What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-07 compared with 2022-08-08 · 195 added, 154 removed, 468 unchanged (43% of the section changed)

7 unchanged sentences

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 June 30, 2022, we have $48 billion of assets under management, comprising digital infrastructure assets managed on behalf of our limited partners and our shareholders.

At September 30, 2022, we have $50 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 240 employees.

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

At June 30, 2022, we owned 93% of the OP, as its sole managing member.

At September 30, 2022, we owned 93% 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.

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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”) carryforwards.

At June 30, 2022, the Company has $48 billion of assets under management ("AUM"), including both third party capital and the Company's balance sheet.

At September 30, 2022, the Company has $50 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:

5 unchanged sentences

The Company currently owns interests in two

DataBank, including zColo, an edge colocation data center business (DBRG ownership at 21.8% as of June 30, 2022, 20% as of December 31, 2021);

DataBank, including zColo, an edge colocation data center business (DBRG ownership at 13.5% as of September 30, 2022, 20% as of December 31, 2021);

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

12 unchanged sentences

Capitalization and Financing

• In July 2022, our board of directors authorized a stock repurchase program which provides for repurchases up to $200 million of our class A common stock and/or preferred stock.

The repurchases are targeted towards preferred stock, which will further reduce our leverage.

• We expect to effectuate a reverse stock split in the third quarter of 2022 in which one share of class A common and class B common stock will be issued in exchange for every four shares of existing class A and class B common stock.

• 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, generating future interest savings.

• We continue to reduce higher cost corporate indebtedness through (i) 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;

and (ii) repurchase of $52.6 million of preferred stock at a discount to par or a weighted average price of $23.62 per share, generating future savings in interest and preferred dividends.

• Pursuant to a $200 million stock repurchase program, in addition to preferred stock repurchases, we have also repurchased $55 million of class A common stock at a weighted average price of $13.09 per share through October 2022.

• A one-for-four reverse stock split of our common stock was effectuated in August 2022.

• We have reinstated quarterly common stock dividends beginning the third quarter of 2022, with the declaration of a dividend of $0.01 per share of common stock that was paid in October 2022.

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

Digital Business

• Through October 2022, included in earnings is our share of realized carried interest of $22.5 million (net of allocation to employees) in connection with the DataBank recapitalization and the first liquidation of investment by DBP I.

• In May 2022, we redeemed Wafra's 31.5% interest in our Digital IM business and Wafra sold or gave up its carried interest entitlement from future (not existing) investment management products.

1 unchanged sentence

(i) net cash paid of $388.5 million;

(ii) 57.7 million shares of our class A common stock valued at $348.8 million at closing;

(ii) 14.4 million shares (after giving effect to the Company's one-for-four reverse stock split on August 22, 2022) of our class A common stock valued at $348.8 million at closing;

and (iii) the ability to earn a contingent amount up to $125 million payable in March 2023 and/or March 2024, with up to 50% payable in common stock at our election.

3 unchanged sentences

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 $128 million), primarily based upon future fundraising for the third and fourth flagship funds under the Global Infrastructure Fund ("GIF") series.

(i) an upfront amount of A$458 million (approximately $314 million, based upon the September 30, 2022 spot rate), subject to certain customary adjustments;

and (ii) a contingent amount of up to A$180 million (approximately $125 million, based upon September 30, 2022 spot rate), primarily based upon future fundraising for the third and fourth flagship funds under the Global Infrastructure Fund ("GIF") series.

Closing is expected in the fourth quarter of 2022.

8 unchanged sentences

• In January 2022, we acquired additional interest in DataBank from a selling investor for $32 million

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

• Immediately following the above transactions, our ownership in DataBank had increased from 20% to 21.8%.

DataBank Recapitalization

• In June 2022, an affiliate of Swiss Life Asset Management AG agreed to acquire 27% of the fully diluted equity interest in DataBank from existing investors for approximately $1.2 billion in cash.

Our share of proceeds from the sale will be approximately $230 million and our ownership interest in DataBank will decrease from 21.8% to 15.5%.

The valuation reflects a 1.9x multiple of the average cost basis of our four investments in DataBank since December 2019.

Closing is expected in the third quarter of 2022.

• Recapitalization efforts will continue throughout the remainder of 2022 and are expected to result in incremental sales of equity interests in DataBank by existing investors to new investors, and further dilute our interest in DataBank.

• The first closing in August 2022 of the recapitalization of DataBank, together with the second closing in October 2022, collectively resulted in the sale of a portion of our equity interest to new investors for $1.7 billion in cash.

Our ownership interest in DataBank decreased from 21.8% to 12.4% following the second closing.

Our share of proceeds from the sale totaled $366 million, including our share of carried interest net of allocation to employees.

The recapitalization implies a pre-transaction net equity value of our ownership in DataBank of $905 million, reflecting a 2.0x multiple of invested capital since our initial investment in DataBank in December 2019.

As the transaction involved a change in ownership of a consolidated subsidiary, it was accounted for as an equity transaction.

After the August closing for $1.5 billion, the difference between the book value of our interest and our ownership based upon the current value of DataBank resulted in an increase to equity of $171 million.

• We anticipate the completion of a third closing of the recapitalization prior to the end of 2022, which will further dilute our interest in DataBank.

• The first liquidation in September 2022 of a DBP I investment, Wildstone, resulted in a receipt of $16.6 million in distributions (excluding carried interest).

As of September 30, 2022, we have $148.5 million invested in DBP I as general partner and limited partner.

• In June 2022, we acquired the mobile telecommunications tower business (“TowerCo”) of Telenet Group Holding NV (Euronext Brussels:

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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.

Non-Digital Business

• A $59.6 million impairment was recorded on our investment in BRSP in the third quarter of 2022.

