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digital operating business and foreign denominated investments, the effect of market risk on our fee income and net carried interest allocation, equity price risk on marketable equity securities, and commodity price risk in connection with our digital operating business.
−Removed: The following discussion excludes the effect of market risk on assets and corresponding liabilities that were held for disposition at March 31, 2022.
+Added: The following discussion excludes the effect of market risk on assets and corresponding liabilities that were held for disposition at June 30, 2022.
Interest Rate Risk
Instruments bearing variable interest rates include our debt obligations and loans receivable warehoused on the balance sheet for future sponsored investment vehicles, all of which are subject to interest rate fluctuations that will affect future cash flows, specifically interest expense and interest income, respectively.
−Removed: Variable Rate Debt (Corporate and Digital Operating) —At March 31, 2022, all of our corporate debt have fixed interest rates.
−Removed: There were no amounts outstanding on our corporate VFN, which is a variable rate revolver.
−Removed: Similarly, investment level financing in our digital operating business are primarily fixed rate securitized notes issued by our subsidiaries, Vantage SDC and DataBank, with $833.8 million or 19% composed of variable rate debt.
−Removed: Our variable rate debt are indexed to either 1-month or 3-month LIBOR.
−Removed: We may utilize derivative instruments, generally interest rate caps, as economic hedges to limit the exposure to interest rate increases on our variable rate debt.
−Removed: There were no interest rate derivatives utilized at March 31, 2022.
−Removed: As our digital operating subsidiaries are substantially owned by third party investors, the resulting increase in interest expense from higher interest rates will be attributed predominantly to noncontrolling interests, with a minimal share of that effect attributed to our shareholders.
−Removed: Based upon the outstanding principal on our variable rate debt at March 31, 2022, a hypothetical 100 basis point increase in interest rates would increase annualized interest expense by $8.3 million on a consolidated basis or $1.7 million after attribution to noncontrolling interests.
−Removed: Variable Rate Loans Receivable and Corresponding Debt —We hold variable rate loans receivable totaling $346.7 million at March 31, 2022, all of which are warehoused on the balance sheet for future sponsored investment vehicles.
−Removed: Our variable rate loans receivable are indexed primarily to LIBOR or SOFR, and a majority of these loans are partially funded through LIBOR-based credit facilities with $130.5 million drawn at March 31, 2022, which reduces our net exposure to interest rate fluctuations.
−Removed: Additionally, our variable rate loans generally have contractual index floors, which establishes minimum index rates.
−Removed: At March 31, 2022, the index rates were less than 1% and were at or marginally above the index floor for these loans.
−Removed: Accordingly, a decrease in interest rates would not materially affect the amount of interest income earned on our variable rate loans.
+Added: Variable Rate Debt —Our corporate debt exposure to variable interest rates is limited to our VFN revolver, which has $70 million outstanding as of June 30, 2022.
+Added: In terms of investment level financing (excluding credit facilities financing loans receivable as discussed below) which totals $4.8 billion, this consists primarily of fixed rate securitized notes issued by our digital operating subsidiaries, Vantage SDC and DataBank, and fixed rate term debt financing TowerCo.
+Added: Of this amount, $1.06 billion or 22% is composed of variable rate debt at June 30, 2022.
+Added: Our variable rate debt is indexed to either 1-month or 3-month LIBOR, or 6-month Euribor.
+Added: At June 30, 2022, our exposure to interest rate increases on the TowerCo variable rate debt is economically hedged with interest rate swaps.
+Added: As our digital operating subsidiaries are substantially owned by third party investors, the resulting increase in interest expense from higher interest rates will be attributed predominantly to noncontrolling interests, with a minimal share of that effect attributed to DBRG.
+Added: Based upon the outstanding principal on our variable rate debt (excluding credit facilities financing loans receivable) at June 30, 2022, a hypothetical 100 basis point increase in interest rates would increase annualized interest expense, net of the effect of interest rate hedges, by $9.0 million on a consolidated basis or $2.4 million after attribution to noncontrolling interests.
+Added: Variable Rate Loans Receivable and Corresponding Debt —We hold variable rate loans receivable totaling $380.9 million at June 30, 2022, all of which are warehoused on the balance sheet for future sponsored investment vehicles.
+Added: Our variable rate loans receivable are indexed primarily to LIBOR.
+Added: These variable rate loans generally have contractual index floors, which establish minimum index rates.
+Added: A majority of these loans are partially funded through LIBOR-based credit facilities with $168.0 million drawn at June 30, 2022, which reduces our net exposure to interest rate fluctuations.
+Added: At June 30, 2022, a hypothetical 100 basis point decrease in interest rates would decrease annualized interest income by approximately $11.1 million;
+Added: however, this would be partially offset by a corresponding decrease in annualized interest expense of $1.7 million on the credit facilities financing the loans receivable.
Foreign Currency Risk
−Removed: As of March 31, 2022, we have limited direct foreign currency exposure from our foreign operations in the digital operating business and foreign currency denominated investments warehoused on the balance sheet for future sponsored vehicles.
+Added: As of June 30, 2022, we have limited direct foreign currency exposure from our foreign operations in the digital operating business and foreign currency denominated investments warehoused on the balance sheet for future sponsored vehicles.
Changes in foreign currency rates can adversely affect earnings and the value of our foreign currency denominated investments, including investments in our foreign subsidiaries.
−Removed: We have exposure to foreign currency risk from the operations of our foreign subsidiaries to the extent the U.S.
−Removed: dollar is not the functional currency.
−Removed: This applies to our subsidiaries in U.K.
−Removed: and France, which collectively operate six colocation data centers.
−Removed: For the substantial majority of our subsidiaries in Canada that operate our hyperscale data centers, the U.S dollar is the functional currency.
−Removed: The resulting effect from translation of the balance sheets and statements of operations of these subsidiaries are recorded as a component of accumulated other comprehensive income (loss) in stockholders' equity, and reclassified into earnings only upon a sale or a complete or substantially complete liquidation of the foreign subsidiary.
−Removed: These subsidiaries with non U.S.
−Removed: dollar functional currencies make up a small percentage of our digital operating business.
−Removed: Accordingly, our exposure to foreign currency risk from the operations of our foreign subsidiaries is limited as of March 31, 2022.
+Added: We have exposure to foreign currency risk from the operations of our foreign subsidiaries to the extent these subsidiaries do not transact in U.S.
+Added: This applies to our foreign subsidiaries that operate six colocation data centers in the U.K.
+Added: and France, and TowerCo assets in Belgium.
+Added: For the substantial majority of our subsidiaries in Canada that operate our hyperscale data centers, the U.S dollar is used as the transactional currency, in which case, there is no foreign currency exposure.
+Added: At June 30, 2022, we have entered into foreign exchange contracts as a net investment hedge of our EUR denominated equity investment in TowerCo.
+Added: In the data center portfolio, the remaining foreign subsidiaries that do not transact in U.S.
+Added: dollars make up only a small percentage of our overall digital operating business, which in turn is substantially owned by third party investors.
+Added: Accordingly, our exposure to foreign currency risk from the operations of our foreign subsidiaries is limited as of June 30, 2022.
Our foreign currency denominated investments, which are temporarily warehoused on the balance sheet, are held by our U.S.
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We generally mitigate foreign currency risk on our foreign currency denominated investments by utilizing currency instruments as economic hedges, such as foreign currency put options, forward contracts and costless collars.
−Removed: The maturity date of these instruments approximate the projected dates of related cash flows from the respective investments.
−Removed: At March 31, 2022, our foreign currency exposure consisted primarily of a GBP investment (£35 million) and a purchase commitment in EUR (€458 million equity commitment) for which we have entered into foreign exchange forward contracts to mitigate our exposure, with the exception of a bridge financing in AUD (A$30 million) that was not economically hedged due to its short term nature.
+Added: The maturity dates of these instruments approximate the projected dates of related cash flows from the respective investments.
+Added: At June 30, 2022 , our foreign currency exposure consisted of a GBP loan receivable (£34 million) and an AUD equity investment (A$35 million).
+Added: As of June 30, 2022, we have entered into foreign exchange forward contracts to mitigate our GBP exposure.
+Added: In connection with our commitment to acquire AMP Capital, our consideration payable in U.S.
+Added: dollar equivalent is largely fixed based upon the foreign exchange rate as of the date of the purchase agreement.
+Added: The consideration is payable in U.S.
+Added: dollars at the spot foreign exchange rate on the closing date of the acquisition, provided, however, that such rate is not A$0.02 higher or lower than the rate on the date of the purchase agreement.
Market Risk Effect on Fee Income and Net Carried Interest Allocation
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To a lesser extent, management fees are based upon the net asset value of vehicles in our digital liquid securities strategy, measured at fair value.
−Removed: At March 31, 2022, our digital liquid securities strategy make up 5% of our $18.8 billion FEEUM.
+Added: At June 30, 2022, our digital liquid securities strategy make up 4.7% of our $19 billion FEEUM.
Accordingly, most of our management fee income will not be directly affected by changes in investment fair values.
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Equity Price Risk
−Removed: At March 31, 2022, we have $197.7 million of investments in marketable equity securities, held largely by our sponsored liquid funds that are consolidated.
+Added: At June 30, 2022, our consolidated sponsored liquid funds had $156.8 million of long positions and $35.8 million of short positions in marketable equity securities.
Realized and unrealized gains and losses from marketable equity securities are recorded in other gain (loss) on the consolidated statement of operations.
−Removed: Market prices for publicly traded equity securities may be volatile and fluctuate due to a myriad of factors, including but not limited to, financial performance of the investee, industry conditions, economic and political environment, level of trades in a security, and general sentiments in the equity markets.
+Added: Market prices for publicly traded equity securities may fluctuate due to a myriad of factors, including but not limited to, financial performance of the investee, industry conditions, economic and political environment, trade volume, and general sentiments in the equity markets.
Therefore the level of volatility and price fluctuations are unpredictable.
Our funds constantly rebalance their investment portfolio to take advantage of market opportunities and to manage risk.
−Removed: Additionally, one of our funds employ a long/short equity strategy, taking long positions that serve as collateral for short positions, which in combination, reduces its market risk exposure.
+Added: Additionally, one of our funds employs a long/short equity strategy, taking long positions that serve as collateral for short positions, which in combination, reduces its market risk exposure.
The effect of equity price decreases to earnings attributable to our shareholders is further reduced as our consolidated liquid funds are substantially owned by third party capital or noncontrolling interests.
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We closely monitor the cost of electricity at all of our locations and may enter into power utility contracts to purchase electricity at fixed prices in certain locations in the U.S., with such contracts generally representing less than our forecasted usage.
−Removed: Our building of new data centers and expansion of existing data centers will also subject us to commodity price risk with respect to building materials such as
−Removed: steel and copper.
+Added: Our building of new data centers and expansion of existing data centers will also subject us to commodity price risk with respect to building materials such as steel and copper.
Additionally, the lead time to procure data center equipment is substantial and procurement delays could increase construction cost and delay revenue generation.
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.