medical office buildings, and hospitals.

The Company earns rental income from senior housing, skilled nursing facilities and hospital assets that are under net leases to single tenants/operators and from medical office buildings which are both single tenant and multi-tenant.

This segment also holds other wellness infrastructure-related assets, principally equity interests in and the management contract of NorthStar Healthcare.

The Company owns between 69.6% and 81.3% of the various real estate portfolios in the Wellness Infrastructure segment.

In the first quarter of 2021, the Company reorganized its Wellness Infrastructure segment to retrospectively include other healthcare related assets and obligations.

These assets and obligations encompass:

(i) the Company's equity interests in and the management contract of NorthStar Healthcare, equity investment in a healthcare asset manager, and N-Star CDOs collateralized largely by certain debt and preferred equity within the capital structure of Wellness Infrastructure, all of which previously resided in the Other segment;

as well as (ii) the 5.375% exchangeable senior notes, trust preferred securities and corresponding junior subordinated debt that were not previously allocated to reportable segments, all of which were issued by NRF Holdco, LLC, a subsidiary of the Company which holds the Wellness Infrastructure assets and acts as guarantor.

Our wellness infrastructure properties are located across 30 states domestically and in the U.K.

(representing 19% of our portfolio based upon NOI for the first quarter of 2021).

The following table presents key balance sheet data of our Wellness Infrastructure segment:

(In thousands) March 31, 2021 December 31, 2020

Held for investment $ 3,223,574 $ 3,338,085

Held for disposition 248,278 162,952

Loans receivable 48,449 47,233

Equity and debt investment 69,359 61,790

Debt (at carrying value) 2,873,579 2,920,030

The following table presents selected metrics on our Wellness Infrastructure operating properties:

Number of Properties Capacity Average Occupancy (1)

Average Remaining Lease Term (Years)

March 31, 2021

Senior housing — operating

53 4,756 units 69.4 % N/A

Medical office buildings 106 3.8 million sq.

Net lease—senior housing 65 3,534 units 70.8 % 11.2

Net lease—skilled nursing facilities 83 9,723 beds 68.2 % 5.0

Net lease—hospitals 9 456 beds 62.8 % 9.1

December 31, 2020

Senior housing — operating

53 4,756 units 72.8 % N/A

Medical office buildings 106 3.8 million sq.

Net lease—senior housing 65 3,534 units 76.1 % 11.5

Net lease—skilled nursing facilities 83 9,713 beds 70.5 % 4.0

Net lease—hospitals 9 456 beds 64.9 % 9.8

(1) Occupancy represents the property operator's patient occupancy for all types except medical office buildings.

Average occupancy is based upon the number of units, beds or square footage by type of facility.

Occupancy percentages are presented as follows:

(i) as of the last day of the quarter for medical office buildings;

(ii) average for the quarter for senior housing — operating;

and (iii) average of the prior quarter for net lease properties as our operators report on a quarter lag.

In April 2021, we sold (i) a medical office building and repaid $22.3 million of underlying debt;

and (ii) two portfolios of net lease skilled nursing facilities, totaling eight properties with 1,025 beds, which included assumption by the respective buyers of $46.1 million of associated debt, of which $44.1 million was in default in March 2021.

In addition to the properties sold, a medical office building and various net lease skilled nursing facilities totaling 12 properties and 1,515 beds were held for disposition at March 31, 2021, with an aggregate carrying value of $156.0 million and encumbered with $74.2 million of outstanding debt.

Indebtedness of our Wellness Infrastructure segment at March 31, 2021 is summarized as follows:

($ in thousands) Outstanding Principal Weighted Average Interest Rate (Per Annum) Weighted Average Years Remaining to Maturity (1)

NRF Holdco 5.375% exchangeable note $ 13,605 5.375 % 12.2

Junior subordinated debt 280,117 3.06 % 15.2

Non-recourse secured investment level debt

Fixed rate 400,075 4.55 % 3.9

Variable rate 2,283,458 3.89 % 3.1

Total debt principal (excluding amounts related to assets held for disposition) $ 2,977,255

Remaining balance is composed principally of marketable equity securities held by private open-end funds that are sponsored and consolidated by us (our interests in the funds range between 23% and 55%).

• At June 30, 2021, we have remaining unfunded commitments to the DCP funds totaling $128.4 million.