Given the continued market volatility in 2022, our anticipated hold period may not be sufficient to allow for a recovery of BRSP's stock price relative to the carrying value of our investment in BRSP.

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

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FEEUM (2)(3) (In billions)

Type Products Description June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

Type Products Description September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

Third Party Managed Capital

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Balance sheet AUM generally reflects 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 increased by $0.7 billion or 4% to $19 billion from December 31, 2021 to June 30, 2022.

• FEEUM increased by $2.2 billion or 12% year-to-date 2022 to $20.5 billion at September 30, 2022.

The increase was primarily FEEUM from co-investment vehicles, largely resulting from the DataBank recapitalization.

Within institutional funds, there was a decrease in FEEUM following DBP I's liquidation of Wildstone.

• Our acquisition of AMP Capital's global infrastructure equity platform is expected to add $5.5 billion of FEEUM when the transaction closes in the fourth quarter of 2022.

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

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

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

(In thousands) 2022 2021 Change 2022 2021 Change

18 unchanged sentences

Total revenues increased $44.4 million, or 18%, in the quarter-to-date comparison and $133.5 million, or 19%, in the year-to-date comparison.

• Digital Investment Management— Revenues were largely consistent in the quarter-to-date comparison and increased 17% in the year-to-date comparison.

2021 had benefited from an incentive fee from our digital liquid strategy, while additional fee income in 2022 was sourced largely from new co-invest vehicles and sub-advisory accounts.

Additionally, year-to-date revenues reflect higher fee income from third party capital committed to DigitalBridge Partners II, LP ("DBP II") in the second half of 2021.

• Digital Investment Management— Revenues decreased 18% in the quarter-to-date comparison and increased 2% in the year-to-date comparison.

Overall, management fees were higher in 2022, attributed to additional DBP II commitments that closed in the fourth quarter of 2021, the DataBank recapitalization in August 2022, additional capital calls by portfolio companies as well as new co-invest vehicles and sub-advisory accounts.

However, 2021 benefited from incentive fees from our digital liquid strategy and in the third quarter of 2021, a catch-up of inception-to-date fees for DigitalBridge Partners II, LP ("DBP II") following the closing of significant new commitments, which resulted in a decrease in revenues in the quarter-to-date comparison.

Supplemental performance measures of the Digital IM segment are presented under "—Non-GAAP Measures."

• Digital Operating— 2022 includes revenue from additional acquisitions, namely DataBank's four new data centers in March 2022 and within the Vantage SDC portfolio, an add-on acquisition in October 2021 and additional lease-up of expanded capacity and existing inventory throughout 2021 and 2022.

The second quarter of 2022 also included a one-time fee from a lease termination at Vantage SDC.

• Corporate and Other— Revenues in 2022 reflect largely income from warehoused investments, specifically interest income from credit investments which were actively acquired or originated over time and lease income from the tower business acquired in June 2022.

Additionally, 2022 included a one-time fee from a lease termination at Vantage SDC recognized in the second quarter.

• Corporate and Other— Revenues in 2022 reflect primarily lease income from the warehoused tower business acquired in June 2022, and interest income from credit investments acquired or originated over time.

Our ownership of these warehoused credit investments have largely been relinquished in the third quarter of 2022.

Income (loss) from continuing operations

• Digital Investment Management— Net income reflects the effect of carried interest, net of management allocations.

2022 included significant carried interest accrued in the second quarter, driven by an increase in the valuation of a portfolio company that is currently under contract for sale.

On a year-to-date basis in 2022, the additional carried interest accrual was partially offset by a reversal in the first quarter.

2022 included significant realized carried interest and allocations in connection with the DataBank recapitalization and the first liquidation of investment by DBP I, along with additional unrealized carried interest and allocations for in DBP I.

On a year-to-date basis in 2022, the carried interest accrual and allocations were partially offset by a reversal in the first quarter.

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

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

Net loss was lower in 2021 as there was a large deferred

tax benefit resulting from a write-off of deferred tax liabilities at DataBank as it was then determined that DataBank would elect REIT status beginning with the 2021 taxable year.

Net loss was lower year-to-date in 2021 as there was a large deferred tax benefit resulting from a write-off of deferred tax liabilities at DataBank as it was then determined that DataBank would elect REIT status beginning with the 2021 taxable year.

• Corporate and Other— The net loss generally reflects corporate level costs that have not been allocated to our reportable segments, primarily interest expense on corporate debt and compensation and administrative expenses.

Also included are the effects of fair value changes on marketable equity securities held by our consolidated liquid strategy funds, warehoused loan investments and underlying portfolio companies of our digital funds which affect our share of earnings from these funds.

The larger net loss in 2022 was driven by a $133.2 million non-cash loss recognized in connection with an early exchange of our 5.75% exchangeable notes in March 2022 (refer to Note 8 to the consolidated financial statements), and decreases in investment fair values.

Also included are the effects of fair value changes on marketable equity securities held by our consolidated liquid strategy funds, previously warehoused investments and underlying portfolio companies of our digital funds which affect our share of earnings from these funds.

This was partially offset by a significant decrease in fair value of the warrants issued to Wafra from its initial remeasurement in May 2022.

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

Comparison of Three and Six Months Ended June 30, 2022 to Three and Six Months Ended June 30, 2021

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

Comparison of Three and Nine Months September 30, 2022 to Three and Nine Months September 30, 2021

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

(In thousands) 2022 2021 Change 2022 2021 Change

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Other income (loss)

Other loss, net (46,256) (27,041) (19,215) (196,137) (36,391) (159,746)

Other gain (loss), net 25,908 4,657 21,251 (170,229) (31,734) (138,495)

Equity method earnings, including carried interest 69,316 65,369 3,947 195,650 111,380 84,270

1 unchanged sentence

Income tax benefit 7,841 10,973 (3,132) 17,772 109,408 (91,636)

Income (loss) from continuing operations (53,310) 3,823 (57,133) (289,596) (142,516) (147,080)

Loss from continuing operations (94,598) (40,935) (53,663) (384,194) (183,451) (200,743)

Loss from discontinued operations (26,389) (10,429) (15,960) (148,558) (590,595) 442,037

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Operating Company (4,834) 4,311 (9,145) (30,786) (38,565) 7,779

Net loss attributable to DigitalBridge Group, Inc.

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

(49,088) 61,357 (110,445) (317,207) (307,677) (9,530)

Preferred stock repurchases/redemptions (1,098) 2,865 (3,963) (1,098) 2,865 (3,963)

Preferred stock dividends 15,283 17,456 (2,173) 46,801 54,488 (7,687)

Net loss attributable to common stockholders $ (37,321) $ (141,260) 103,939 $ (299,637) $ (406,066) 106,429

Net income (loss) attributable to common stockholders $ (63,273) $ 41,036 (104,309) $ (362,910) $ (365,030) 2,120

Property Operating Income and Expense

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

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

(In thousands) 2022 2021 Change 2022 2021 Change

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Property operating income and expense are higher in 2022, which includes operating results from additional acquisitions.

These include DataBank's acquisition of four data centers in March 2022, and within the Vantage SDC portfolio, an add-on acquisition in October 2021 and additional lease-up of expanded capacity and existing inventory throughout 2021.

Additionally, the second quarter of 2022 also included a $5.8 million fee received from a lease termination in the Vantage SDC portfolio.

Total real estate carrying value in our Digital Operating segment increased to $6.05 billion at June 30, 2022 compared to $4.97 billion at December 31, 2021 following the DataBank March 2022 acquisition.

At June 30, 2022, our portfolio includes 73 data centers in the U.S., three in Canada, one in the U.K., and five in France.

June 30, 2022 December 31, 2021

Total real estate carrying value in our Digital Operating segment increased to $5.81 billion at September 30, 2022 compared to $4.97 billion at December 31, 2021 following the DataBank March 2022 acquisition.

At September 30, 2022, our portfolio includes 73 data centers in the U.S., three in Canada, one in the U.K., and five in France.

September 30, 2022 December 31, 2021

Digital Operating

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

This represents one month of property operating income and expense from the tower business, acquired in June 2022.

This represents property operating income and expense from the tower business acquired in June 2022.

Interest Income

Interest income was $5.6 million higher in the quarter-to-date comparison and $17.1 million higher in the year-to-date comparison.

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 June 30, Six Months Ended June 30,

In 2022, there was additional interest income from new loans originated or acquired beginning the third quarter of 2021.

All of these new loans have been transferred either to a third party sponsored CLO or to our sponsored fund in the third quarter of 2022, except for one loan for which the transfer is pending.

Additionally, we also

recognized paid-in-kind interest on an unsecured promissory note in connection with the sale of our Wellness Infrastructure business in February 2022.

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

(In thousands) 2022 2021 Change 2022 2021 Change

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$ 41,263 $ 50,226 (8,963) $ 128,418 $ 124,826 3,592

Fee income decreased $0.8 million in the quarter-to-date comparison and increased $12.6 million in the year-to-date comparison.

Management fees were higher in both periods under comparison, attributed to capital calls by portfolio companies as well as new co-invest vehicles and sub-advisory accounts.

Additionally, the increase in the year-to-date period was driven by DBP II commitments that were closed subsequent to the second quarter of 2021.

However, there were no incentive fees earned from our digital liquid strategy in 2022 in comparison to 2021, which contributed to an overall decrease in fee income in the quarter-to-date period and partially offset the higher management fees in the year-to-date period.

Other income increased $0.6 million in the quarter-to-date comparison and $6.3 million in the year-to-date comparison.

The increase is attributed primarily to higher professional service fees incurred on behalf of and reimbursable by our managed investment vehicles, dividend income received from our equity interest in a third party non-traded REIT and loan origination fee earned in in the first quarter of 2022 in connection with a loan syndication.

Fee income decreased $9.0 million in the quarter-to-date comparison but increased $3.6 million in the year-to-date comparison.

There was an overall increase in management fees in 2022, attributed to additional DBP II commitments that closed in the fourth quarter of 2021, the DataBank recapitalization in August 2022, additional capital calls by portfolio companies as well as new co-invest vehicles and sub-advisory accounts.

However, management fees decreased in the quarter-to-date comparison as the third quarter of 2021 benefited from a catch-up of inception-to-date fees for DBP II following the closing of significant new commitments during that period.

Additionally, there were no incentive fees earned from our digital liquid strategy in 2022 in comparison to 2021, which further contributed to the overall decrease in fee income in the quarter-to-date period and partially offset the higher management fees in the year-to-date period.

Other income decreased $1.7 million in the quarter-to-date comparison but increased $4.6 million in the year-to-date comparison.

The decrease in the quarter-to-date comparison can be attributed to lower professional service fees incurred on behalf of and reimbursable by our managed investment vehicles.

The increase in the year-to-date comparison is due primarily to dividend income received from our equity interest in a third party non-traded REIT and loan origination fee earned in the first quarter of 2022 in connection with a loan syndication.

Interest Expense

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

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

(In thousands) 2022 2021 Change 2022 2021 Change

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Digital Investment Management— This represents interest expense from our securitized financing facility beginning in July 2021, which is attributed largely to the Digital IM segment.

Digital Operating— The increase of $8.0 million in the quarter-to-date comparison and $13.0 million in the year-to-date comparison is attributed to:

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

(ii) interest expense on new financing for DataBank's acquisition of four data centers in March 2022;

and (iii) interest expense on our securitized financing facility beginning July 2021 which is partially allocated to the Digital Operating segment.

At June 30, 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 3.11% per annum (2.88% per annum at December 31, 2021).

Interest expense is higher in 2022, reflecting a full year-to-date period, and additionally, from drawdowns on the VFN during the year.

Digital Operating— The increase of $10.9 million in the quarter-to-date comparison and $23.9 million in the year-to-date comparison is attributed to interest expense from the following:

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

(ii) new financing for DataBank's acquisition of four data centers in March 2022;

and (iii) securitized financing facility beginning July 2021 which is partially allocated to the Digital Operating segment.

At September 30, 2022, our data center portfolio was financed by an aggregate $4.51 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 3.38% per annum (2.88% per annum at December 31, 2021).

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

(i) debt to partially fund the acquisition of the tower assets in June 2022;

(ii) credit facilities financing loans warehoused for future securitization vehicles;

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

(ii) 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 (iii) credit facilities previously financing warehoused loans which were repaid following a transfer of the loans to a third party sponsored CLO in the third quarter of 2022.

Corporate-level Debt— Interest expense decreased $3.6 million in the quarter-to-date comparison and $12.3 million in the year-to-date comparison as we have extinguished $221 million of higher cost corporate debt through early exchanges of our 5.75% exchangeable notes totaling $161 million in the fourth quarter of 2021 and an additional $60 million in March 2022 (refer to Note 8 to the consolidated financial statements).

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Investment Expense

Investment expense increased $1.3 million in the quarter-to-date comparison and $4.0 million in the year-to-date comparison, 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, higher management fees paid to Vantage as a result of the add-on acquisition in October 2021, and higher professional service fees incurred on behalf of and reimbursable by our managed investment vehicles.

Investment expense increased $2.2 million in the quarter-to-date comparison and $6.2 million in the year-to-date comparison.

The increase is 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, higher management fees paid to Vantage as a result of the add-on acquisition in October 2021, and professional service fees incurred in the tower business in 2022.

These increases were partially offset by lower costs in the third quarter of 2022 in connection with transition services for DataBank.

Transaction-Related Costs

Transaction-related costs in the second quarter of 2022 are related to the pending acquisition of AMP Capital and in connection with unconsummated investments in other periods.

Transaction-related costs increased $2.9 million in the quarter-to-date comparison and $4.2 million in the year-to-date comparison, attributed to the pending acquisition of AMP Capital and unconsummated investments.

Depreciation and Amortization

Increase in depreciation and amortization can be attributed to real estate and intangible assets acquired through the Vantage SDC add-on acquisition in October 2021, DataBank's four new data centers in March 2022, and tower assets in June 2022.

The second quarter of 2022 also included accelerated amortization of lease intangibles in connection with an early lease termination in the Vantage SDC portfolio.

2022 also included accelerated amortization of lease intangibles in connection with an early lease termination in the Vantage SDC portfolio.

The increase was partially offset by (i) 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;

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Compensation Expense

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

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

(In thousands) 2022 2021 Change 2022 2021 Change

3 unchanged sentences

136,275 87,669 48,606 283,326 222,887 60,439

Total compensation expense was $45.4 million higher in the quarter-to-date comparison and $11.8 million higher in the year-to-date comparison.

The increase in both periods under comparison is driven primarily by carried interest compensation accrued in the second quarter of 2022, representing a portion of unrealized carried interest from our sponsored investment vehicles that are shared with management and certain employees.

In the year-to-date comparison, the increase was partially offset by a reversal of carried interest compensation in the first quarter of 2022 and also a decrease in cash and equity-based compensation as there was higher severance payments, including acceleration of equity-based compensation, in the first quarter of 2021.

Equity-based compensation — Databank Recapitalization

10,100 — 10,100 10,100 — 10,100

$ 146,375 $ 87,669 58,706 $ 293,426 $ 222,887 70,539

Compensation expense increased $48.6 million in the quarter-to-date comparison and $60.4 million in the year-to-date comparison, excluding accelerated equity awards resulting from the DataBank recapitalization as discussed below.

In this case, the increase in both periods under comparison is driven by carried interest compensation in 2022, representing a portion of realized and unrealized carried interest from our sponsored investment vehicles that are shared with certain employees.

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.

The increase above was partially offset by:

(i) a decrease in cash and equity-based compensation as there was higher severance payments, including acceleration of equity-based compensation, in the first quarter of 2021, and lower bonus accrual in 2022;

as well as (ii) a reversal of carried interest compensation in the first quarter of 2022.

Separately, the DataBank recapitalization transaction triggered an accelerated vesting of certain profits interest units that had been issued by DataBank to its employees.

As a result, $10.1 million of additional equity based compensation was recorded for the Digital Operating segment in the third quarter of 2022, of which $7.8 million was attributed to noncontrolling interests in investment entities.

Administrative Expenses

Administrative expense decreased $2.2 million in the quarter-to-date comparison and increased $7.9 million in the year-to-date comparison.

The second quarter of 2021 had included placement fees incurred in fundraising for DBP II which resulted in a decrease in administrative expense in the quarter-to-date comparison.

However, this was more than offset by higher professional fees incurred in 2022 which resulted in an increase in administrative expense in the year-to-date comparison.

Other loss increased $19.2 million from $27.0 million to $46.3 million in the quarter-to-date comparison, and increased $159.7 million from $36.4 million to $196.1 million in the year-to-date comparison.

The losses in 2022 were driven by fair value decreases in relation to:

(i) marketable equity securities held largely by our consolidated liquid securities funds, net of offsetting fair value changes on short positions;

and (ii) loans receivable in the second quarter of 2022 given the rising interest rate environment.

Additionally, the first quarter of 2022 included a non-cash debt extinguishment loss of $133.2 million, recognized in connection with an early exchange of our 5.75% exchangeable notes (refer to Note 8 to the consolidated financial statements).

Losses in the second quarter of

2022 were partially offset by a decrease in the liability fair value of the warrants issued to Wafra (refer to Note 13 to the consolidated financial statements).

In 2021, the losses were driven by a write-off of an equity investment that was determined to be unrecoverable in June 2021 and an increase in value of the Blackwells settlement liability prior to its settlement in June 2021 (refer to Note 13 to the consolidated financial statements).

In contrast, there were fair value increases on marketable equity securities in 2021 that partially offset these losses.

Administrative expenses increased $1.0 million in the quarter-to-date comparison and $8.9 million in the year-to-date comparison.

The increase is due to higher legal costs in 2022, which more than offset the placement fees incurred in fundraising for DBP II in the second and third quarters of 2021.

Other Gain (Loss)

Other gain increased $21.3 million from $4.7 million to $25.9 million in the quarter-to-date comparison, and other loss increased $138.5 million from $31.7 million to $170.2 million in the year-to-date comparison.

Quarter-to-date

On a quarter-to-date basis, the gain in 2022 was driven by a decrease in the liability fair value of the warrants issued to Wafra (refer to Note 13 to the consolidated financial statements) and an unrealized gain on a non-designated interest rate contract that economically hedges a floating rate debt.

These gains were partially offset by fair value decreases on marketable equity securities held largely by our consolidated liquid securities funds, net of offsetting fair value changes on their short positions.

In 2021, in contrast, gains were recorded on increases in fair value of marketable equity securities.

Losses in the 2022 year-to-date period were driven by fair value decreases in relation to:

(i) a non-cash debt extinguishment loss of $133.2 million in the first quarter of 2022, recognized in connection with an early exchange of our 5.75% exchangeable notes (refer to Note 8 to the consolidated financial statements);

(ii) marketable equity securities held largely by our consolidated liquid securities funds, net of offsetting fair value changes on short positions;

and (iii) loans receivable given the rising interest rate environment (prior to transfer of warehoused loans to a third party sponsored CLO and to our sponsored fund in the third quarter of 2022).

These losses were partially offset by similar gains as recorded in the quarter-to-date period.

In the 2021 year-to-date period, the losses were driven by a write-off of an equity investment that was determined to be unrecoverable in June 2021 and an increase in value of the Blackwells settlement liability prior to its settlement in June 2021 (refer to Note 13 to the consolidated financial statements).

These losses were partially offset by fair value increases on marketable equity securities.

Equity Method Earnings

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

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

(In thousands) 2022 2021 Change 2022 2021 Change

Digital Investment Management (carried interest earnings of $110,779, $11,169, $79,700 and $10,947)

$ 111,795 $ 11,202 $ 100,593 $ 80,733 $ 11,007 $ 69,726

Digital Investment Management $ 122,714 $ 59,196 $ 63,518 $ 203,447 $ 70,203 $ 133,244

Other (53,398) 6,173 (59,571) (7,797) 41,177 (48,974)

$ 69,316 $ 65,369 3,947 $ 195,650 $ 111,380 84,270

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

In 2022, there was significant carried interest accrued in the second quarter, driven by an increase in the valuation of a portfolio company that is currently under contract for sale.

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

In 2022, there was significant carried interest realized in connection with the DataBank recapitalization and the first liquidation of investment by DBP I, along with additional unrealized carried interest recognized for DBP I.

On a year-to-date basis in 2022, this increase was partially offset by a reversal of carried interest in the first quarter.

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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 $11.0 million and $23.8 million for the three and six months ended June 30, 2022, respectively, and $42.2 million and $14.8 million for the three and six months ended June 30, 2021, respectively.

These amounts included basis difference adjustment (as discussed in Note 5 to consolidated financial statements) that increased earnings in 2022 and quarter-to-date 2021, while offsetting year-to-date net loss in 2021.

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

Also included in all periods are earnings from our limited partnership interests in funds in the DigitalBridge Partners opportunistic strategy, representing unrealized fair value increases on the underlying investments of these funds.

Additionally, 2021 included earnings related to fair value increases on an equity method investment that had been accounted for under the fair value option.

Other— The equity method loss in 2022 was driven by $59.6 million of impairment charge in the third quarter on our equity investment in BRSP.

This was partially offset by our share of net income from BRSP and earnings from our limited partnership interests in funds in the DigitalBridge Partners opportunistic strategy, representing unrealized fair value increases on the underlying investments of these funds.

In 2021, the equity method gain can be attributed to earnings from our limited partner interests in the DigitalBridge Partner funds, driven by unrealized fair value changes on their underlying investments.

Also, year-to-date included fair value increases on an equity method investment that had been accounted for under the fair value option.

Beginning May 2021, the equity investment is accounted for as a marketable equity security following a merger of the investee into a special purpose acquisition company.

A gain was also recorded in the third quarter of 2021 from partial sale of our BRSP shares.

These gains were partially offset, year-to-date, by our share of net losses from BRSP, attributed largely to

investment write-downs and BRSP's restructuring costs in the first quarter of 2021, including the BRSP management contract termination fee that was paid to us.

Income Tax Benefit

Income tax benefit was $2.5 million compared to $75.2 million in the three months ended June 30, 2022 and 2021, respectively, and $9.9 million compared to $98.4 million in the six months ended June 30, 2022 and 2021, respectively.

The large deferred tax benefit in 2021 resulted primarily from a write-off of deferred tax liabilities at DataBank when it was determined in the second quarter of 2021 that DataBank would elect REIT status beginning with the 2021 taxable year.

Income tax benefit decreased from $11.0 million to $7.8 million in the quarter-to-date comparison and from $109.4 million to $17.8 million in the year-to-date comparison.

The higher deferred tax benefit in 2021 was driven, year-to-date, by a write-off of deferred tax liabilities at DataBank when it was determined in the second quarter of 2021 that DataBank would elect REIT status beginning with the 2021 taxable year.

2021 also included higher deferred tax benefit recognized in connection with significant severance costs.

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Loss from Discontinued Operations

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

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

(In thousands) 2022 2021 Change 2022 2021 Change

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Operating Company (1,156) 7,177 (8,333) (10,433) (23,354) 12,921

Loss from discontinued operations attributable to DigitalBridge Group, Inc.

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

$ (15,006) $ 68,135 (83,141) $ (122,109) $ (221,036) 98,927

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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.

The net loss in 2022 is attributed largely to the disposition of NRF Holdco in February 2022, specifically, a write-off of unamortized deferred financing costs on the Wellness Infrastructure debt assumed by the buyer and impairment loss recognized based upon the final carrying value of net assets of the Wellness Infrastructure business upon disposition.

The net loss year-to-date in 2022 is attributed to the disposition of NRF Holdco in February 2022, specifically, a write-off of unamortized deferred financing costs on the Wellness Infrastructure debt assumed by the buyer and impairment loss recognized based upon the final carrying value of net assets of the Wellness Infrastructure business upon disposition.

In the quarter-to-date period in 2022, losses were incurred in connection with investment dispositions and fair value decreases.

The net loss in 2021 was driven by significant impairment expense and decreases in asset fair values based upon the selling price of our Wellness Infrastructure and OED portfolios.

Impairment of our investment assets in the third quarter of 2021 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.

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

Preferred Stock Repurchases/Redemptions

In the third quarter of 2022, net loss attributable to common stockholders was reduced by $1.1 million, reflecting the discount on the repurchases of preferred stock.

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.

Non-GAAP Supplemental Financial Measures

Following our decision not to maintain qualification as a REIT for 2022, we no longer present Funds From Operations, a supplemental non-GAAP measure commonly used by equity REITs.

Resulting from the significant growth in our digital investment management business, effective the second quarter of 2022, we report Distributable Earnings, Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) and, specific to our Digital IM segment, Fee Related Earnings (“FRE”) as non-GAAP financial measures attributable to the Operating Company, which more closely align the key performance metrics of our core business to the alternative investment management industry.

Resulting from the significant growth in our digital investment management business, effective the second quarter of 2022, we report Distributable Earnings ("DE"), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) and, specific to our Digital IM segment, Fee Related Earnings (“FRE”) as non-GAAP financial measures attributable to the Operating Company, which more closely align the key performance metrics of our core business to the alternative investment management industry.

We use these non-GAAP financial measures in evaluating the Company’s business performance and in making operating decisions.

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Our calculation of these non-GAAP measures may differ from methodologies utilized by other companies for similarly titled performance measures and, as a result, may not be directly comparable to those calculated by other companies in similar lines of business.

Results of our non-GAAP measures attributable to Operating Company were as follows:

(In thousands) Three Months Ended June 30, 2022

Results of our non-GAAP measures attributable to the Operating Company were as follows:

(In thousands) Three Months Ended September 30, 2022

Attributable to Operating Company:

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Digital IM FRE 21,498

Distributable Earnings ("DE")

Distributable Earnings

Distributable Earnings is an after-tax measure that differs from GAAP net income or loss from continuing operations as a result of the following adjustments, including adjustment for our share of similar items recognized by our equity method investments:

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Distributable Earnings and Adjusted EBITDA reconciliation

(In thousands) Three Months Ended June 30, 2022

(In thousands) Three Months Ended September 30, 2022

Net loss attributable to common stockholders $ (63,273)

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Amortization of acquired above- and below-market lease values, net 80

Impairment loss 12,184

Non-revenue enhancing capital expenditures (10,992)

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Equity method earnings included in DE (16,285)

Non-revenue enhancing capital expenditures deducted from DE and investment costs 3,086

Realized carried interest, net of associated compensation expense (20,258)

Non-revenue enhancing capital expenditures deducted from DE 2,531

Adjusted EBITDA—attributable to Operating Company

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Digital IM FRE reconciliation

(In thousands) Three Months Ended June 30, 2022

(In thousands) Three Months Ended September 30, 2022

Digital Investment Management

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Start-up FRE 2,399

Digital IM FRE 25,459

Attributable to redeemable noncontrolling interests (4,700)

Digital IM FRE—attributable to Operating Company

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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.

At June 30, 2022, our liquidity position was $260 million, including corporate-level cash and $230 million availability under our VFN.

In addition to corporate-level cash at September 30, 2022, our liquidity position is approximately $718 million, including the full $300 million availability under our VFN and the subsequent release of $22 million of distributions received from DBP II out of restricted cash.

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

In the third quarter of 2022, we anticipate cash inflows from partial monetization of our interest in DataBank of approximately $230 million and additionally, a return of funds from our warehoused loans that will be transferred to our new credit fund, as discussed below.

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.

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Significant Liquidity and Capital Activities in 2022

• 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.

• Through October 2022, we received total proceeds of $366 million, including our share of carried interest net of allocation to employees, from partially monetizing our interest in DataBank.

• We continue to reduce higher cost corporate indebtedness through early exchange of an additional $60 million of senior notes in March 2022, and repurchase of $52.6 million of preferred stock at a discount to par, which will generate future savings in interest and preferred dividends.

• 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.

• 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.

Liquidity Needs and Sources of Liquidity

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• cash on hand;

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

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

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

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Investment Commitments

Fund Commitments —As of June 30, 2022, we have unfunded commitments of $65 million, predominantly to our DBP funds.

Fund Commitments —As of September 30, 2022, we have unfunded commitments of $142 million to its sponsored funds.

Wafra Redemption —In connection with the May 2022 redemption of Wafra's interest in our Digital IM business, additional contingent consideration of up to $125 million may be payable in March 2023 and/or March 2024, with up to 50% payable in shares of our class A common stock at our election.

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Lease Obligations

At June 30, 2022, we have $139.3 million and $488.1 million of finance and operating lease obligations, respectively, that were assumed through acquisitions, principally in connection with leasehold data centers and ground space hosting tower communication sites, and $39.1 million of operating lease obligations on our corporate offices.

At September 30, 2022, we have $137.5 million and $477 million of finance and operating lease obligations, respectively, that were assumed through acquisitions, principally in connection with leasehold data centers and ground space hosting tower communication sites, and $36 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.

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

Preferred Stock— At June 30, 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.

Common Stock —The Company reinstated quarterly common stock dividends beginning the third quarter of 2022, with the declaration of a dividend of $0.01 per share of common stock that was paid in October 2022.

Preferred Stock— At September 30, 2022, we have outstanding preferred stock totaling $828 million, bearing a weighted average dividend rate of 7.135% per annum, with aggregate dividend payments of $14.8 million per quarter.

Stock Repurchase

We currently have a $200 million stock repurchase program, with repurchases targeted towards preferred stock to further reduce our leverage.

Through October 2022, we have repurchased $107.6 million in aggregate of preferred and common stock pursuant to a stock repurchase program.

Approximately $92 million remains available out of the $200 million repurchase program, which may be extended, modified, or discontinued at any time by our Board of Directors.

Cash From Operations

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

We primarily generate revenue from net operating income of our digital infrastructure business, which is partially offset by interest expense associated with non-recourse borrowings on our digital portfolio.

We primarily generate revenue from net operating income of our digital infrastructure business, which is partially offset by interest expense

associated with non-recourse borrowings on our digital portfolio.

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

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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.

Carried Interest Distributed

Through October 2022, we received our share of realized carried interest of $22.5 million (net of allocation to employees) in connection with the DataBank recapitalization and DBP I's liquidation of Wildstone.

Warehoused Investments

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The warehoused investments are transferred to the investment vehicle when sufficient third party capital, including debt, is raised.

At June 30, 2022, our warehoused investments include $57 million of equity investments and $381 million of outstanding loan principal, of which $151 million is expected to be transferred to a new credit vehicle in the third quarter of 2022.

The remaining loan balance is partially funded by $168 million of debt.

The largest warehoused investment is currently TowerCo that was acquired in June 2022, for which we funded $278 million at acquisition.

In the third quarter of 2022, we received a return of $98 million in total capital from the transfer of warehoused loans to our newly launched digital credit fund and to a third party sponsored CLO, along with repayment of the corresponding debt.

At September 30, 2022, our largest warehoused investment is TowerCo that was acquired in June 2022, for which we funded $278 million at acquisition.

Other warehoused investments include $55 million of equity investments and one remaining loan of $38 million for which the transfer to our digital credit fund is expected to be completed in the fourth quarter of 2022.

Asset Monetization

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

Wellness Infrastructure— 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.

DataBank— We expect to partially monetize our interest in DataBank in the third quarter of 2022 for approximately $230 million in proceeds.

Efforts to recapitalize DataBank will continue throughout the remainder of 2022, with incremental sales of equity interests in DataBank by existing investors to new investors, which will result in further monetization of our interest in DataBank.

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

Our indebtedness at June 30, 2022 is summarized as follows:

DataBank— Through October 2022, we have partially monetized our interest in DataBank and received total proceeds of $366 million, including our share of carried interest net of allocation to employees.

We anticipate the completion of another closing of the recapitalization of DataBank prior to the end of 2022, which will result in further monetization of our interest in DataBank.

Wellness Infrastructure— 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 obligations is included in Note 8 to the consolidated financial statements.

Our indebtedness at September 30, 2022 is summarized as follows:

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

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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 June 30, 2022 were as follows.

Scheduled principal payments on our debt obligations at September 30, 2022 were as follows.

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

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Total $ 1,558 $ 428,792 $ 890,303 $ 1,224,939 $ 1,949,690 $ 898,852 $ 5,394,134

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 June 30, 2022 for extensions that are at the Company's option.

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 September 30, 2022 for extensions that are at the Company's option.

Securitized Financing Facility

As of the date of this filing, we are in compliance with all of the financial covenants under the securitized financing facility.

As noted above, our VFN availability was increased $100 million to $300 million in April 2022, of which $230 million is available to be drawn as of June 30, 2022.

As noted above, our VFN availability was increased $100 million to $300 million in April 2022, with the full amount available to be drawn as of September 30, 2022.

Non-Recourse Investment-Level Secured Debt

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Significant Developments in 2022

• 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.

• Dispositions— Investment-level debt of $2.86 billion held by NRF Holdco (previously classified as held for disposition) was assumed by the acquirer upon sale of NRF Holdco in February 2022.

In August 2022, $173 million of debt previously financing warehoused loans was repaid following a transfer of the loans into a third party sponsored CLO.

These transactions resulted in further deleveraging of our balance sheet.

• Acquisition— Additional $313 million of debt was undertaken to partially fund the acquisition of TowerCo in June 2022.

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

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2022 2021

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Operating Activities

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 warehoused loans, 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-related costs, as well as compensation and general administrative costs.

Cash inflows from operating activities are generated primarily through fee income, including incentive fees, and distributions of our share of net carried interest from our investment management business, property operating income from our real estate investments, interest received from our warehoused loans, and distributions of earnings received from equity investments.

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

Our operating activities generated net cash inflows of $194.8 million in 2022 and $181.4 million in 2021.

Investing Activities

Investing activities include primarily cash outlays for acquisition of real estate, origination or acquisition of warehoused loans and disbursement on subsequent drawdowns, and new equity investments and subsequent contributions, which are partially offset by repayments and sales of loans receivable, distributions of capital received from equity investments, and proceeds from sale of real estate and equity investments.

These are partially offset by repayments, sales and transfers of warehoused loans receivable, distributions of capital received from equity investments, and proceeds from sale of real estate and equity investments.

Our investing activities generated net cash outflows of $1.9 billion in 2022 and net cash inflows of $85.7 million in 2021.

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

2021 saw net cash inflows of $176.8 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, more than offset capital expenditures.

• Debt investments —Our debt investments generated net cash outflows in 2022 and net cash inflows in 2021.

Cash outflows of $226.5 million in 2022 were driven by origination and acquisition of loans that are warehoused for future investment vehicles, partially offset by repayment and a loan syndication.

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

The N-Star CDOs were subsequently sold as part of the disposition of NRF Holdco in February 2022.

• Equity investments —Our equity investments generated net cash outflows in both years.

In 2022, our equity investments recorded net cash outflows of $33.3 million, largely representing the trading activities in marketable equity securities by our consolidated liquid funds, in addition to funding our digital fund commitments.

In 2021, net cash outflows of $120.7 million can be attributed to funding our digital fund commitments and 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.

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

• Debt investments —Our debt investments generated net cash inflows in both years.

Net cash inflows in 2022 was relatively immaterial at $4.6 million as we have largely transferred our acquired or originated warehoused loans to a sponsored fund and a third party sponsored CLO.

In 2021, net cash inflows of $390.8 million can be attributed to loan repayments, in particular a $305.0 million repayment received on two loans in our Irish loan portfolio, partially offset by acquisition or origination of warehoused loans, and acquisition of additional N-Star CDOs at a discount by our Wellness Infrastructure segment.

• Equity investments —Our equity investments generated net cash inflows in 2022 and net cash outflows in 2021.

In 2022, our equity investments recorded net cash inflows of $97.4 million, largely representing the trading activities in marketable equity securities by our consolidated liquid funds, and a return of capital from the first sale of investment by DBP I, partially offset by additional contributions to our digital funds.

2021 saw 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 were 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.

Financing Activities

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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 of the second quarter of 2022), as well as distributions to noncontrolling interests in our various investments.

Financing activities generated net cash inflows of $760.3 million in 2022 and net cash outflows of $308.7 million in 2021.

Accordingly, we incur cash outlays for payments on our investment-level and corporate debt, dividends to our preferred stockholders and common stockholders (common dividends were reinstated beginning the third quarter of 2022), as well as distributions to noncontrolling interests in our various investments.

Financing activities generated net cash inflows of $741.8 million in 2022 and $198.2 million in 2021.

• In 2022, the large net cash inflow of $741.8 million was driven by financing for the acquisitions of TowerCo and the DataBank data center acquisition through term loans and capital contributions from noncontrolling interests totaling $1.1 billion.

This was partially offset by $388.5 million of cash paid to redeem Wafra's interest in our digital investment management business.

Financing cash inflows also included draws on our corporate VFN revolver and

on credit facilities to finance bank-syndicated warehoused loans.

Other notable cash outflows included acquisition of noncontrolling interest in DataBank and distributions to various noncontrolling interests.

• The financing net cash outflows of $308.7 million in 2021 were driven by $360.9 million of debt repayments exceeding borrowings, primarily repayment of debt financing real estate and loans that were sold or resolved during the year.

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

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

• Dividend payments were $31.5 million in 2022 compared to $37.0 million in 2021 following additional preferred stock redemptions during 2021.

Additionally, cash inflows included our share of proceeds recorded in equity of $302.8 million from sale of a portion of our interest in our DataBank subsidiary in connection with the DataBank recapitalization in August 2022 that was treated as an equity transaction (Note 10).

These inflows were partially offset by $388.5 million of cash paid to redeem Wafra's interest in our digital investment management business in May 2022.

Financing cash outflows also included repayment of our warehouse credit facility of $172.5 million with proceeds from a transfer of

the warehoused loans to a third party CLO, and paydowns on amortizing debt in our Digital Operating business.

Other notable cash outflows included preferred and common stock repurchases totaling $60.8 million and distributions to various noncontrolling interests.

Dividend payments were $47.6 million in 2022, which is lower than 2021 following preferred stock redemptions during 2021 and repurchases during 2022.

• The financing net cash inflows of $198.2 million in 2021 were driven by $285.9 million of borrowings exceeding debt repayments.

Investment-level financing activities included 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 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.

Dividend payments were $56.1 million in 2021.

Risk Management

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These processes are designed to enable management to evaluate and proactively identify investment-specific issues and trends on a portfolio-wide basis for both assets on our balance sheet and assets of the companies within our investment management business.

Nevertheless, we cannot be certain that such review will identify all issues within our portfolio due to, among

other things, adverse economic conditions or events adversely affecting specific assets;

Nevertheless, we cannot be certain that such review will identify all issues within our portfolio due to, among other things, adverse economic conditions or events adversely affecting specific assets;

therefore, potential future losses may also stem from investments that are not identified during these reviews.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis