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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 June 30, 2022.
+Added: The following discussion excludes the effect of market risk on assets and corresponding liabilities that were held for disposition at September 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 —Our corporate debt exposure to variable interest rates is limited to our VFN revolver, which has $70 million outstanding as of June 30, 2022.
−Removed: 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.
−Removed: Of this amount, $1.06 billion or 22% is composed of variable rate debt at June 30, 2022.
−Removed: Our variable rate debt is indexed to either 1-month or 3-month LIBOR, or 6-month Euribor.
−Removed: At June 30, 2022, our exposure to interest rate increases on the TowerCo variable rate debt is economically hedged with interest rate swaps.
+Added: Variable Rate Debt —Our corporate debt exposure to variable interest rates is limited to our VFN revolver, which was fully repaid as of September 30, 2022.
+Added: In terms of investment level financing 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, $1.09 billion or 23% is composed of variable rate debt at September 30, 2022.
+Added: Our variable rate debt is indexed largely to either 1-month or 3-month LIBOR, or 6-month Euribor.
+Added: At September 30, 2022, our exposure to interest rate on the TowerCo variable rate debt is economically hedged with interest rate swaps.
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.
−Removed: 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.
−Removed: 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.
−Removed: Our variable rate loans receivable are indexed primarily to LIBOR.
−Removed: These variable rate loans generally have contractual index floors, which establish minimum index rates.
−Removed: 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.
−Removed: At June 30, 2022, a hypothetical 100 basis point decrease in interest rates would decrease annualized interest income by approximately $11.1 million;
−Removed: 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.
+Added: Based upon the outstanding principal on our variable rate debt at September 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 $8.8 million on a consolidated basis or $1.2 million after attribution to noncontrolling interests.
+Added: Variable Rate Loans Receivable —We hold one warehoused variable rate loan receivable of $38 million at September 30, 2022, for which the transfer to our newly launched digital credit fund is expected to be completed in the fourth quarter of 2022.
+Added: The risk of a decrease in interest rates that would reduce our interest income from the loan is low given the current increasing interest rate environment and the temporary nature of our holding.
Foreign Currency Risk
−Removed: 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.
+Added: As of September 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.
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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.
−Removed: At June 30, 2022, we have entered into foreign exchange contracts as a net investment hedge of our EUR denominated equity investment in TowerCo.
−Removed: In the data center portfolio, the remaining foreign subsidiaries that do not transact in U.S.
+Added: The remaining foreign subsidiaries in our colocation data center business that do not transact in U.S.
dollars make up only a small percentage of our overall digital operating business, which in turn is substantially owned by third party investors.
−Removed: Accordingly, our exposure to foreign currency risk from the operations of our foreign subsidiaries is limited as of June 30, 2022.
+Added: As it relates to our EUR denominated equity investment in TowerCo, we have entered into foreign exchange contracts as a net investment hedge.
+Added: Accordingly, our exposure to foreign currency risk from the operations of our foreign subsidiaries is limited as of September 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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The maturity dates of these instruments approximate the projected dates of related cash flows from the respective investments.
−Removed: At June 30, 2022 , our foreign currency exposure consisted of a GBP loan receivable (£34 million) and an AUD equity investment (A$35 million).
−Removed: As of June 30, 2022, we have entered into foreign exchange forward contracts to mitigate our GBP exposure.
+Added: At September 30, 2022 , our foreign currency exposure consisted of a GBP loan receivable (£35 million) and an AUD equity investment (A$35 million).
+Added: As of September 30, 2022, we have entered into foreign exchange forward contracts to mitigate our GBP exposure.
In connection with our commitment to acquire AMP Capital, our consideration payable in U.S.
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The consideration is payable in U.S.
−Removed: 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.
+Added: dollars at the spot foreign exchange rate on the closing date of the acquisition, provided 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 June 30, 2022, our digital liquid securities strategy make up 4.7% of our $19 billion FEEUM.
+Added: At September 30, 2022, our digital liquid securities strategy make up 4.9% of our $21 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 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.
+Added: At September 30, 2022, we had $150.0 million of long positions and $35.1 million of short positions in marketable equity securities, held predominantly by our consolidated sponsored liquid funds.
Realized and unrealized gains and losses from marketable equity securities are recorded in other gain (loss) on the consolidated statement of operations.
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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.
−Removed: 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.
+Added: 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, which represent noncontrolling interests.
Commodity Price Risk
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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.