What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-05-09 compared with 2021-11-09 · 278 added, 399 removed, 242 unchanged (74% of the section changed)

1 unchanged sentence

The following discussion should be read in conjunction with our unaudited consolidated financial statements and accompanying notes thereto, which are included in Item 1 of this Quarterly Report, as well as information contained in our Annual Report on Form 10-K for the year ended December 31, 2021, which is accessible on the SEC's website at www.sec.gov .

In this Quarterly Report, unless specifically stated otherwise or the context indicates otherwise, the terms " the "Company," "we," "our" and "us" refer to DigitalBridge Group, Inc.

and its consolidated subsidiaries.

References to the “Operating Partnership,” our “Operating Company” and the “OP” refer to DigitalBridge Operating Company, LLC, a

Delaware limited liability company and the operating company of the Company, and its consolidated subsidiaries.

Our Organization

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

We are a leading global-scale digital infrastructure firm that invests, directly and through our portfolio companies, across the digital ecosystem, including data centers, cell towers, fiber networks, small cells, and edge infrastructure.

At March 31, 2022, we have $47 billion of assets under management, comprising digital infrastructure assets managed on behalf of our limited partners and our shareholders.

We are headquartered in Boca Raton, Florida, with key offices in New York, Los Angeles, London and Singapore, and have approximately 230 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.

federal income tax purposes .

We conduct our operations as a REIT, and generally are not subject to U.S.

federal income taxes on our taxable income to the extent that we annually distribute all of our taxable income to stockholders and maintain qualification as a REIT, although we are subject to U.S.

federal income tax on income earned through our taxable subsidiaries.

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 subsidiary, DigitalBridge Operating Company, LLC (the "Operating Company" or the "OP").

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

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 September 30, 2021, the Company has $49 billion of assets under management ("AUM"), including both third party capital and the Company's balance sheet, of which $38 billion is dedicated to digital real estate and infrastructure.

We conduct substantially all of our activities and hold substantially all of our assets and liabilities through the OP, our operating subsidiary.

At March 31, 2022, we owned 92% of the OP, as its sole managing member.

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

Transition to C-Corporation

Prior to January 1, 2022, the Company elected to be taxed as a real estate investment trust ("REIT") for U.S.

federal income tax purposes, which generally provided that the Company was not subject to U.S.

federal and state income taxes on its taxable income to the extent that it annually distributed such income to stockholders.

The income earned through the Company’s underlying taxable REIT subsidiaries ("TRS"), primarily the investment management earnings, however, was subject to U.S.

federal and state income tax.

In the first quarter of 2022, the Company completed the disposition of its non-digital assets, as described below, and in connection with its digital transformation, has recorded significant growth in its Digital Investment Management ("Digital IM") business.

Due to the pace of growth of the Company's Digital IM business and other strategic transactions that the Company may pursue, the Company’s Board of Directors and management agreed to discontinue actions necessary to maintain qualification as a REIT for 2022.

Commencing with the taxable year ending December 31, 2022, all of the Company’s taxable income, except for income generated by subsidiaries that have elected or anticipate electing REIT status, is subject to U.S.

federal and state income tax at the applicable corporate tax rate.

Any dividends paid to stockholders will no longer be tax deductible.

The Company is also no longer subject to the REIT requirement for distributions to stockholders when the Company has taxable income.

The Company anticipates that operating as a C-Corporation will provide the Company with flexibility to execute various strategic initiatives without the constraints of complying with REIT requirements.

This includes the intended deployment of capital to redeem third party interest in the Company’s Digital IM business, retaining and reinvesting earnings in other new initiatives in the Digital IM business, and warehousing digital infrastructure investments in the future that may be non-REIT qualified assets.

The Company’s transition to a C-Corporation is not expected to result in significant incremental current income tax expense in the near term due to the availability of significant capital loss and net operating loss (“NOL”) carry forwards.

As of March 31, 2022, there was no material net tax effect on the Company’s consolidated statement of operations as a result of the Company's transition to a C-Corporation.

At March 31, 2022, the Company has $46.6 billion of assets under management ("AUM"), including both third party capital and the Company's balance sheet.

The Company conducts its business through two 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.

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 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.

Earnings from our Digital IM segment are generally attributed 31.5% to Wafra, a significant investor in our Digital IM business effective July 2020.

• Digital Investment Management ("Digital IM")— This business represents a leading global digital infrastructure investment platform, managing capital on behalf of a diverse base of global investors.

The Company's flagship opportunistic strategy is conducted through its Digital Bridge Partners platform ("DBP") and separately capitalized vehicles, while other strategies, including digital credit, ventures 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 incentive fees and carried interest based upon the performance of such investment vehicles, subject to achievement of minimum return hurdles.

Earnings from our Digital IM segment are attributed 31.5% to Wafra, a significant investor in our Digital IM business, until such time Wafra's interest is redeemed by the Company (as discussed further in Note 10 to the consolidated financial statements).

• Digital Operating— This business is composed of balance sheet equity interests in digital infrastructure and real estate operating companies, which generally earn rental income from providing use of digital asset space and/or capacity through leases, services and other agreements.

The Company currently owns interests in two companies:

DataBank, including zColo, an edge colocation data center business (20% DBRG ownership);

and Vantage SDC, a stabilized hyperscale data center business (13% DBRG ownership).

DataBank, including zColo, an edge colocation data center business (DBRG ownership at 21.8% as of March 31, 2022, 20% as of December 31, 2021);

and Vantage SDC, a stabilized hyperscale data center business (DBRG ownership at 13%).

Both DataBank and Vantage are also portfolio companies managed under Digital IM for the equity interests owned by third party capital.

Digital Transformation

Following the successful exit of its hotel business in March 2021, the Company is now in the final stages of monetizing the remainder of its non-digital business to complete its digital transformation.

This encompasses 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 previously resided in the Other segment.

The Company's completed disposition of its hotel business, and pending disposition of its OED investments, Other IM business and Wellness Infrastructure segment each represents a strategic shift in the Company's business that has or is expected to have a significant effect on the Company’s operations and financial results, and accordingly, each has met the criteria as discontinued operations.

In February 2022, the Company completed its digital transformation that commenced in the second quarter of 2020.

The Company's completed disposition of its hotel business (March 2021), Other Equity and Debt ("OED") investments and non-digital investment management ("Other IM") business (December 2021), and its Wellness Infrastructure business (February 2022) each represented a strategic shift in the Company's business that had a significant effect on the Company’s operations and financial results, and accordingly, had 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 discontinued operations on the consolidated statements of operations (refer to Item 1.

"Financial Statements" of this Quarterly Report).

Accelerating the Monetization of Wellness Infrastructure, OED and Other IM

In September 2021 and June 2021, the Company entered into separate definitive agreements with third parties to sell (a) its Wellness Infrastructure business, that, along with other non-core assets, are held by the Company's subsidiary, NRF Holdco, LLC ("NRF Holdco");

and (b) a substantial majority of its OED investments and Other IM business.

In assessing the recovery of assets classified as held for disposition and discontinued operations, in particular considering the sales price for the Wellness Infrastructure assets, and for the OED investments and Other IM business, the Company wrote down the carrying value of these assets by $646 million in aggregate, of which $294 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).

Wellness Infrastructure

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 and its subsidiaries.

The sales price for 100% of the equity of NRF Holdco is $281.0 million, composed of $190.7 million in cash and $90.3 million unsecured promissory note (the "Seller Note").

The sale includes the acquirer's assumption of $2.6 billion of consolidated investment level debt, for which we own between 69.6% and 81.3% of the various healthcare portfolios, and $293.7 million of debt at NRF Holdco.

The sales price will be adjusted for certain amounts contributed to, or distributed from, NRF Holdco prior to closing of the sale, with any adjustment to be applied pro rata to the cash portion and the Seller Note.

The Seller Note matures five years from closing of the sale, accruing interest at a per annum rate of 6.5% in the period prior to two years from the closing date and 8.5% thereafter.

Consummation of the sale is subject to customary closing conditions, with no financing conditions, and is expected to close in the first half of 2022.

There can be no assurance that the sale will close in the timeframe contemplated or on the terms anticipated, if at all.

OED and Other IM

The OED investments and Other IM business that are under contract for sale are 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 third party consents and regulatory approvals, with no financing conditions.

In October 2021, a joint venture partner applied in Ireland for an injunction to delay the closing and a temporary injunction was granted pending a hearing in November 2021.

The outcome of the hearing may delay the closing and/or impact the Company's ability to close the sale.

There can be no assurance that the sale will close in the timeframe contemplated or on the terms anticipated, if at all.

Internalization of BrightSpire Capital, Inc.

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.

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 BRSP's 2023 annual meeting.

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

The Company is prohibited from acquiring additional BRSP shares and currently holds a 29% equity ownership in BRSP following the sale of a portion of its BRSP shares in August 2021.

Exit of the Hotel Business

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 100% of the equity in its hotel subsidiaries which held five of the six hotel portfolios in the Hospitality segment and its 55.6% equity interest in a portfolio of limited service hotels in the Other segment that was previously acquired through a consensual foreclosure (the "THL Hotel Portfolio"), composed of 197 hotel properties in aggregate.

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.

The aggregate selling price of $67.5 million represented a transaction value of approximately $2.8 billion, with the acquirer's assumption of $2.7 billion of consolidated investment-level debt.

In September 2021, the remaining interests in the THL Hotel Portfolio held by investment vehicles managed by the Company were sold to the same buyer.

Also in September 2021, the remaining portfolio in the Hospitality segment that was in receivership was sold by the lender for no proceeds to the Company.

Significant Developments

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

• Securitized Financing Facility— 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.

Proceeds from issuance of the Class A-2 Notes of $285 million, net of offering costs and $5.4 million of interest reserve deposit, 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.

• Preferred Stock— We redeemed all of our outstanding 7.5% Series G preferred stock in August 2021 for $86.8 million using proceeds from our securitized financing facility, which lowered our cost of corporate debt by approximately 350 basis points.

Additionally, we issued notices of redemption in October 2021 for 2.6 million shares or 22% of our 7.125% Series H preferred stock with redemption to be settled in November 2021 for $64.4 million.

Redemption amounts include accrued and unpaid dividends through the redemption date.

• Senior Notes— In October 2021, we exchanged approximately $44 million of the outstanding principal of the 5.75% exchangeable notes into approximately 20 million shares of class A common stock, which will result in future interest savings.

The following summarizes significant developments that affected our business and results of operations in 2022 through the date of this filing.

Transition To C-Corporation

• We have discontinued actions necessary to maintain qualification as a REIT for 2022, and will be taxed as a C-Corporation.

Absent REIT constraints, we will have more flexibility to execute various strategic initiatives, including the proposed Wafra transaction, as discussed below.

Incremental tax burden is not expected to be significant in the near term given the availability of significant capital loss and NOL carry forwards and that our Digital IM business was previously taxable under a TRS.

• We continue to reduce higher cost corporate indebtedness through early exchange of an additional $60 million of senior notes in March 2022 for shares of our class A common stock and cash, resulting in 74% of the original issuance exchanged to-date, which will generate future interest savings.

• Effective April 2022, the availability under our VFN was increased by $100 million to $300 million.

Digital Business

• In February 2021, we announced the first closing of DCP II, our second flagship digital infrastructure fund.

As of November 4, 2021, DCP II has total commitments of $8.1 billion (inclusive of $120 million of our commitments as limited partner and general partner).

• In April 2022, we agreed to redeem Wafra's 31.5% interest in our Digital IM business.

With limited exceptions, Wafra will also sell or forgo its carried interest entitlement from future, but not from existing, investment management products.

Consideration for the redemption consists of:

(i) upfront amount of $390 million in cash (subject to certain net cash and closing adjustments) to be paid using cash on hand and issuance of 57,741,599 shares of our Class A common stock;

and (ii) contingent amount between $90 million and up to $125 million based upon achievement of new capital formation targets that may become payable in March 2023 and March 2024, with up to 50% payable in shares of our Class A common stock at our election.

The transaction will be accretive to our shareholders through full ownership of our high growth and high margin Digital IM platform.

All net cash flows from our fee business will immediately accrue to us at 100% and similarly, with net carried interest from new investment products in the future.

The transaction is expected to close in May 2022.

Refer to further descriptions of the transaction in Note 10 to the consolidated financial statements.

• In April 2022, we agreed to acquire AMP Capital's global infrastructure equity investment management business, composed of its management platform, fund sponsor investments, and retained performance fees.

Consideration for the acquisition consists of:

(i) an upfront amount of A$458 million (approximately $327 million), subject to certain customary adjustments;

and (ii) a contingent amount of up to A$180 million (approximately $129 million), primarily based upon future fundraising for the third and fourth flagship funds under the Global Infrastructure Fund ("GIF") series.

The transaction is expected to close in the second half of 2022.

AMP Capital’s global infrastructure equity platform will be a strategic fit alongside our value-add equity franchise, enhancing our capabilities in the mid-market segment.

The acquisition will add $5.5 billion in fee earning assets under management, comprising $3.4 billion GIF II and $1.4 billion GIF I investment funds, and co-investment vehicles, and is expected to be immediately accretive to our fee related earnings.

Digital Operating

• 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 $67 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 an additional data center and build-out of expansion capacity within the Vantage SDC portfolio, including lease-up of the expanded capacity and existing inventory, for aggregate payments of $478 million, funded primarily through borrowings by Vantage SDC.

• In March 2021 and October 2021, DataBank raised $658 million and $332 million of 5-year securitized notes at blended fixed rates of 2.32% and 2.43% per annum, respectively.

Proceeds from the March securitization were applied principally to refinance $514 million of outstanding debt, which meaningfully reduced DataBank's overall cost of debt and extended its debt maturities, while the October proceeds will be used to repay borrowings on its credit facility and finance future acquisitions.

• In November 2021, Vantage SDC issued $530 million of 5-year securitized notes at a blended per annum fixed rate of 2.17%.

Proceeds will be applied to replace its current bridge financing and fund capital expenditures on the September 2021 add-on acquisition as well as to fund payments for future build-out and lease-up of expansion capacity.

◦ DCP II, together with other third party co-invest capital, acquired a digital communications infrastructure business in October 2021.

No capital was drawn from DBRG's balance sheet to bridge the financing for this acquisition and DBRG's previous commitment to a preferred equity investment has been cancelled.

Non-Digital Assets

• 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 September 2021 and June 2021, we entered into separate definitive agreements to sell (i) NRF Holdco, which holds our Wellness Infrastructure business, for $281 million;

and (ii) a substantial majority of our OED investments and Other IM business for approximately $535 million.

• Based upon recoverable values, in particular, the sales price for the Wellness Infrastructure assets, OED investments and Other IM business, the carrying values of these assets were written down in for an aggregate $646 million, of which $294 million was attributable to the OP, included in discontinued operations.

• 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 consolidated investment-level debt.

The remaining one hotel portfolio that was in receivership was sold by the lender in September 2021 for no proceeds to us.

• In August 2021, we sold 9.5 million BRSP shares for net proceeds of approximately $82 million.

• In April 2021, we received proceeds from the 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.

Our share of excess net proceeds was $103.5 million.

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 disposition and associated liabilities (excluding our interest in BRSP other than BRSP shares and units held by NRF Holdco) 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).

• In March 2022, DataBank acquired four colocation data centers in Houston, Texas for $670 million, funded by a combination of $262.5 million of debt and $407.5 million of equity, of which the Company's share was $87.0 million.

The new facilities added approximately 308,000 built square feet and 42.5 MW of installed critical IT load, as well as a roster of blue-chip customers.

Additionally, one of the facilities is the region’s primary interconnection point that is strategically positioned with access to significant and redundant utility power feeds and access to fast and reliable telecommunications networks.

• In January 2022, we acquired additional interest in DataBank from a selling investor for $32.0 million

• The above transactions increased our ownership in DataBank from 20% to 21.8%.

• In March 2022, we agreed to acquire the mobile telecommunications tower business (“TowerCo”) of Telenet Group Holding NV (Euronext Brussels:

TNET, "Telenet") for approximately €745 million (or approximately $820 million ) , to be funded through a combination of debt and equity, including our €458 million (approximately $504 million) equity commitment.

The TowerCo investment is intended to thereafter be transferred to a new sponsored investment vehicle as we continue to develop new investment strategies in our Digital IM business.

Telenet’s tower business is a high-quality digital infrastructure asset with stable, predictable cashflows, high cash conversion, and long-term contracts.

We will acquire full ownership of Telenet’s passive infrastructure and tower assets, including TowerCo’s nationwide footprint of 3,322 sites in Belgium.

Telenet will enter into a long-term Master Lease Agreement (“MLA”) with TowerCo, which includes an initial period of 15 years and two renewals of 10 years each.

The MLA also includes a build-to-suit commitment to deploy a minimum of 475 additional new sites with Telenet acting as subcontractor to TowerCo, and provides for payment for such services to Telenet over time.

The transaction is expected to close in the second quarter of 2022.

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

2 unchanged sentences

FEEUM (2)(3) (In billions)

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

Type Products Description March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

Third Party Managed Capital

Institutional Funds Digital Colony Partners opportunistic strategy Earns management fees and potential for carried interest or incentive fees $ 14.2 $ 9.3 $ 10.2 $ 7.0

Institutional Funds Digital Bridge Partners opportunistic strategy Earns management fees and potential for carried interest or incentive fees $ 16.5 $ 16.6 $ 11.0 $ 11.2

Liquid securities strategy 1.0 0.8 1.0 0.8

5 unchanged sentences

Other 0.6 0.5 NA NA

Total Digital 37.8 30.0 16.5 12.8

Non-Digital (4)

Third Party Managed Capital 8.2 13.4 4.4 7.2

Balance Sheet Capital (3)

3.4 8.6 NA NA

Total Company $ 49.4 $ 52.0 $ 20.9 $ 20.0

$ 46.6 $ 45.3 $ 18.8 $ 18.3

(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;

7 unchanged sentences

(3) Represents the Company's investment interests on its balance sheet, excluding the portion held by noncontrolling interests in investment entities, that is managed by the Company on behalf of its stockholders, therefore is not fee-bearing.

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) Represents predominantly assets held for disposition and discontinued operations.

Total FEEUM increased $0.9 billion from December 31, 2020 to $20.9 billion at September 30, 2021.

• Digital FEEUM increased $3.7 billion to $16.5 billion, attributable primarily to the successful fundraising for DCP II and to a lesser extent, additional capital from co-investment vehicles, both of which were partially offset by a lower DCP I FEEUM as the fee base of DCP I changed from committed capital to net capital contributions following the closing of DCP II.

In the nine months ended September 30, 2021, DCP II has raised $2.7 billion of capital, with an additional $1.3 billion through November 4, 2021.

• Non-digital FEEUM decreased $2.8 billion, 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.

Sales and fair value decreases in investments held by our distressed credit funds further contributed to a lower non-digital FEEUM.

Our management contract with these funds and with NorthStar Healthcare will be sold in conjunction with the disposition of our Other IM business and of NRF Holdco, respectively.

Total AUM decreased $2.6 billion from December 31, 2020 to $49.4 billion at September 30, 2021.

• This was driven by a significant decrease in our non-digital balance sheet capital in 2021, attributed to the sale of our hospitality business, along with sales and fair value decreases in OED investments.

Upon completing the pending disposition of a substantial majority of our OED investments and of NRF Holdco, we expect our balance sheet capital to be fully rotated to digital by mid-2022.

• In 2021, we have made significant progress in the digital rotation of our investment management business.

As of September 30, 2021, Digital AUM at $36.3 billion, following a $7.8 billion increase in 2021, represents 77% of our total AUM, up from 58% at December 31, 2020.

Balance sheet AUM reflects generally the OP's share of net book value of balance sheet assets, 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.

• FEEUM grew 3% or $0.5 billion to $18.8 billion at March 31, 2022.

• Our acquisition of AMP Capital's global infrastructure equity platform will add another $5.5 billion of FEEUM when the transaction closes in the second half of 2022.

Results of Operations

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Continuing Operations

16 unchanged sentences

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

Total revenues increased $129.2 million quarter-to-date and $448.9 million year-to-date, or over 100%.

• Digital Investment Management— Revenues from our investment management business grew 164% to $53.8 million quarter-to-date and 118% to $131.8 million year-to-date as a result of significant growth in our Digital IM FEEUM from $8.5 billion at September 30, 2020 to $16.5 billion at September 30, 2021 following successful fundraising for DCP II and co-invest vehicles, including capital raised alongside our balance sheet for new acquisitions in Digital Operating.

The third quarter of 2021 also included a catch-up of DCP II inception-to-date fee income for significant commitments that closed during the period.

• Digital Operating— 2021 includes revenues from acquisition of Vantage SDC's 12 hyperscale data centers (13% DBRG ownership) in July 2020 and zColo's 44 colocation data centers (through our subsidiary, DataBank, 20% DBRG ownership) in December 2020 and February 2021.

Total revenues increased $36.9 million or 17%.

• Digital Investment Management— Revenues from our investment management business grew 44% to $44.9 million as a result of significant growth in our FEEUM from $12.9 billion at March 31, 2021 to $18.8 billion at March 31, 2022 following the successful fundraising for DigitalBridge Partners II, LP ("DBP II") and co-invest vehicles.

DBP II had its final closing in December 2021 at $8.3 billion of total commitments, having raised $4.1 billion subsequent to the first quarter of 2021.

• Digital Operating— 2022 includes revenue from additional acquisitions, driven by the Vantage SDC portfolio, with an add-on acquisition in October 2021 and additional lease-up of expanded capacity and existing inventory throughout 2021.

• Corporate and Other— Revenues in 2022 also reflect interest income from our growing credit investments which we started actively warehousing in 2021 for future credit products.

Income (loss) from continuing operations

• Digital Investment Management— In addition to higher fee income in 2021, the third quarter of 2021 also recorded significant unrealized carried interest income, of which generally 65% is allocated to management, investment professionals and certain other employees.

• Digital Operating— Our Digital Operating segment generally records a net loss, reflecting the effects of real estate depreciation.

In year-to-date 2021, net loss in Digital Operating was reduced by 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.

• Digital Investment Management— Net loss in the first quarter of 2022 is attributed to a reversal of some of the carried interest that accrued in the fourth quarter of 2021 when fair value increases on most of the underlying fund investments was initially recognized, net of reversal of associated compensation expense (prior to attribution to noncontrolling interest).

In this case, the reversal of carried interest is a function of continuing accrual of preferred returns over time while fair value of underlying investments remain largely consistent.

Additionally, there was an unrealized loss on our interest in a managed sub-account as net asset value decreased due to mark-to-market of underlying equity securities invested in the account.

We have also continued to ramp up resources and invest in our growing Digital IM business.

• Digital Operating— Our Digital Operating segment generally records a net loss, reflecting the effects of real estate depreciation and amortization of lease intangibles.

We present our supplemental operating results measure of earnings before interest, tax, depreciation and amortization for real estate ("EBITDA re ") for Digital Operating under " —Non-GAAP Measures."

• Corporate and Other— Net losses generally reflect corporate level costs that have not been allocated to our reportable segments.

In the year-to-date period, however, the large net losses were driven by impairment of our various other equity investments, primarily BRSP in which we recorded a $254.5 million charge in June 2020.

The significantly larger net loss in 2022 was driven by a $133.2 million non-cash loss

recognized in connection with an early exchange of $60.3 million of our 5.75% exchangeable notes (refer to discussion in Note 8 to the consolidated financial statements).

Key components of revenue and income (loss) from continuing operations are discussed in more detail below.

Comparison of Three and Nine Months September 30, 2021 to Three and Nine Months September 30, 2020

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Comparison of Three Months Ended March 31, 2022 to Three Months Ended March 31, 2021

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Property operating income $ 202,511 $ 189,002 $ 13,509

8 unchanged sentences

Depreciation and amortization 128,567 139,425 (10,858)

Impairment loss — 3,832 (3,832) — 16,129 (16,129)

Compensation expense, including carried interest 45,190 78,753 (33,563)

Administrative expenses 27,885 17,796 10,089

Settlement loss — — — — 5,090 (5,090)

Total expenses 339,405 364,127 (24,722)

Other income (loss)

Other gain (loss), net 4,657 1,339 3,318 (31,734) (632) (31,102)

Equity method earnings (losses), including carried interest 65,369 23,371 41,998 111,380 (303,493) 414,873

Other loss, net (149,881) (9,350) (140,531)

Equity method losses, including carried interest (11,872) (16,639) 4,767

Loss before income taxes (243,699) (169,535) (74,164)

7 unchanged sentences

Operating Company (22,862) (27,896) 5,034

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

Net loss attributable to DigitalBridge Group, Inc.

(246,557) (246,290) (267)

Preferred stock redemption 2,865 — 2,865 2,865 — 2,865

Preferred stock dividends 15,759 18,516 (2,757)

Net income (loss) attributable to common stockholders $ 41,036 $ (205,784) 246,820 $ (365,030) $ (2,610,208) 2,245,178

Net loss attributable to common stockholders $ (262,316) $ (264,806) 2,490

Property Operating Income and Expense

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Digital Operating

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Property operating income

3 unchanged sentences

Property operating expense $ 84,003 $ 79,862 4,141

Property operating income and expense amounts are higher in 2021, which includes the operating results of zColo's 44 colocation data centers, acquired in December 2020 and February 2021, Vantage SDC's 12 hyperscale data centers, acquired in July 2020, and additional lease-up of expanded capacity and existing inventory in Vantage in 2021.

Total real estate carrying value in our Digital Operating segment stood at $4.91 billion at September 30, 2021 compared to $4.45 billion at December 31, 2020.

Our portfolio includes 68 data centers in the U.S., three in Canada, one in the U.K., and five in France.

September 30, 2021 December 31, 2020

Property operating income and expense amounts are higher in 2022, which includes operating results from additional acquisitions, primarily within the Vantage SDC portfolio, with an add-on acquisition in October 2021 and additional lease-up of expanded capacity and existing inventory throughout 2021, as well as DataBank's acquisition of four new data centers in March 2022.

Total real estate carrying value in our Digital Operating segment stood at $5.63 billion at March 31, 2022 compared to $4.45 billion at December 31, 2021.

At March 31, 2022, our portfolio includes 73 data centers in the U.S., three in Canada, one in the U.K., and five in France.

March 31, 2022 December 31, 2021

Number of data centers (1)

5 unchanged sentences

% Utilization Rate (% Leased) (2)

(1) Excludes data centers that are not held for the entire period during the most recent quarter;

in this case, one data center that was acquired during the quarter ended September 30, 2021.

On a same store basis, property operating income and expense also increased quarter-to-date and year-to-date, reflecting an increase in rentable square footage.

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

(1) Converted a leased data center to owned in the first quarter of 2022.

(2) Excludes data centers that were not held for the entire period;

in this case, four data centers that were acquired in March 2022.

On a same store basis, property operating income and expense also increased in 2022, reflecting an increase in leased square footage, driven by the lease-up of expanded capacity and existing inventory in the Vantage SDC portfolio.

Interest Income

Interest income was $1.8 million higher quarter-to-date and largely consistent in the year-to-date period.

In 2021, there was additional interest income from new loans originated or acquired that are being warehoused for future investment vehicles in our digital credit strategy.

However, for the year-to-date period, this increase was largely offset by lower interest income on available cash in 2021 as proceeds from the sale of our light industrial business in December 2019 have since been redeployed.

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Interest income was $4.3 million higher.

In 2022, there was additional interest income from new loans originated or acquired beginning the third quarter of 2021 that are being warehoused for future investment vehicles, as well as an unsecured promissory note in connection with the sale of our Wellness Infrastructure business.

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Digital Investment Management

2 unchanged sentences

Incentive fees

1,313 — 1,313 6,396 — 6,396

Other fee income

1 unchanged sentence

$ 42,837 $ 29,443 13,394

Fee income was higher by $30.3 million quarter-to-date and $65.7 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 with a change in its fee base from committed capital to net contributed capital following the closing of DCP II;

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

In particular, there was a larger contribution of fee income from DCP II in the third quarter of 2021 following the closing of $1.0 billion of commitments during this period and a catch-up of inception-to-date fee income for the new investors.

There was a marginal increase in other income quarter-to-date.

In the year-to-date period, other income decreased $4.0 million, which can be attributed primarily to lower cost reimbursements from our investment holding entities.

Fee income was higher by $13.4 million.

The increase was driven by the successful fundraising for DBP II which had a final close in December 2021 at $8.3 billion of total commitments, having raised $4.1 billion subsequent to the first quarter of 2021.

Other income increased $5.7 million, which can be attributed primarily to higher professional service fees incurred on behalf of and reimbursable by our managed investment vehicles, and dividend income received from our equity interest in a third party non-traded REIT.

Interest Expense

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Digital Investment Management $ 2,502 $ — $ 2,502

5 unchanged sentences

Digital Investment Management— This represents interest expense from our securitized financing facility beginning in July 2021 as the $300 million term loan is attributed largely to the Digital IM segment.

Digital Operating— The increase of $11.3 million quarter-to-date and $54.1 million year-to-date is attributed to interest expense incurred on debt financing the zColo portfolio, acquired in December 2020, and an additional acquisition by DataBank in the third quarter of 2021, interest expense from our securitized financing facility which is partially allocated to the Digital Operating segment, and for the year-to-date period, debt financing the Vantage SDC portfolio, acquired in July 2020.

This increase was partially offset by lower interest expense on the DataBank portfolio following its March 2021 securitization transaction which 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.

Overall, at September 30, 2021, our data center portfolio was financed by an aggregate $3.82 billion of outstanding debt principal ($3.23 billion at December 31, 2020), bearing a combined weighted average interest rate of 2.91% per annum (3.69% per annum at December 31, 2020).

Other Investment-level Debt— This represents primarily interest expense from our securitized financing facility that is partially allocated to our digital credit and digital liquid investments on the balance sheet.

Corporate-level Debt— Interest expense was $3.9 million lower quarter-to-date and $8.9 million lower year-to-date.

This can be attributed to a higher average outstanding balance in 2020 on our corporate credit facility which was terminated in July 2021, and additionally, for the year-to-date period, a proportional write-off of deferred financing costs in June 2020 to reflect a previous reduction in the corporate credit facility amount.

This decrease was partially offset by a net increase in interest expense on our senior notes, with a higher interest 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).

Digital Operating— The increase of $5.1 million is attributed to:

(i) interest expense on additional debt raised through securitization transactions by DataBank and Vantage SDC during 2021;

and (ii) interest expense on our securitized financing facility which is partially allocated to the Digital Operating segment.

Overall, at March 31, 2022, our data center portfolio was financed by an aggregate $4.48 billion of outstanding debt principal ($4.22 billion at December 31, 2021), primarily fixed rate securitized debt, bearing a combined weighted average interest rate of 2.92% per annum (2.88% per annum at December 31, 2021).

Other Investment-level Debt— This represents interest expense from:

(i) our securitized financing facility beginning in July 2021 that is partially allocated to our digital credit and digital liquid investments on the balance sheet;

and (ii) interest expense on our credit facilities financing loans that are being warehoused for future securitization vehicles.

Corporate-level Debt— Interest expense was $4.0 million lower in 2022 as we have extinguished $221 million of higher cost corporate debt since March 2021 through early exchanges of our 5.75% exchangeable notes totaling $161 million in the fourth quarter of 2021 and an additional $60 million in the first quarter of 2022.

Additionally, the first quarter of 2021 also included interest expense on our corporate credit facility that was terminated in July 2021.

Investment Expense

Investment expense was $2.8 million higher quarter-to-date and $10.8 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 end of July 2020, fees paid in 2021 for transitional services in connection with the zColo portfolio, and reimbursable due diligence costs incurred in our investment management business.

Investment expense increased $2.7 million, attributable largely to compensatory expense recognized in connection with equity awards granted to the management team of Vantage who performs the day-to-day operations of Vantage SDC.

Transaction-Related Costs

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

Transaction-related costs are generally in connection with unconsummated investments.

Depreciation and Amortization

Increase in depreciation and amortization expense is primarily related to real estate and intangible assets from acquisition of Vantage SDC in July 2020, including additional lease-up of expanded capacity and existing inventory in 2021, and zColo in December 2020.

Impairment Loss

Impairment loss in 2020 reflects:

(i) reduced cash flows from the original Vantage management contract, which was replaced by a new fee stream from third party capital that was raised in our acquisition of Vantage SDC from its existing owners;

and (ii) write down to recoverable value on the corporate aircraft prior to its sale in January 2021.

Decrease in depreciation and amortization was primarily due to accelerated amortization recognized in the first quarter of 2021 on a trade name intangible in anticipation of the Company's name change in June 2021.

In the Digital Operating segment, overall depreciation and amortization was largely consistent between the two periods as increases attributable to assets acquired throughout 2021 were mostly offset by a decrease in amortization expense on lease intangibles following the term expiration on short term leases in our co-location business in the first quarter of 2022.

Compensation Expense

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Cash compensation and benefits $ 55,811 $ 62,880 $ (7,069)

2 unchanged sentences

$ 45,190 $ 78,753 (33,563)

Total compensation expense was $50.4 million higher quarter-to-date and $102.9 million higher year-to-date, driven primarily by:

• significant severance payments, including acceleration of equity-based compensation in the first quarter of 2021;

• incentive and carried interest compensation accrued in 2021, representing a portion of incentive fees earned and unrealized carried interest from our managed accounts and sponsored investment vehicles that are shared with management and certain employees.

Unlike incentive fees 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.

Total compensation expense was $33.6 million lower, driven primarily by a reversal of carried interest compensation in the first quarter of 2022.

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.

Additionally, the first quarter of 2021 included higher severance payments, including acceleration of equity-based compensation.

Administrative Expenses

Administrative expense increased $12.4 million quarter-to-date and $18.1 million year-to-date, attributable largely to administrative costs associated with our new zColo portfolio, growth in our Digital Operating business, placement fees incurred in fundraising for DCP II, higher professional fees, and costs incurred in connection with our 2021 investor conference.

Settlement Loss

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.

Other Gain (Loss)

The large year-to-date loss in 2021 can be attributed to a write-off of an equity investment in the second quarter of 2021 that was determined to be unrecoverable.

Additionally, we recorded losses from increase in value of the Blackwells settlement liability in all periods prior to its settlement in June 2021 based upon an increase in the DBRG stock price, which was more pronounced in 2021 (refer to Note 13 to the consolidated financial statements).

During 2021, however, there were also fair value increases in our marketable equity securities, held primarily by our consolidated digital liquid securities funds.

Unlike the year-to-date period, these gains were not offset by various other losses in the third quarter of 2021.

Administrative expense increased $10.1 million, attributable largely to higher professional fees.

Other loss was $149.9 million in 2022 and $9.4 million in 2021.

The significant loss in 2022 was driven by a non-cash debt extinguishment loss of $133.2 million, recognized in connection with an early exchange of our 5.75% exchangeable notes in March 2022, as discussed further in Note 8 to the consolidated financial statements.

Other losses include decreases in fair value of marketable equity securities, held primarily by our consolidated digital liquid funds.

In 2021, the loss was driven by an increase in value of the Blackwells settlement liability prior to its settlement in June 2021 based upon an increase in the DBRG stock price (refer to discussion in Note 13 to the consolidated financial statements).

In contrast, there were fair value increases on the marketable equity securities in 2021 that partially offset the Blackwells loss.

Equity Method Earnings (Losses)

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Digital Investment Management $ 59,196 $ 6,134 $ 53,062 $ 70,203 $ 6,295 $ 63,908

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Digital Investment Management (carried interest reversal of $31,079 and $222)

$ (31,062) $ (195) $ (30,867)

Other 19,190 (16,444) 35,634

$ (11,872) $ (16,639) 4,767

Digital Investment Management— These amounts represent earnings, predominantly unrealized carried interest income, from our general partner interests in sponsored investment vehicles.

Carried interest income 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.

Other— These amounts are driven primarily by our investment in BRSP.

The large equity method loss year-to-date 2020 can be attributed to $254.5 million of impairment charge on our equity investment in BRSP in June 2020 (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 overall in 2020 as a result of the economic effects of COVID-19.

We also recorded net losses from BRSP in 2021, attributable largely to investment write-downs and BRSP's restructuring costs, including the BRSP management contract termination fee that was paid to us.

These net losses from BRSP, however, were reduced by a higher basis difference in 2021 year-to-date of $95.5 million compared to $38.1 million in 2020 year-to-date.

The basis difference were allocated to investments that were resolved or written-down by BRSP during these periods and also, in proportion to the Company's ownership in BRSP that was disposed in August 2021 (Note 5 to consolidated financial statements).

Additionally, 2021 included a gain from partial realization of another equity investment that had unrealized losses in 2020;

and higher contribution of earnings, primarily from our limited partner interests in DCP I and DCP II funds, which include unrealized fair value changes on their underlying investments.

Digital Investment Management— These amounts represent predominantly unrealized carried interest from our general partner interests in sponsored investment vehicles.

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.

In the first quarter of 2022, there was a reversal of some of the carried interest that accrued in the fourth quarter of 2021 when fair value increases on most of the underlying fund investments was initially recognized.

In this case, the carried interest reversal is a function of continuing accrual of preferred returns over time while fair value of underlying investments remain largely consistent.

Other— These amounts were driven primarily by our investment in BRSP for which we recorded earnings of $12.8 million in 2022 and losses of $27.5 million in 2021.

These amounts included basis difference adjustment (as discussed in Note 5 to consolidated financial statements) that increased earnings in 2022 and notably offset some of the losses in 2021.

Our share of net losses in 2021 were attributed largely to investment write-downs and BRSP's restructuring costs, including the BRSP management contract termination fee that was paid to us.

2022 also included higher earnings from our limited partnership interests in DBP I and DBP II, representing unrealized fair value increases on the underlying investments of these funds.

In 2021, the BRSP losses were partially offset by fair value increases on an equity method investment that had been accounted for under the fair value option.

Income Tax Benefit

Income tax benefit decreased $2.3 million quarter-to-date as 2020 included a deferred tax benefit at our DataBank subsidiary compared to a tax expense in the third quarter of 2021, and additionally, a higher tax expense in 2021 from an increase in fee income.

These income tax expense items in 2021, however, were partially offset by additional deferred tax benefit in relation to higher compensation expense in 2021.

The large income tax benefit year-to-date 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.

Additionally, higher deferred tax benefit was also recorded in relation to an increase in compensation expense, primarily significant severance costs incurred in the first quarter of 2021.

Income (loss) from Discontinued Operations

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Income tax benefit decreased $15.8 million.

The first quarter of 2021 had included deferred tax benefit recognized on NOL from our DataBank subsidiary and in connection with significant severance costs.

In the second quarter of 2021, it was determined that DataBank would elect REIT status beginning with the 2021 taxable year and thereafter, only NOL on DataBank TRS is subject to a deferred tax benefit, for which a full valuation allowance was recorded in the first quarter of 2022.

The net income tax benefit recorded in the first quarter of 2022 otherwise reflects the tax effect of activities in the Company's TRS in the normal course of business, which continues to be driven primarily by deferred tax benefit on equity-based compensation.

Loss from Discontinued Operations

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Revenues $ 80,281 $ 266,777 $ (186,496)

Expenses (201,155) (502,576) 301,421

Other loss (26,765) (82,469) 55,704 (100,330) (204,850) 104,520

Income tax expense (2,751) (3,081) 330 (22,938) (34,259) 11,321

Other gain (loss) 11,364 (249,179) 260,543

Income tax benefit 2,112 3,718 (1,606)

Loss from discontinued operations (107,398) (481,260) 373,862

Income (loss) from discontinued operations attributable to noncontrolling interests:

Loss from discontinued operations attributable to noncontrolling interests:

Investment entities (6,175) (303,851) 297,676

Operating Company (8,135) (16,908) 8,773

Income (loss) from discontinued operations attributable to DigitalBridge Group, Inc.

Loss from discontinued operations attributable to DigitalBridge Group, Inc.

$ (93,088) $ (160,501) 67,413

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) prior to its disposition in March 2021, the Company's hotel business, with the remaining hotel portfolio that was in receivership sold by the lender in September 2021.

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 the year-to-date period are driven by significant impairment expense and decreases in asset fair values, particularly in the second quarter of 2020.

Our determination to accelerate our digital transformation in the second quarter of 2020 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.

In the year-to-date period in 2021, asset values were further written-down, but to a much lesser extent than in 2020, based upon recoverable values, in particular, the respective sales price for our Wellness Infrastructure, and OED and Other IM business.

The third quarter of 2021, however, benefited from significantly less depreciation and amortization expense.

Additionally, impairment of our investment assets were largely offset by various gains recognized during the period, including a gain on extinguishment of debt on our hotel portfolio that was sold in September 2021.

Such gains were attributed predominantly to DBRG while impairment loss was largely attributable to noncontrolling interests in investment entities, resulting in a net income attributed to DBRG in the third quarter of 2021.

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

Preferred Stock Redemption

In connection with the redemption of Series G preferred stock in August 2021, net income attributable to common stockholders was reduced by $2.9 million, representing the excess of the $25.00 per share redemption price over the carrying value of the preferred stock which is net of issuance cost.

(1) Wellness Infrastructure prior to its disposition in February 2022;

(2) opportunistic investments in our OED portfolio and credit investment management business in Other IM prior to disposition of our equity interest and deconsolidation in December 2021;

and (3) the Company's hotel business prior to its disposition in March 2021, with the remaining hotel portfolio that was in receivership sold by the lender in September 2021.

Losses in 2022 can be attributed primarily to write-off of unamortized deferred financing costs related to the Wellness Infrastructure debt, which was assumed by the buyer in February 2022.

Losses in 2021 were driven by significant impairment expense and decreases in asset fair values based upon the selling price of our OED and Other IM portfolio.

A detailed income statement on discontinued operations is included in Note 12 to the consolidated financial statements.

Non-GAAP Supplemental Financial Measures

We report Company-wide funds from operations ("FFO") and for the Digital Operating segment, earnings before interest, tax, depreciation and amortization for real estate ("EBITDA re "), both of which are supplemental non-GAAP financial measures widely used in the equity REIT industry.

These non-GAAP measures should not be considered alternatives to GAAP net income (loss) as indications of operating performance, or to cash flows from operating activities as measures of liquidity, nor as indications of the availability of funds for our cash needs, including funds available to make distributions.

Our calculation of FFO and EBITDA re may differ from methodologies utilized by other REITs for similar performance measurements, and, accordingly, may not be comparable to those of other REITs.

Funds from Operations

We calculate FFO in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which defines FFO as net income or loss calculated in accordance with GAAP, excluding (i) real estate-related depreciation and amortization;

(ii) impairment of depreciable real estate and impairment of investments in unconsolidated ventures directly attributable to decrease in value of depreciable real estate held by the venture;

from sale of depreciable real estate;

(iv) gain or loss from a change in control in connection with interests in depreciable real estate or in-substance real estate;

and (v) adjustments to reflect the Company's share of FFO from investments in unconsolidated ventures.

Included in FFO are gains and losses from sales of assets which are not depreciable real estate such as loans receivable, equity investments, 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 (loss) attributable to common stockholders to FFO attributable to common interests in OP and common stockholders, both of which include results from discontinued operations.

Amounts in the table include our share of the relevant activities from equity method investments, where applicable.

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

Net income (loss) attributable to common stockholders $ 41,036 $ (205,784) $ (365,030) $ (2,610,208)

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

Net income (loss) attributable to noncontrolling common interests in Operating Company 4,311 (22,651) (38,565) (287,308)

Real estate depreciation and amortization ($6,825, $87,263, $99,794 and $284,472 related to discontinued operations)

126,494 162,705 461,714 424,950

(Reversal of) Impairment of real estate—discontinued operations

(8,210) 142,767 340,770 1,925,297

Gain on sale of real estate — discontinued operations

(514) (12,332) (41,585) (15,346)

Adjustments attributable to noncontrolling interests in investment entities (1)

(95,512) (146,905) (446,029) (558,835)

FFO attributable to common interests in OP and common stockholders ($75,275, ($52,435), $2,336 and ($635,777) related to discontinued operations) $ 67,605 $ (82,200) $ (88,725) $ (1,121,450)

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 2021 2020

FFO adjustments attributable to noncontrolling interests in investment entities:

Real estate depreciation and amortization ($4,161, $19,198, $29,401 and $70,872 related to discontinued operations)

$ 101,535 $ 84,252 $ 323,177 $ 178,466

(Reversal of) Impairment of real estate — discontinued operations

(5,999) 70,734 123,590 390,708

Gain on sale of real estate — discontinued operations

(24) (8,081) (738) (10,339)

$ 95,512 $ 146,905 $ 446,029 $ 558,835

Following our decision not to maintain qualification as a REIT for 2022, we no longer present Funds From Operations, which is a non-GAAP supplemental financial measure that is widely used by the equity REIT industry.

For the Digital Operating segment in which our DataBank and Vantage SDC subsidiaries operate as REITs, we report earnings before interest, tax, depreciation and amortization for real estate ("EBITDA re "), which is a non-GAAP supplemental financial measure widely used by the equity REIT industry.

This non-GAAP measure should not be considered an alternative to GAAP net income (loss) as an indication of operating performance, or to cash flows from operating activities as a measure of liquidity, nor as an indication of the availability of funds for our cash needs, including funds available to make distributions, in our Digital Operating segment.

Our calculation of EBITDA re may differ from methodologies utilized by other REITs for similar performance measurements, and, accordingly, may not be comparable to those of other REITs.

We calculate EBITDA re for our Digital Operating segment in accordance with standards established by NAREIT, which defines EBITDA re as net income or loss calculated in accordance with GAAP, excluding (i) interest expense;

7 unchanged sentences

EBITDA re depicts the operating performance of a real estate business independent of its capital structure, leverage and noncash items, which allows for comparability across real estate entities with different capital structure, tax rates and depreciation or amortization policies.

Additionally, exclusion of gains on disposition and impairment of depreciated real estate, similar to FFO, also provides a reflection of ongoing operating performance and allows for period-over-period comparability.

Additionally, exclusion of gains on disposition and impairment of depreciated real estate also provides a reflection of ongoing operating performance and allows for period-over-period comparability.

As with other non-GAAP measures, the usefulness of EBITDA re may be limited.

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.

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

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2021 2020 Change 2021 2020 Change

Three Months Ended March 31,

(In thousands) 2022 2021 Change

Digital Operating

6 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

2021 2020 2021 2020

Digital Operating

2 unchanged sentences

Depreciation and amortization 122,891 122,221

Income tax expense (benefit) 1,922 (6,091) (77,134) (14,494)

Income tax benefit (330) (12,268)

$ 84,604 $ 76,825

The higher 2021 year-to-date EBITDA re reflects the acquisition Vantage SDC in July 2020 and zColo in December 2020 and February 2021.

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

While there was an increase in revenues attributed to an increase in rentable square footage, 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.

The higher 2022 EBITDA re reflects an increase in rentable square footage, driven by the Vantage SDC portfolio, with an add-on acquisition in October 2021 and additional lease-up of expanded capacity and existing inventory throughout 2021, as well as DataBank's acquisition of four new data centers in March 2022.

Liquidity and Capital Resources

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

Our liquidity position was $774 million at September 30, 2021, composed of corporate cash on hand and the full $200 million availability under our VFN Notes.

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.

We believe we have sufficient cash on hand, and anticipated cash generated from operating activities and external financing sources, to meet our short term and long term capital requirements.

In addition to our cash balance at March 31, 2022, our expected liquidity position is $1.0 billion, including the full $300 million availability under our VFN.

In the normal course of business, we continue to seek and capitalize on opportunities to syndicate our investments to third party co-investors.

We also have access to the capital markets to raise additional funds, namely through issuance of additional series of notes under our securitized financing facility.

Our evaluation of future liquidity requirements is regularly reviewed and updated for changes in internal projections, economic conditions, competitive landscape and other factors.

At this time, while we are in compliance with all of our corporate debt covenants and have sufficient liquidity to meet our operational needs, we continue to evaluate alternatives to manage our capital structure and market opportunities to strengthen our liquidity and provide further operational and strategic flexibility.

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.

• Issuance of the Class A-2 Notes generated proceeds of $285.1 million, net of offering expenses and $5.4 million of interest reserve deposit.

• The Series 2021-1 Notes will provide funding for acquisition of digital infrastructure investments, satisfying commitments to sponsored funds, redemption or repayment of other higher cost corporate securities, and/or for general corporate utilization.

Preferred Stock Redemption

We redeemed all of our outstanding 7.5% Series G preferred stock in August 2021 for $86.8 million using proceeds from our securitized financing facility, which lowered our cost of corporate debt by approximately 350 basis points.

Additionally, we issued notices of redemption in October 2021 for 2.6 million shares or 22% of our 7.125% Series H preferred stock with redemption to be settled with cash on hand in November 2021 for $64.4 million.

Redemption amounts include accrued and unpaid dividends through the redemption date.

Significant Liquidity and Capital Activities

• We continue to reduce higher cost corporate indebtedness through early exchange of an additional $60 million of senior notes in March 2022, which will generate future interest savings.

• Effective April 2022, the availability under our VFN was increased by $100 million to $300 million.

• We monetized our Wellness Infrastructure business in February 2022 for $161 million in cash, including cash distributions received from NRF Holdco prior to closing of the sale, and a $155 million unsecured promissory note.

Liquidity Needs and Sources of Liquidity

Our current primary liquidity needs are to fund:

• our general partner and co-investment commitments to our investment vehicles;

Our primary liquidity needs are to fund:

• acquisitions of target digital assets for our balance sheet and related ongoing commitments;

• our general partner and co-investment commitments to our investment vehicles;

• warehouse investments pending the raising of third party capital for future investment vehicles;

• principal and interest payments on our debt;

1 unchanged sentence

• obligation for lease payments, principally leasehold data centers and corporate offices;

• capital expenditures for our real estate investments;

• our liability for corporate and other taxes;

• development, construction and capital expenditures on our operating real estate;

• distributions to our common and preferred stockholders (to the extent distributions have not been suspended).

• income tax liabilities of taxable REIT subsidiaries and of the Company subject to limitations as a REIT.

Our current primary sources of liquidity are:

Our primary sources of liquidity are:

• cash on hand;

• our corporate securitization financing facility;

• fees received from our investment management business, including the Company's share of realized net incentive or carried interest, if any;

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

• fees received from our investment management business, including incentive or carried interest payments, if any;

• proceeds from full or partial realization of investments and/or businesses, particularly from investments in the Other segment;

• availability under our VFN;

• issuance of additional term notes under our corporate securitization;

• third party co-investors in our consolidated investments and/or businesses;

• proceeds from full or partial realization of investments;

• investment-level financing;

• proceeds from public or private equity and debt offerings.

• third party co-investors in our consolidated investments and/or businesses.

Liquidity Needs

Investment Commitments

As of September 30, 2021, we have unfunded commitments of $117 million to the DCP funds.

We expect to fund our commitments using proceeds from issuance of our Class A-2 Notes, sales of our BRSP shares and/or other future asset monetization, cash on hand or a combination thereof.

Fund Commitments —As of March 31, 2022, we have unfunded commitments of $91 million, predominantly to our DBP funds.

Wafra Redemption —We agreed to redeem Wafra's 31.5% interest in our Digital IM business for $390 million in cash and 57.7 million in shares of our Class A common stock.

The transaction is expected to close in May 2022.

Additional contingent consideration between $90 million and up to $125 million based upon achievement of new capital formation targets may become payable in March 2023 and March 2024, with up to 50% payable in shares of our Class A common stock at our election.

Acquisition of Tower Assets —We have committed to acquire a mobile telecommunications tower business for approximately €745 million (or approximately $820 million ) , to be funded through a combination of debt and equity, including a €458 million (approximately $504 million) equity commitment.

The acquisition is expected to close in the second quarter of 2022.

We expect to temporarily warehouse the investment, which is intended to be transferred thereafter to a new sponsored investment vehicle.

Acquisition of Infrastructure Investment Management Platform —We have committed to acquire AMP Capital's global infrastructure equity investment management platform for A$458 million (approximately $327 million) in cash.

The transaction is expected to close in the fourth quarter of 2022.

Additional contingent consideration of up to A$180 million (approximately $129 million) may become payable based upon achievement of future fundraising targets.

Lease Obligations

At September 30, 2021, we have $143.6 million and $310.4 million of finance and operating lease obligations, respectively, that were assumed through acquisitions, primarily leasehold data centers, and $43.0 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.

Certain lease payments under ground leases are recoverable from our tenants.

At March 31, 2022, we have $141.0 million and $293.8 million of finance and operating lease obligations, respectively, that were assumed through acquisitions, principally leasehold data centers, and $41.1 million of operating lease obligations on our corporate offices.

These amounts represent fixed lease payments, 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.

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

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.

These distribution requirements may constrain our ability to accumulate operating cash flows.

We intend to pay regular quarterly dividends to our stockholders in an amount equal to our net taxable income, if and to the extent authorized by our board of directors.

Before we pay any dividend, whether for U.S.

federal income tax purposes or otherwise, we must first meet both our operating requirements and debt service, including complying with any restrictions imposed by our lenders.

If our cash available for distribution is less than our net taxable income, we may be required to sell assets or borrow funds to make cash distributions or we may make a portion of the required distribution in the form of a taxable stock distribution or distribution of debt securities.

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

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 will reevaluate its dividend policy as conditions improve.

Preferred Stock— After redeeming Series G preferred stock in August 2021 and incorporating a partial redemption of Series H preferred stock that will settle in November 2021, our outstanding preferred stock is expected to total $883.5 million in liquidation preference, bearing a weighted average dividend rate of 7.135% per annum, with aggregate dividend payments of $15.8 million per quarter.

Sources of Liquidity

The Company expects to reinstate quarterly common stock dividends beginning the third quarter of 2022, subject to approval of its Board of Directors.

Preferred Stock— At March 31, 2022, we have outstanding preferred stock totaling $884 million, bearing a weighted average dividend rate of 7.135% per annum, with aggregate dividend payments of $15.8 million per quarter.

Cash From Operations

2 unchanged sentences

We also receive periodic distributions from our equity investments, including our GP co-investments.

Additionally, we generate fee related earnings from our digital investment management business, of which 31.5% is attributable to our noncontrolling investor, Wafra.

Management fee income is generally a predictable and stable revenue stream, while carried interest and contractual incentive fees are by nature less predictable in amount and timing.

Additionally, we generate fee related earnings from our digital investment management business.

Following the expected conversion of Wafra's 31.5% interest in our Digital IM business into DBRG corporate level ownership, 100% of fee related earnings will be attributable to us.

Management fee income is generally a predictable and stable revenue stream, while carried interest and incentive fees are by nature less predictable in amount and timing.

Our ability to establish new investment vehicles and raise investor capital depends on general market conditions and availability of attractive investment opportunities as well as availability of debt capital.

1 unchanged sentence

We periodically monetize our investments through opportunistic asset sales or to recycle capital from non-core assets.

In August 2021, we sold 9.5 million BRSP shares through a secondary offering by BRSP for net proceeds of approximately $81.8 million.

As we complete our digital transformation, we anticipate monetizing a substantial majority of our OED assets and our Wellness Infrastructure assets.

Description of our debt is included in Note 8 to the consolidated financial statements (and Note 11 for debt related to assets held for disposition).

Summary of Indebtedness

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

As noted above, in completing our digital transformation, we monetized our Wellness Infrastructure assets in February 2022 for $161 million in cash, including cash distributions received from NRF Holdco prior to closing of the sale, and $155 million in note receivable.

Description of our debt is included in Note 8 to the consolidated financial statements.

Our indebtedness at March 31, 2022 is summarized as follows:

($ in thousands) Outstanding Principal Weighted Average Interest Rate (1)

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

Weighted Average Years Remaining to Maturity (2)

Secured fund fee revenue notes $ 300,000 3.93 % 4.5

Convertible and exchangeable senior notes 278,422 5.21 % 1.7

Non-recourse investment level financing

Non-recourse investment level secured debt

Fixed rate 3,644,908 2.44 %

1 unchanged sentence

4,609,175 2.84 % 3.6

Total debt (excluding amounts related to assets held for disposition) $ 4,621,240

Debt related to assets held for disposition (to be assumed by counterparty) $ 3,554,000

Total debt $ 5,187,597

(1) Calculated based upon outstanding debt principal at balance sheet date.

For variable rate debt, weighted average interest rate is calculated based upon the applicable index plus spread at balance sheet date.

(2) Calculated based upon anticipated repayment dates for notes issued under securitization financing;

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

otherwise based upon initial maturity dates, or extended maturity dates if extension criteria are met for extensions that are at the Company's option.

Scheduled principal payments on our debt obligations at March 31, 2022 were as follows.

(In thousands) Remaining 2022 2023 2024 2025 2026 2027 and thereafter Total

Secured fund fee revenue notes $ — $ — $ — $ — $ 300,000 $ — $ 300,000

Convertible and exchangeable senior notes — 200,000 — 78,422 — — 278,422

Investment-level secured debt

Digital Operating 4,673 491,292 616,503 1,146,517 1,619,690 600,000 4,478,675

Other — 119,000 11,500 — — — 130,500

Total $ 4,673 $ 810,292 $ 628,003 $ 1,224,939 $ 1,919,690 $ 600,000 $ 5,187,597

Debt maturities and future debt principal payments are presented based upon anticipated repayment dates for notes issued under securitization financing, otherwise based upon initial maturity dates or extended maturity dates if extension criteria are met at March 31, 2022 for extensions that are at the Company's option.

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 through the issuance of $300 million 3.933% Class A-2 Notes, and $200 million of VFN Notes which is available to be drawn in full as of the date of this filing.

Non-Recourse Investment-Level Financing

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

Developments in 2021

• Digital Operating— In March 2021 and October 2021, DataBank raised $658 million and $332 million of 5-year securitized notes at blended fixed rates of 2.32% and 2.43% per annum, respectively.

In November 2021, Vantage SDC issued $530 million of 5-year securitized notes at a blended fixed rate of 2.17% per annum.

• Other— In the third quarter of 2021, the Company entered into a $50.0 million credit facility to fund the acquisition of loans that are warehoused for a future securitization vehicle.

• Hotels— $3.5 billion of underlying hotel debt (previously classified as held for disposition) have been assumed by the acquirers upon sale of our hotel assets, resulting in a significant deleveraging of our balance sheet.

We expect to materially deleverage our balance sheet further when we consummate the sales of our remaining non-digital assets, which will include the assumption of all underlying debt, through a sale of our OED investments in the fourth quarter of 2021 and our NRF Holdco subsidiary that conducts our Wellness Infrastructure business in 2022, which have outstanding debt of $687.7 million and $2.87 billion, respectively, at September 30, 2021.

As noted above, our VFN availability was increased $100 million to $300 million, all of which is available to be drawn in full as of the date of this filing.

Non-Recourse Investment-Level Secured Debt

Investment level financing is non-recourse to us and secured by the respective underlying real estate.

Significant Developments

• Dispositions— Consolidated investment-level debt of $2.86 billion held by NRF Holdco (previously classified as held for disposition) have been assumed by the acquirer upon sale of NRF Holdco in February 2022, which resulted in further deleveraging of our balance sheet.

Public Offerings

2 unchanged sentences

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

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2022 2021

4 unchanged sentences

Operating Activities

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, 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 $181.4 million in 2021 and $89.9 million in 2020.

Notable items affecting operating cash flows included the following:

• 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.

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

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

Our operating activities generated net cash inflows of $1.3 million in 2022 and net cash outflows of $23.9 million in 2021.

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 inflows of $85.7 million in 2021 compared to net cash outflows of $981.9 million in 2020.

• Debt investments —Investing cash inflows in 2021 included $390.8 million from our debt investments, attributed to loan repayments, in particular a $305.0 million repayment received on two loans in our Irish loan portfolio, partially offset by loans acquired and warehoused for future digital credit vehicles, including a potential CLO, 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 $44.9 million, which partially offset net cash inflows from equity investments.

• Real estate investments —Real estate investing activities generated net cash outflows in both years, with significantly higher outflows in 2020 of $1.0 billion, driven by the acquisition of Vantage SDC in July 2020.

In 2021, net cash outflows were $244.7 million as add-on acquisitions in the Vantage SDC portfolio and capital expenditures were partially offset by sales of various properties in Europe, in our Wellness Infrastructure segment and our hotel business.

• Equity investments —In 2021, net cash inflows from our debt and real estate investments were partially offset by net cash outflows of $56.2 million in connection with our equity investments.

This can be attributed largely to funding of our digital fund commitments and draws on acquisition, development and construction ("ADC") loans that are accounted for as equity method investments, partially offset by net proceeds of approximately $81.8 million from sales of 9.5 million BRSP shares, as well as trading activities in marketable equity securities by our consolidated funds in the digital liquid strategy.

In contrast, 2020 had $89.8 million of net cash inflows 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 funding of our commitments to DCP I and additional draws on ADC loans.

Our investing activities generated net cash outflows of $1.1 billion in 2022 and $7.9 million in 2021.

• Real estate investments —Real estate investing activities generated net cash outflows in both years.

Outflows were significantly higher in 2022 totaling $0.9 billion, attributed to DataBank's acquisition of five data centers, capital expenditures in our data center portfolio and payments for build-out of expansion capacity and lease-up within the Vantage SDC portfolio.

Also contributing to the cash outflows was cash assumed by the buyer in the sale of real estate investment holding entities in our Wellness Infrastructure business.

All of these outflows were partially offset by proceeds received from our Wellness Infrastructure sale.

2021 saw net cash outflows of $9.2 million, as proceeds from sales of various European properties and sales of real estate investment holding entities in our hotel business, net of cash assumed by the buyer, were more than offset by capital expenditures.

• Debt investments —Our debt investments generated net cash outflows of $164.1 million in 2022 and $4.5 million in 2021.

Cash outflows in 2022 were driven by origination and acquisition of loans that are warehoused for future investment vehicles, including securitization vehicles;

and were partially offset by a loan syndication.

In 2021, there was a $9.7 million acquisition of additional N-Star CDOs by our Wellness Infrastructure segment at a discount (subsequently sold as part of the disposition of NRF Holdco in February 2022), which was partially offset by repayments exceeding disbursements on our loan portfolio.

• Equity investments —In 2022, our equity investments recorded net cash inflows of $8.7 million, largely representing the net activity from the marketable equity securities portfolio of our consolidated liquid funds.

In 2021, we recorded net cash outflows of $25.0 million from equity investments, largely from draws on acquisition, development and construction ("ADC") loans that were accounted for as equity method investments.

These ADC loans have since been disposed in conjunction with the sale of investment holding entities in our OED portfolio in December 2021.

Purchases and sales of equity investments in 2021 also included the trading activities in marketable equity securities by our consolidated liquid funds.

Financing Activities

We finance our investing activities largely through investment-level secured debt along with capital from third party or affiliated co-investors.

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 (common dividends temporarily suspended), as well as distributions to noncontrolling interests in our various investments.

We finance our investing activities largely through investment-level secured debt and capital from co-investors.

We also draw upon our securitized financing 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 private placement notes.

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

Financing activities generated net cash inflows of $559.3 million in 2022 and $99.2 million in 2021.

• In 2021, financing net cash inflows were driven by $285.9 million of borrowings exceeding debt repayments.

Investment-level financing activities include primarily borrowings by Vantage SDC to finance an add-on acquisition and expansion capacity, issuance of securitized notes by DataBank that was largely used to refinance its existing debt, and repayment of debt financing real estate in Europe that were sold during the year.

We replaced our corporate credit facility with a securitized financing facility, from which we received $285.1 million of net proceeds in July through issuance of Class A-2 Notes, some of which were applied to redeem our Series G preferred stock in August for $86.8 million.

Additionally, there was $73.3 million of net contributions from noncontrolling interests.

Such contributions were 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.

Cash outflows include dividend payments of $56.1 million, which is lower in 2021 following the redemption of Series G preferred stock and suspension of common dividends beginning with the second quarter of 2020.

• The financing net cash inflows in 2020 were driven by $1.3 billion of net contributions from noncontrolling interests, of which $1.0 billion represented third party investors in Vantage SDC, primarily fee bearing capital that we raised, and a $253.6 million investment by Wafra in our digital investment management business.

However, these financing cash inflows were largely offset by:

(i) $402.9 million settlement in January 2020 of the December 2019 redemption of our Series B and E preferred stock using proceeds from our industrial sale in December 2019;

(ii) repayments on our investment level debt exceeding borrowings by $298.3 million;

(iii) higher dividend payments of $167.3 million which included common stock dividends in the first quarter of 2020 in addition to preferred stock;

and (iv) partial repurchase of our 3.875% convertible senior notes for $81.3 million through a tender offer in September 2020.

An additional repurchase of our 3.875% convertible senior notes for $289.7 million was made through a concurrent application of all of the net proceeds from our issuance of $300.0 million of new 5.75% exchangeable senior notes in July 2020.

• In 2022, the large cash inflows reflect the financing for DataBank's data center acquisition in March 2022 through a term loan and capital contribution from noncontrolling interests.

Other investment-level financing included additional amounts drawn on credit facilities to finance loans acquired for future securitization vehicles.

• The 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 by Wafra of a portion of our commitments to DBP I.

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.

• Dividend payments were $15.8 million in 2022 compared to $18.5 million in 2021 following additional preferred stock redemptions during 2021.

Guarantees and Off-Balance Sheet Arrangements

8 unchanged sentences

Specifically, as part of our underwriting process, we evaluate and review the following data, including, but not limited to:

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.

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, leverage and comparable transactions, environmental, social and governance considerations, 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.

4 unchanged sentences

We currently manage, and may in the future manage, private funds, REITs and other entities that have investment and/or rate of return objectives similar to our own or to other investment vehicles that we manage.

In order to address the risk of potential conflicts of interest among us and our managed investment vehicles, we have implemented an investment allocation policy consistent with our duty as a registered investment adviser to treat our managed investment vehicles fairly and equitably over time.

Pursuant to this policy, and subject to certain priority rights in our DCP funds, investment allocation decisions are based on a suitability assessment involving a review of numerous factors, including the particular source of capital’s investment objectives, available cash, diversification/concentration, leverage policy, the size of the investment, tax, anticipated pipeline of suitable investments and fund life.

In order to address the

risk of potential conflicts of interest among us and our managed investment vehicles, we have implemented an investment allocation policy consistent with our duty as a registered investment adviser to treat our managed investment vehicles fairly and equitably over time.

Pursuant to this policy, and subject to certain priority rights in our DBP funds, investment allocation decisions are based on a suitability assessment involving a review of numerous factors, including the particular source of capital’s investment objectives, available cash, diversification/concentration, leverage policy, the size of the investment, tax, anticipated pipeline of suitable investments and fund life.

Portfolio Management

7 unchanged sentences

In addition, we may utilize services of certain strategic partnerships and joint ventures with third parties with relevant expertise to assist our portfolio management.

In order to maintain our qualification as a REIT for U.S.

federal income tax purposes and our exemption from registration under the 1940 Act, and maximize returns and manage portfolio risk, we may dispose of an asset earlier than anticipated or hold an asset longer than anticipated if we determine it to be appropriate depending upon prevailing market conditions or factors regarding a particular asset.

In order to maintain our exemption from registration under the 1940 Act, and maximize returns and manage portfolio risk, we may dispose of an asset earlier than anticipated or hold an asset longer than anticipated if we determine it to be appropriate depending upon prevailing market conditions or factors regarding a particular asset.

We can provide no assurances, however, that we will be successful in identifying or managing all of the risks associated with acquiring, holding or disposing of a particular asset or that we will not realize losses on certain assets.

Interest Rate and Foreign Currency Hedging

Subject to maintaining our qualification as a REIT for U.S.

federal income tax purposes and our exemption from registration under the 1940 Act, we may mitigate the risk of interest rate volatility through the use of hedging instruments, such as interest rate swap agreements and interest rate cap agreements.

Subject to maintaining our exemption from registration under the 1940 Act, we may mitigate the risk of interest rate volatility through the use of hedging instruments, such as interest rate swap agreements and interest rate cap agreements.

The goal of our interest rate management strategy is to minimize or eliminate the effects of interest rate changes on the value of our assets, to improve risk-adjusted returns and, where possible, to lock in, on a long-term basis, a favorable spread between the yield on our assets and the cost of financing such assets.

2 unchanged sentences

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 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.

There have been no changes to our critical accounting policies or those of our unconsolidated joint ventures since the filing of our Annual Report on Form 10-K for the year ended December 31, 2021.

With respect to critical estimates, we have established policies and control procedures which seek to ensure that estimates and assumptions are appropriately governed and applied consistently from period to period.

With respect to all critical estimates, we have established policies and control procedures which seek to ensure that estimates and assumptions are appropriately governed and applied consistently from period to period.

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 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.

Due to the inherently judgmental nature of the various projections and assumptions used, and unpredictability of

economic and market conditions, 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

1 unchanged sentence

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