Operating Performance

Results of operations of our Wellness Infrastructure segment are as follows:

Three Months Ended March 31,

(In thousands) 2021 2020 Change

Property operating income $ 86,214 $ 138,249 $ (52,035)

Results of operations of our Digital Other segment are summarized as follows:

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Interest income 988 $ 2 $ 986 $ 1,678 $ 9 $ 9

Fee income 2,769 4,431 (1,662)

Other income 2,745 1,207 1,538

Total revenues 93,543 144,679 (51,136)

Net loss (41,210) (66,288) 25,078

Net loss attributable to Colony Capital, Inc.

Equity method earnings 6,396 7,782 (1,386) 9,172 8,247 925

Other gain, net 6,746 5,481 1,265 9,934 1,909 8,025

Net income 13,280 12,292 988 20,943 9,257 11,686

Net income attributable to DigitalBridge, Inc.

5,424 10,723 (5,299) 9,187 8,481 706

Operating results at the property level are discussed under NOI below.

Results summarized above include (i) the effects of interest expense on mortgage financing, impairment charges and depreciation and amortization expense on our wellness infrastructure real estate portfolio;

as well as (ii) results from our debt securities portfolio, equity investments and management of NorthStar Healthcare, which are discussed in " —Results of Operations.

Earnings in both years were affected by the fallout from COVID-19 on the operations of our healthcare properties, as discussed in more detail below.

In comparison, net loss was higher in the first quarter of 2020, attributed to $33.3 million of higher real estate impairment loss.

Results in the first quarter of 2021 were negatively affected by a $22.4 million reversal of straight-line rent receivable on our UK net lease senior housing portfolio while we engage in ongoing negotiations with the tenant to restructure the lease, partially offset by lower interest expense due to a decline in LIBOR and extinguishment of $157.5 million of debt in August 2020 through conveyance of underlying collateral to the lender.

Net Operating Income

NOI of our wellness infrastructure operating properties is derived as follows and is reconciled to the most directly comparable GAAP measure in " —Non-GAAP Supplemental Financial Measures.

Three Months Ended March 31,

(In thousands) 2021 2020

Total revenues $ 88,666 $ 139,182

Straight-line rent and amortization of above- and below-market lease intangibles and ground lease ROU assets 24,571 (3,968)

Interest income (53) (25)

Property operating expenses (52,400) (66,567)

NOI—Wellness Infrastructure $ 60,784 $ 68,622

NOI by type of wellness infrastructure properties is as follows:

Three Months Ended March 31, Change

($ in thousands) 2021 2020 $

Senior housing—operating $ 8,654 16,853 $ (8,199) (48.7) %

Medical office buildings 13,574 12,991 583 4.5 %

Senior housing 14,066 14,304 (238) (1.7) %

Skilled nursing facilities 22,037 22,523 (486) (2.2) %

Hospitals 2,453 1,951 502 25.7 %

NOI—Wellness Infrastructure $ 60,784 $ 68,622 (7,838) (11.4) %

NOI decreased $7.8 million, of which $4.6 million was attributed to the conveyance of 36 properties in a senior housing operating portfolio to the lender in August 2020, and sales of six net lease properties in 2020.

The remaining decrease in NOI is attributed primarily to the effects of COVID-19 on our senior housing operating portfolio as resident fee income decreased due to a decline in occupancy while incremental operating costs were incurred, partially offset by government stimulus funding, as discussed further below.

Effects of COVID-19 on our Wellness Infrastructure Segment

Although there are some indications that widespread vaccine deployment has eased some of the effects of COVID-19, our first priority continues to be the health and safety of the residents and staff at our communities.

We remain focused on supporting our operating partners during this challenging time.

Concurrently, we are actively managing capital needs and liquidity to mitigate the financial impact of COVID-19 on our wellness infrastructure business.

At this time, we understand from our operators and managers that significant vaccine deployment has begun to mitigate the number of confirmed COVID-19 cases.

Nevertheless, the incidence of confirmed cases in our portfolio correlates with vaccination rates, local prevalence, and the emergence of variants .

The COVID-19 vaccine rollout began in early January 2021.

Our operators and tenants coordinated with the respective states and administering agents to set up on-site clinics at our communities to provide the vaccine to both residents and staff.

Currently, their focus is on the coordination of vaccines for new residents and employees.

To date, the resident acceptance rate has been high.

Staff acceptance, however, has been lower than many of our operators and tenants would have liked and they have implemented programs to support improving those efforts.

The effect of COVID-19 varies by asset class in the Company's wellness infrastructure portfolio.

Specifically, efforts to address COVID-19 have in some cases forced temporary closures of medical offices, restricted the admission of new residents to senior housing facilities, especially in communities that have experienced infections, and caused incurrence of unanticipated costs and other business disruptions.

The Company is directly impacted by these factors in its RIDEA assets, and indirectly impacted in its net leased assets as these factors influence tenants’ ability to pay rent.

• In our medical office portfolio, beginning in April 2020, a number of tenants failed to make rent payments or make timely payments, and some sought more flexible payment terms or rent concessions as a result of the COVID-19 crisis.

Local governments in certain jurisdictions have implemented programs that permit or require forbearance of rent payments by tenants affected by COVID-19.

The Company agreed to provide the affected tenants with deferral of rent, generally for two to three months, with deferred rent to be repaid in monthly installments over periods of three to 18 months.

As of March 31, 2021, the increase in lease income receivable as a result of the

deferral was $0.1 million.

All lease income receivable, including straight-line rents, are subject to the Company's policy for evaluation of collectability based upon creditworthiness of the lessee.

• In our senior housing operating portfolio, statutory or self-imposed restrictions began to limit admission of new residents into our communities starting in March 2020 in an effort to contain COVID-19.

Although some restrictions have loosened, we continue to face challenges from consumer apprehension regarding congregate living, staffing challenges, and regulatory scrutiny.

There remains a period of time where restrictions on admissions continue to be imposed in communities that have experienced infections until such time that infections are no longer detected.

As a result, we still anticipate occupancy challenges until such time the rate of resident move-outs is outpaced by new resident admissions.

Although improving, there continues to be other factors impacting our operators’ ability to move in new residents, including:

health and safety concerns of prospective new residents and their loved ones;

restricted access to community dining, amenities and other lifestyle benefits;

inability to tour communities in person;

quarantine requirements upon initial move-in to a community;

and limitations on families’ ability to visit their loved ones.

• Operating costs in our senior housing operating portfolio have risen as our healthcare operators take action to protect their residents and staff, specifically higher labor costs, as well as higher usage and cost of personal protective equipment, and medical and sanitation supplies.

Since the onset of the pandemic, we have incurred $13.2 million of such incremental costs, of which $7.0 million was abated through income received from government stimulus funding under the CARES Act Provider Relief Fund.

The increased operating costs are expected to continue until there is a shift in the employment market dynamics and consumer confidence.

• Our senior housing and skilled nursing net leased portfolios have experienced similar challenges.

In addition, for our skilled nursing portfolio, the deferral of elective surgeries has also impacted occupancy.

However, we generally have continued to collect rent from our operators, in part due to the benefits of various federal relief programs.

The challenges faced by our healthcare operators and our tenants as a result of COVID-19 will continue to put pressure on future revenues and operating margins in our Wellness Infrastructure segment.

As necessary, we will engage in discussions with our lenders on the deferral of payment obligations, and/or waiver of defaults for any potential failure in the future to satisfy certain financial or other covenants.

Given the ongoing nature of the pandemic, the extent of the financial effects and how prolonged the effects will be to our wellness infrastructure business remains uncertain at this time, and largely dependent on the duration and severity of the COVID-19 crisis, vaccination rates, and the employment market..

• Operating results include unrealized fair value changes related to i) our share of investments held by the DCP funds (reflected in equity method earnings);

and ii) marketable equity securities held by consolidated funds in the digital liquid securities strategy (reflected in other gain).

Non-GAAP Supplemental Financial Measures

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Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity method investments, and equity and debt securities, as applicable.

We believe that FFO is a meaningful supplemental measure of the operating performance of our business because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation.

Because real estate values fluctuate with market conditions, management considers FFO an appropriate supplemental performance measure by excluding historical cost

depreciation, gains related to sales of previously depreciated real estate, and impairment of previously depreciated real estate which is an early recognition of loss on sale.

The following table presents a reconciliation of net income attributable to common stockholders to FFO attributable to common interests in Operating Company and common stockholders.

diminishes predictably over time, as reflected through depreciation.

Because real estate values fluctuate with market conditions, management considers FFO an appropriate supplemental performance measure by excluding historical cost depreciation, gains related to sales of previously depreciated real estate, and impairment of previously depreciated real estate which is an early recognition of loss on sale.

The following table presents a reconciliation of net income attributable to common stockholders to FFO attributable to common interests in OP and common stockholders.

Amounts in the table include our share of activity in unconsolidated ventures.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 2021 2020

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$ (141,260) $ (2,042,790) $ (406,066) $ (2,404,423)

Adjustments for FFO attributable to common interests in Operating Company and common stockholders:

Adjustments for FFO attributable to common interests in OP and common stockholders:

Net loss attributable to noncontrolling common interests in Operating Company

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(162,021) (329,601) (350,517) (411,930)

FFO attributable to common interests in Operating Company and common stockholders

$ (228,461) $ (52,705)

FFO attributable to common interests in OP and common stockholders $ 72,131 $ (986,545) $ (156,330) $ (1,039,250)

(1) The components of adjustments attributable to noncontrolling interests in investment entities for FFO are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(In thousands) 2021 2020 2021 2020

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For example, EBITDA re focuses on profitability from operations, and does not take into account financing costs, and capital expenditures needed to maintain operating real estate.

NOI for our Wellness Infrastructure segment represents total property and related income less property operating expenses, adjusted primarily for the effects of (i) straight-line rental income adjustments;

and (ii) amortization of acquired above- and below-market lease adjustments to rental income, where applicable.

We believe that NOI is a useful measure of operating performance of our wellness infrastructure portfolio as it is more closely linked to the direct results of operations at the property level.

NOI also reflects actual rents received during the period after adjusting for the effects of straight-line rents and amortization of above- and below-market leases;

therefore, a comparison of NOI across periods better reflects the trend in occupancy rates and rental rates at our properties.

NOI excludes historical cost depreciation and amortization, which are based upon different useful life estimates depending on the age of the properties, as well as adjust for the effects of real estate impairment and gains on sales of depreciated properties, which eliminate differences arising from investment and disposition decisions.

This allows for comparability of operating performance of our properties period over period and also against the results of other equity REITs in the same sector.

Additionally, by excluding corporate level expenses or benefits such as interest expense, any gain or loss on early extinguishment of debt, and income taxes, which are incurred by the parent entity and are not directly linked to the operating performance of our properties, NOI provides a measure of operating performance independent of our capital structure and indebtedness.

However, the exclusion of these items as well as others, such as capital expenditures and leasing costs, which are necessary to maintain the operating performance of our properties, and transaction costs and administrative costs, may limit the usefulness of NOI.

Reconciliation of Non-GAAP Financial Measures

The following tables present reconciliations of net loss of the Digital Operating segment to EBITDA re , and net loss of the Wellness Infrastructure segment to NOI of the operating properties in Wellness Infrastructure.

Digital Operating Wellness Infrastructure

Three Months Ended March 31, Three Months Ended March 31,

The following table presents a reconciliation of net loss to EBITDA re for the Digital Operating segment.

Three Months Ended June 30, Six Months Ended June 30,

(In thousands)

2021 2020 2021 2020

$ (62,844) $ (18,295) $ (41,210) $ (66,288)

Straight-line rent and amortization of above- and below-market lease intangibles and ground lease ROU assets — — 24,571 (3,968)

Interest income

— — (999) 100

Fee income — — (2,769) (4,431)

Digital Operating

$ (10,850) $ (21,262) $ (75,110) $ (39,677)

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29,272 8,170 60,404 17,572

Transaction-related, investment and servicing costs — — 2,163 2,913

Depreciation and amortization

126,227 28,571 248,448 58,602

Impairment loss

— — 15,232 48,532

Compensation and administrative expense

— — 3,913 5,205

Other (gain) loss, net

3 — (657) 6,467

Income tax (benefit) expense

(66,788) (2,673) (79,056) (8,403)

EBITDA re / NOI

$ 77,861 $ 12,806 $ 154,686 $ 28,094

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We believe that our capital resources are sufficient to meet our short-term and long-term capital requirements.

As of March 31, 2021, our liquidity position was $667 million, composed of corporate cash on hand and availability under our corporate credit facility.

In addition to our cash balance at June 30, 2021, our expected liquidity position is $780 million, including net proceeds from issuance of our Class A-2 Notes in July 2021 and full availability under our VFN Notes, after the repayment of our corporate credit facility in July 2021 and the upcoming redemption of our Series G preferred equity in August 2021.

We regularly evaluate our liquidity position, debt obligations, and anticipated cash needs to fund our operating and investing activities, based upon our projected financial and operating performance, and investment opportunities as we divest non-digital assets and complete our digital transformation.

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Stabilizing our capital structure and liquidity in 2020 has put us in a stronger position to execute our digital transformation.

Recent Developments

Securitized Financing Facility

In July 2021, we replaced our corporate credit facility with the issuance of $500 million aggregate principal amount of Series 2021-1 Notes, composed of:

(i) $300 million 3.933% Class A-2 Notes;

and (ii) up to $200 million VFN Notes which allow for borrowings on a revolving basis.

• These Series 2021-1 Notes provide a lower cost of capital, extend our revolving credit maturity to 2026 from 2022, and removes certain restrictions under our previous corporate credit facility around dividend payments and stock repurchases.

• We expect to use net proceeds from the securitized financing facility for acquisition of digital infrastructure investments, funding of commitments to sponsored funds, redemption or repayment of other higher cost corporate securities, and/or general corporate purposes.

Liquidity Needs and Sources of Liquidity

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• cash on hand;

• our corporate revolving credit facility;

• our corporate securitization financing facility;

• cash flow generated from our investments, both from operations and return of capital;

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Investment Commitments

As of March 31, 2021, we have $170 million of unfunded capital commitments to our DCP I and DCP II funds, after assumption by Wafra of $60 million of our DCP I commitments.

Separately, Wafra has also acquired a participation interest and is responsible for $17 million of our approximately $50 million remaining unfunded commitments to DCP I.

We expect to fund our remaining investment commitments through cash on hand and/or proceeds from future asset monetization.

As of June 30, 2021, we have $128 million of unfunded commitments to the DCP funds, of which Wafra has acquired a participation interest and is responsible for $13 million of our unfunded commitments to DCP I.

This excludes $60 million of our DCP I commitments that has been separately assumed by Wafra.

We expect to fund our remaining fund commitments through cash on hand and/or proceeds from future asset monetization.

Lease Obligations

At March 31, 2021, we have $146.8 million and $321.4 million of finance and operating lease obligations, respectively, that were assumed through acquisitions, primarily leasehold data centers and to a lesser extent, ground leases on certain investment properties, and $42.2 million of operating lease obligations on corporate offices.

At June 30, 2021, we have $145.2 million and $323.3 million of finance and operating lease obligations, respectively, that were assumed through acquisitions, primarily leasehold data centers, and $39.9 million of operating lease obligations on corporate offices.

These amounts represent fixed lease payments on an undiscounted basis, excluding any contingent or other variable lease payments, and factor in lease renewal or termination options only if it is reasonably certain that such options would be exercised.

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These lease obligations will be funded through operating cash generated by the investment properties and corporate operating cash, respectively.

Our lease obligations, including future fixed lease payments.

federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its net taxable income.

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Common Stock —The Company suspended dividends on its class A common stock beginning with the second quarter of 2020.

Under the terms of the Company's amended credit facility, the Company is restricted from paying common dividends other than to maintain the Company’s status as a REIT or to reduce income tax payments.

The Company will continue to monitor its financial performance and liquidity position, and as economic conditions improve, the Company will reevaluate its dividend policy in consultation with its revolver lending group.

Preferred Stock— At March 31, 2021, the Company's outstanding preferred stock, totaling $1.03 billion in liquidation preference, bears a weighted average dividend rate of 7.165% per annum, with aggregate cash distributions of $18.5 million per quarter.

Payment of common dividends was previously subject to certain restrictions under the terms of the corporate credit facility, which was terminated in July 2021.

The Company continues to monitor its financial performance and liquidity position, and as economic conditions improve, the Company will reevaluate its dividend policy.

Preferred Stock— At June 30, 2021, the Company's outstanding preferred stock, totaling $1.03 billion in liquidation preference, bears a weighted average dividend rate of 7.165% per annum, with aggregate cash distributions of $18.5 million per quarter.

In July 2021, we issued notices of redemption for all of our outstanding 7.5% Series G preferred stock with total liquidation value of $86.25 million, to be settled in August 2021 using proceeds from our securitized financing facility, which will lower our cost of corporate debt by 350 basis points.

Sources of Liquidity

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Our investments generate cash, either from operations or as a return of our invested capital.

We primarily generate revenue from net operating income of our real estate properties, and expect such earnings to be increasingly sourced from our Digital Operating segment as we complete our digital transformation.

We primarily generate revenue from net operating income of our real estate properties, and expect such earnings to be increasingly sourced

from our Digital Operating segment as we complete our digital transformation.

We also generate interest income from commercial real estate related loans and securities as well as receive periodic distributions from our equity investments, including our GP co-investments.

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Summary of Indebtedness

Our indebtedness at March 31, 2021 is summarized as follows:

($ in thousands) Outstanding Principal Weighted Average Interest Rate (Per Annum) Weighted Average Years Remaining to Maturity (1)

Our indebtedness at June 30, 2021 is summarized as follows:

($ in thousands) Outstanding Principal Weighted Average Interest Rate

(Per Annum) Weighted Average Years Remaining to Maturity (1)

Corporate credit facility $ 45,000 4.75 % —

Convertible and exchangeable senior notes 500,000 5.45 % 3.1

Junior subordinated debt 280,117 3.06 % 15.2

Non-recourse investment level financing

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Variable rate 586,474 5.69 %

3,374,255 3.05 % 4.4

Total debt (excluding amounts related to assets held for disposition) $ 3,919,255

Debt related to assets held for disposition (to be assumed by counterparty) $ 4,285,636

Wellness Infrastructure $ 44,149

Other 884,053

(1) Calculated based upon initial maturity dates, or extended maturity dates if extension criteria are met and extension is available at the Company's option.

(2) Represents debt on a hotel portfolio that is under receivership.

Recent Developments

Corporate Credit Facility

We expect to either exercise the second extension option on our credit facility prior to maturity in July 2021, with a reduction to the current maximum principal amount of $400 million, or otherwise replace the existing credit facility.

As of the date of filing, the full $400 million was available to be drawn.

Securitized Financing Facility

As discussed above and further in Note 8 to the consolidated financial statements, we replaced our corporate credit facility with a securitized financing facility in July 2021.

Non-Recourse Investment-Level Financing

Investment level financing is non-recourse to us, and secured by the respective underlying commercial real estate or mortgage loans receivable.

Developments in 2021

• Digital Operating— In March 2021, DataBank raised $658 million of securitized notes at a blended fixed rate of 2.3%, with 5 years maturity.

The proceeds were applied principally to refinance $514 million of outstanding debt, which meaningfully reduced the overall cost of debt from 6.1% per annum as of December 31, 2020 to 2.4% per annum as of March 31, 2021 and extended debt maturities at DataBank.

• Hotels— Upon closing of the sale of our hotel assets in March 2021, $2.7 billion of the underlying debt was assumed by the acquirer, which resulted in a significant deleveraging of our balance sheet.

• Hotels— Upon closing of the sale of our hotel assets in March 2021, $2.7 billion of the underlying debt (previously classified as held for disposition) was assumed by the acquirer, which resulted in a significant deleveraging of our balance sheet.

Public Offerings

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The following table summarizes the activities from our statements of cash flows.

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2021 2020

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Cash inflows from operating activities are generated primarily through property operating income from our real estate investments, interest received from our loans and securities portfolio, distributions of earnings received from equity investments, and fee income from our investment management business.

This is partially offset by payment of operating expenses supporting our various lines of business, including property management and operations, loan servicing and workout of loans in default, investment transaction costs, as well as compensation and general administrative costs.

Our operating activities resulted in net cash outflows of $23.9 million in 2021 and $59.7 million in 2020.

This is partially offset by payment of operating expenses, including property management and operations, loan servicing and workout of loans in default, investment transaction costs, as well as compensation and general administrative costs.

Our operating activities generated net cash inflows of $104.9 million in 2021 and $42.3 million in 2020.

Notable items affecting operating cash flows included the following:

• in 2021, contribution of operating cash flows from our Digital Operating segment, specifically Vantage SDC acquired in July 2020 and zColo acquired in December 2020, partially offset by significant severance payments;

• in 2020, payment of $39.9 million of accrued carried interest compensation in connection with carried interest realized from the sale of our light industrial portfolio in December 2019 .

• In 2021, the higher operating cash flows were driven by receipt of a $102.3 million one-time payment in connection with termination of the BRSP management agreement.

Additionally, net operating cash flows were also contributed by our Digital Operating segment, specifically Vantage SDC acquired in July 2020 and zColo acquired in December 2020 and February 2021.

These cash inflows were partially offset by severance payments in the first quarter of 2021.

• In 2020, operating cash inflows were lower and included $39.9 million paid in the first quarter of 2020 as carried interest compensation in connection with carried interest realized from the sale of our light industrial portfolio in December 2019 .

Additionally, operating cash flows were negatively affected by the fallout from COVID-19 in the second quarter of 2020, particularly in our hospitality and healthcare business.

Investing Activities

Investing activities include primarily cash outlays for acquisition of real estate, disbursements on new and/or existing loans, and contributions to unconsolidated ventures, which are partially offset by repayments and sales of loans receivable, distributions of capital received from unconsolidated ventures, and proceeds from sale of real estate and equity investments.

Our investing activities resulted in net cash outflows of $7.9 million in 2021 compared to net cash inflows of $166.9 million in 2020.

• Equity investments —In 2021, we recorded net cash outflows of $25.0 million from equity investments, largely from draws on ADC loans that are accounted for as equity method investments.

In contrast, investing cash inflows in 2020 was driven by $133.6 million generated from equity investments, which was attributed primarily to $179.1 million of net proceeds received from sale of our investment in RXR Realty, partially offset by additional draws on ADC loans.

• Real estate investments —2021 saw net cash outflows of $9.2 million, with proceeds from sales of various European properties and our hotel business more than offset by capital expenditures.

In 2020, real estate activities generated net cash inflows of $48.5 million with relatively higher proceeds from sale and no new acquisitions, coupled with lower capital expenditures on a smaller digital real estate portfolio.

• Debt investments —Our loan and securities portfolio generated net cash outflows of $4.5 million in 2021, largely from a $9.7 million acquisition of additional N-Star CDOs by our Wellness Infrastructure segment at a discount, and partially offset by repayments exceeding disbursements on our loan portfolio.

In 2020, the $13.1 million net cash outflow reflects activities in our loan portfolio, which partially offset the net cash inflows from equity investments and real estate.

Our investing activities resulted in net cash inflows of $408.6 million in 2021 and $114.6 million in 2020.

• Debt investments —Investing cash inflows in 2021 included $320.9 million from our debt investments, attributed to loan repayments, in particular a $305.0 million repayment on two loans in our Irish loan portfolio, partially offset by a loan acquired and warehoused for a future digital credit vehicle, other loan disbursements and acquisition of additional N-Star CDOs at a discount by our Wellness Infrastructure segment.

In comparison, in 2020, loan disbursements exceeded repayments, resulting in net cash outflows of $116.8 million, which partially offset net cash inflows from equity investments.

• Real estate investments —2021 also saw net cash inflows of $176.8 million from sales of various properties in Europe, in our Wellness Infrastructure segment and our hotel business, which more than offset capital expenditures in our digital real estate portfolio.

In 2020, real estate activities generated much lower net cash inflows of $38.1 million from sales, net of acquisitions, coupled with lower capital expenditures on a smaller digital real estate portfolio.

• Equity investments —In 2021, net cash inflows from our debt and real estate investments were partially offset by net cash outflows of $120.7 million in connection with our equity investments.

This can be attributed largely to funding our digital fund commitments and draws on acquisition, development and construction ("ADC") loans that are accounted for as equity method investments, as well as the acquisition and sale of marketable equity securities by consolidated funds in our digital liquid securities strategy.

In contrast, investing cash inflows in 2020 was driven by $203.7 million generated from equity investments, attributed primarily to $179.1 million of net proceeds received from sale of our investment in RXR Realty and $87.4 million from recapitalization of our joint venture investment in Albertsons, both of which were partially offset by additional draws on ADC loans.

Financing Activities

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We also draw upon our corporate credit facility to finance our investing and operating activities, as well as have the ability to raise capital in the public markets through issuances of preferred stock, common stock and senior notes.

Accordingly, we incur cash outlays for payments on our investment-level and corporate debt, dividends to our preferred stockholders and common stockholders (temporarily suspended), as well as distributions to our noncontrolling interests.

Financing activities generated net cash inflows of $99.2 million in 2021 and $4.9 million in 2020.

• The higher financing net cash inflows in 2021 were driven by $91.0 million of net contributions from noncontrolling interests.

This was composed largely of a syndication of our interest to a new third party investor in our zColo investment vehicle and assumption of a portion of our commitments to DCP I by Wafra.

While there were net borrowings from our secured mortgage debt during the period, the cash inflow was offset by a $31.5 million repayment of our remaining convertible senior notes at maturity.

We also had lower dividend payments of $18.5 million to preferred stockholders in 2021, as common dividends were suspended beginning with the second quarter of 2020.

• In 2020, while borrowings exceeded debt repayments by $496.2 million, primarily due to a $600 million draw on our corporate credit facility, we also settled the redemption of our Series B and E preferred stock for $402.9 million in January 2020 using proceeds from the sale of our light industrial portfolio in December 2019.

Additionally, dividend payments were higher, totaling $77.4 million as it included both preferred and common stock.

Accordingly, we incur cash outlays for payments on our investment-level and corporate debt, dividends to our preferred stockholders and common stockholders (common dividends temporarily suspended), as well as distributions to noncontrolling interests in our investments.

Financing activities generated net cash outflows of $308.7 million in 2021 and $329.5 million in 2020.

• In 2021, financing net cash outflows were driven by $360.9 million of debt repayments exceeding borrowings, primarily repayment of debt financing real estate and loans that were sold or resolved during the year.

The net cash outflow from debt financing was partially offset by $106.2 million of net contributions from noncontrolling interests.

This was composed largely of a syndication of our interest to a new third party investor in our zColo investment vehicle, assumption of a portion of our commitments to DCP I by Wafra, and additional consideration paid by Wafra for its investment in our digital investment management business.

We also had lower dividend payments of $37.0 million to preferred stockholders, as common dividends were suspended beginning with the second quarter of 2020.

• The financing net cash outflow in 2020 was driven by a $402.9 million settlement in January 2020 of the redemption of our Series B and E preferred stock using proceeds from the sale of our light industrial portfolio in December 2019.

This was partially offset by $224.8 million of net cash inflow from debt financing as borrowings exceeded repayments, attributed largely to a net draw of $400 million on our corporate credit facility.

Additionally, dividend payments were higher at $148.8 million as it included common stock for the first quarter of 2020 in addition to preferred stock.

Guarantees and Off-Balance Sheet Arrangements

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financial data including historical and budgeted financial statements, tenant or customer quality, lease terms and structure, renewal probability, capital expenditure plans, sales pipeline , technical/energy requirements and supply, local and macroeconomic market conditions, ESG, leverage and comparable transactions, as applicable.

For debt investments, we also analyze metrics such as loan-to-collateral value ratios, debt service coverage ratios, debt yields, sponsor credit ratings and performance history.

For debt investments,

we also analyze metrics such as loan-to-collateral value ratios, debt service coverage ratios, debt yields, sponsor credit ratings and performance history.

In addition to evaluating the merits of any particular proposed investment, we evaluate the diversification of our or a particular managed investment vehicle’s portfolio of assets, as the case may be.

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Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment and that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues

and expenses during the reporting period.

Our critical accounting policies and estimates are integral to understanding and evaluating our reported financial results as they require subjective or complex management judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain and unpredictable.

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We believe that all of the decisions and assessments applied were reasonable at the time made, based upon information available to us at that time.

Due to the inherently judgmental nature of the various projections and assumptions used, unpredictability of economic and market conditions, uncertainty as to the timing and the manner by which the assets in our Other segment would be monetized and the recoverable values upon monetization, and uncertainties over the duration and severity of the resulting economic effects of COVID-19, actual results may differ from estimates, and changes in estimates and assumptions could have a material effect on our financial statements in the future.

Due to the inherently judgmental nature of the various projections and assumptions used, unpredictability of economic and market conditions, uncertainty as to the timing and the manner by which the assets in our Wellness Infrastructure and Other segments would be monetized and the recoverable values upon monetization, and uncertainties over the duration and severity of the resulting economic effects of COVID-19, actual results may differ from estimates, and changes in estimates and assumptions could have a material effect on our financial statements in the future.

Recent Accounting Updates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis