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Item 7. Management’s Discussion and Analysis

2023-02-27 compared with 2022-02-28 · 514 added, 431 removed, 235 unchanged (80% of the section changed)

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Significant Developments

The following summarizes significant developments in 2021 and through the date of this filing that affected our business and results of operations.

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

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

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

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

Proceeds from issuance of the Class A-2 Notes of $285 million, net of offering costs and $5.4 million of interest reserve deposit, are being applied for acquisitions of digital infrastructure investments, funding of commitments to sponsored funds, redemption or repayment of other higher cost corporate securities, and/or general corporate purposes.

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

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

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

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

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

• In 2021, we reduced higher cost corporate indebtedness by $343 million.

This reduction encompasses:

(i) $193 million of corporate debt extinguished through $32 million repayment upon maturity and early exchange of $161 million of senior notes into shares of our class A common stock;

and (ii) $150 million of preferred stock redeemed.

The following summarizes significant developments that affected our business and results of operations in 2022 and through February 2023.

Transition To Taxable C Corporation

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

Without the constraints of maintaining REIT status, we have more flexibility to execute various strategic initiatives, including the redemption of Wafra, as discussed below.

Incremental tax burden is not expected to be significant in the near term given the availability of significant capital loss and NOL carryforwards and that our investment management business, prior to the transition, was already taxable under a TRS.

Capitalization and Financing

• Effective April 2022, the availability under our Series 2021-1 Secured Fund Fee Revenue Variable Funding Notes ("VFN") was increased by $100 million to $300 million.

• 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.

• $55 million of class A common stock in aggregate was repurchased in September and October 2022 at a weighted average price of $13.09 per share.

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

• We reinstated quarterly common stock dividends at $0.01 per share beginning the third quarter of 2022.

Digital Business

• DBP II, our second flagship digital infrastructure fund, had its final closing in December 2021 with commitments totaling $8.3 billion (inclusive of $120 million of our commitments as limited partner and general partner).

The successful fundraising for DBP II significantly exceeded our initial target and stands at twice the size of DBP I.

Digital Operating

• Our DataBank subsidiary completed its restructuring in the second quarter of 2021 and expects to elect REIT status for the 2021 taxable year, resulting in a write-off of $67 million of net deferred tax liabilities.

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

• We acquired an additional data center and build-out of expansion capacity within the Vantage SDC portfolio, including lease-up of the expanded capacity and existing inventory, for aggregate payments of $505 million, funded primarily through borrowings by Vantage SDC.

• In January 2022, DataBank entered into a definitive agreement to acquire four colocation data centers in Houston, Texas for $670 million.

Based upon total equity investment by DataBank, our share of the investment is $91 million.

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

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

The transaction is expected to close in March 2022, subject to customary closing conditions and regulatory approval.

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

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

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

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

• In January 2022, we acquired additional interest in DataBank from a selling investor for $32.0 million, which increased our ownership in DataBank to 21.9%.

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

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

Non-Digital Assets

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

• In December 2021, pursuant to a definitive agreement entered into in June 2021, we sold our interests in a substantial majority of our OED investments and Other IM business for cash consideration of $443 million, net of closing adjustments of $31 million, representing net cash already received, largely for asset monetizations realized prior to closing.

Approximately $510 million of consolidated investment-level debt was assumed by the acquirer.

• In February 2022, pursuant to a definitive agreement entered into in September 2021 (as amended in February 2022), we sold our Wellness Infrastructure business in a transaction valued at $3.1 billion, including the acquirer's assumption of $2.86 billion of consolidated investment-level debt.

The sales price was $281 million, composed of $126 million in cash and a $155 million 5-year seller note.

In addition, we received a $35 million cash distribution from NRF Holdco prior to closing.

• Based upon the sales price for the Wellness Infrastructure assets, OED investments and Other IM business, the carrying values of these assets were written down by $625 million in aggregate, of which $265 million was attributable to the OP, included in discontinued operations.

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

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

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

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

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

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

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

• In October 2021, our equity interest in a private healthcare real estate investor/manager (the "Investee") was diluted following an acquisition of the Investee in conjunction with a merger of the Investee's co-sponsored non-traded REITs.

In connection with this transaction, we received distributions of $7.8 million cash and units in the operating company of the new combined non-traded healthcare REIT, valued at approximately $45 million, based upon the net asset value of the non-traded healthcare REIT.

As a result, we recorded a $7.4 million realized gain and approximately $37 million of unrealized gain.

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

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

Our share of excess net proceeds was $103.5 million.

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

• For all current and prior periods presented, all non-digital assets that have been disposed or subject to planned disposition, and associated liabilities (excluding our interest in BRSP, except for BRSP shares and units held by NRF Holdco) are presented as held for disposition, and the related operating results are presented as discontinued operations (Notes 11 and 12 to the consolidated financial statements).

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

Investment Management segment

• In February 2023, we completed our previously announced acquisition of InfraBridge (formerly AMP Capital's global infrastructure equity business) for $316 million (excluding net working capital), subject to customary post-closing adjustments, plus potential contingent payments based upon future fundraising for InfraBridge's third and fourth flagship funds under the Global Infrastructure Fund ("GIF") series.

The acquisition comprises InfraBridge's investment management platform, fund sponsor investments, and retained performance fees.

The acquisition further scales our investment management business.

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

The acquisition added $5.6 billion in fee earning equity under management ("FEEUM"), comprising GIF II and GIF I investment funds, as well as co-investment vehicles, and is expected to be immediately accretive to our fee related earnings.

• In 2022, we received our share of carried interest distributions of $32.6 million (net of allocation to employees and to Wafra) in connection with the DataBank recapitalization and sales of investments by DBP I and DBP II.

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

Consideration for the redemption was valued at $862 million at closing, consisting of:

(i) net cash paid of $388.5 million;

(ii) issuance of 14.4 million shares of our class A common stock valued at $349 million at closing;

and (iii) contingent amount up to $125 million based upon future capital raise thresholds, payable to Wafra in March 2023 for portion earned in 2022 and March 2024 for any remaining portion earned in 2023, with up to 50% payable in common stock at our election.

Based upon capital raised in 2022, $90 million of the contingent amount is payable in March 2023.

Following the redemption, 100% of net cash flows from our fee business accrue to us, and we are entitled to 100% of carried interest net of management allocations from future investment products.

The transaction is described further in Note 10 to the consolidated financial statements in Item 15 of this Annual Report.

Operating segment

• The partial recapitalization of DataBank in the second half of 2022 resulted in the sale of a portion of DataBank's equity interest to new investors totaling $2.0 billion.

Our ownership interest in DataBank decreased from 20% as of December 2021 to 11.0% as of December 2022.

Our share of proceeds from the sale totaled $425 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.

The incremental third party capital raised through the recapitalization also translates into additional fee income in our Investment Management segment.

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

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 $230 million.

• DBP I and DBP II each had its first sale of investment in 2022 which generated $24 million of distributions to us (excluding carried interest described above).

At December 31, 2022, we had investments of $97 million in DBP I and $102 million in DBP II as general partner and limited partner.

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

TNET, "Telenet") for €740 million or $791 million (including transaction costs) .

The acquisition was funded through $326 million of debt, $278 million of equity from the Company, and $214 million of third party equity (at acquisition date exchange rate), including funding for transaction costs, debt issuance costs and working capital.

In December 2022, our interest in the temporarily warehoused TowerCo investment was transferred to our new sponsored fund and TowerCo was deconsolidated.

We received a return of our capital plus a holding fee of an aggregate $282 million (at transfer date exchange rate).

Non-Digital Business

• We recorded an other-than-temporary impairment of $60 million on our investment in BRSP in 2022.

Given the continuing market volatility, 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

Below is a summary of our AUM and FEEUM.

AUM (1)(3) (In billions)

FEEUM (2)(3) (In billions)

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

Third Party Managed Capital

Institutional Funds Digital Bridge Partners opportunistic strategy Earns management fees and potential for carried interest or incentive fees $ 16.6 $ 9.3 $ 11.2 $ 7.0

Liquid securities strategy 0.8 0.5 0.8 0.4

Other Investment Vehicles Digital co-invest vehicles Earns management fees, business service fees from portfolio companies, and potential for carried interest 19.3 9.9 4.2 2.6

Digital real estate and infrastructure held by portfolio companies 6.9 8.9 2.1 2.8

Type Products Description December 31, 2022 December 31, 2021

Assets under Management (1)

$ 51.3 $ 43.6

Balance Sheet Capital (4)

Digital Operating 1.2 1.1 NA NA

Other 0.5 0.3 NA NA

Fee Earning Equity under Management (2)

Institutional Funds DBP infrastructure equity Earns management fees and potential for carried interest or incentive fees $ 11.2 $ 11.2

Core Equity, DigitalBridge Credit and Liquid Strategies 2.0 0.8

Other Investment Vehicles Digital co-invest vehicles Earns management fees, business service fees from portfolio companies, and potential for carried interest 6.5 4.2

Digital infrastructure held by portfolio companies 2.5 2.1

$ 22.2 $ 18.3

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

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

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

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

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

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

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

FEEUM generally represents the basis used to derive fees, which may be based upon invested equity, stockholders’ equity, or fair value, pursuant to the terms of each underlying investment management agreement.

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

(3) Our non-digital investment management business was disposed in the fourth quarter of 2021.

AUM and FEEUM associated with our non-digital investment management business are no longer presented for the prior year period.

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

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

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

At December 31, 2021, our third party AUM stood at $43.6 billion.

• FEEUM grew 43% or $5.5 billion to $18.3 billion at December 31, 2021, attributed to the successful fundraising for DBP II and additional capital from co-investment vehicles.

These increases were partially offset by a change in the fee base for DBP I from committed to contributed capital following the closing of DBP II.

DBP II had its final closing in December 2021 with total commitments of $8.3 billion, having raised $4.2 billion in 2021.

The successful fundraising for DBP II significantly exceeded our initial target and stands at twice the size of DBP I.

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

• FEEUM increased by $3.9 billion or 21% to $22.2 billion at December 31, 2022, reflecting primarily capital raised in the recapitalization of DataBank and the closing of our new Core Equity fund.

• The acquisition of InfraBridge's global infrastructure equity platform in February 2023 added $5.6 billion of FEEUM.

Results of Operations

A comparative discussion of our consolidated results of operations for 2021 and 2020 is presented below.

Refer to Item 7.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2020 Annual Report on Form 10-K for comparative discussion of our consolidated results of operations for 2020 and 2019.

In 2021, our Wellness Infrastructure segment and substantially all of our Other segment qualified as discontinued operations.

The operating results of those segments for all periods presented have been recast as income from discontinued operations on the consolidated statements of operations.

Additionally, beginning with the third quarter of 2021, only Digital Investment Management and Digital Operating represent reportable segments, while our remaining investment activities and corporate level activities are combined and presented as Corporate and Other.

The operating results by segment have been recast for all prior periods presented.

The discussion of our consolidated results of operations for 2020 and 2019 in our 2020 Form 10-K should be read in conjunction with Item 15.

"Exhibits and Financial Statement Schedules" in this Annual Report, specifically the consolidated statement of operations, Note 12.

Discontinued Operations and Note 20.

Segment Reporting.

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

"Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2021 Annual Report on Form 10-K, which is incorporated by reference herein, for comparative discussion of our consolidated results of operations for the prior year periods of 2021 and 2020.

The Company's current business and operations reflect the completion in February 2022 of its transformation from a REIT and investment manager of a diversified real estate portfolio into an investment manager focused primarily on digital infrastructure.

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

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

A comparative discussion of our consolidated results of operations for 2022 and 2021 is presented below.

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

Year Ended December 31,

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Total revenues

Digital Investment Management $ 191,682 $ 85,782 $ 105,900

Digital Operating 763,199 313,283 449,916

Investment Management $ 182,045 $ 191,682 $ (9,637)

Operating 884,874 763,199 121,675

Corporate and Other 77,653 10,918 66,735

$ 1,144,572 $ 965,799 178,773

$ 965,799 $ 416,430 549,369

Income (loss) from continuing operations

Digital Investment Management $ 90,915 $ 11,155 $ 79,760

Digital Operating (230,841) (132,063) (98,778)

Investment Management $ 186,084 $ 90,915 $ 95,169

Operating (330,331) (230,841) (99,490)

Corporate and Other (277,046) (76,897) (200,149)

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

Digital Investment Management $ 51,531 $ 10,423 $ 41,108

Digital Operating (36,664) (20,903) (15,761)

Investment Management $ 69,884 $ 51,531 $ 18,353

Operating (53,178) (36,664) (16,514)

Corporate and Other (228,410) (87,506) (140,904)

$ (211,704) $ (72,639) (139,065)

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

Total revenues increased $549.4 million or 132%.

• Digital Investment Management— Revenues from our investment management business grew 123% to $191.7 million as a result of significant growth in our FEEUM from $12.8 billion at December 31, 2020 to $18.3 billion at December 31, 2021 following the successful fundraising for DBP II and co-invest vehicles.

DBP II had its final closing in December 2021 at $8.3 billion of total commitments, with $4.2 billion raised in 2021.

• Digital Operating— 2021 includes a full fiscal year of revenues from zColo's 39 colocation data centers (held through our subsidiary, DataBank, 20% DBRG ownership during 2021) and Vantage SDC's 12 hyperscale data centers (13% DBRG ownership), acquired in December 2020 and July 2020, respectively.

2021 also included

additional acquisitions with another five zColo colocation data centers, and in the Vantage SDC portfolio, an add-on acquisition plus additional lease-up of expanded capacity and existing inventory.

Income (loss) from continuing operations

• Digital Investment Management— In addition to higher fee income, 2021 also included significant unrealized carried interest income, which accrues to the Company net of allocations to certain employees.

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

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

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

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

The significantly larger net loss in 2020 was driven by $298.2 million of losses in connection with our equity investment in BRSP, including a $254.5 million impairment.

BRSP represents our largest remaining non-digital investment.

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

Comparison of Year Ended December 31, 2021 to Year Ended December 31, 2020

Total revenues increased 18.5% to $1.1 billion.

• Investment Management— Revenues were 5% lower at $182.0 million.

2021 had included incentive fees from our Liquid Strategies.

Management fees increased marginally in 2022 with the effect of additional capital raises largely offset by a catch-up of DBP II fees in 2021 and one-time fee adjustments in 2022.

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

• Operating— Revenues were higher in 2022, resulting from data center acquisitions, additional lease-up of expanded capacity in Vantage SDC, and a one-time lease termination fee at Vantage SDC.

• Corporate and Other— Higher revenues in 2022 reflect primarily lease income from the warehoused tower business acquired in June 2022, and interest income from credit investments originated in 2020 through early 2022.

These warehoused investments were transferred to our new sponsored funds in the second half of 2022.

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

Net loss from continuing operations attributable to DBRG increased 191% to $211.7 million, driven by a one-time non-cash loss in Corporate and Other.

• Investment Management— Net income attributable to DBRG increased 35.6% to $69.9 million.

Subsequent to the redemption of Wafra's 31.5% interest in Investment Management in May 2022, 100% of net income in Investment Management is attributed to DBRG.

2022 net income included our share of carried interest, net of allocation to employees, of $63.7 million (of which $32.6 million has been distributed to us).

Tempering this effect is an increase in operating costs as we continue to ramp up resources and invest in our growing Investment Management segment.

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

Our share of net loss reflects a 13% ownership in Vantage SDC and our interest in DataBank, which decreased from 20% as of December 2021 to 11% as of December 2022.

Net loss was lower in 2021 due to a large deferred tax benefit from write-off of deferred tax liabilities at DataBank, resulting from DataBank's election of REIT status beginning with the 2021 taxable year.

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

Also included are the effects of fair value changes on investments carried at fair value, including our share of earnings from our fund investments.

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 in Item 15 of this Annual Report).

A more detailed discussion of key components of revenue and income (loss) from continuing operations follows.

Year Ended December 31,

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Property operating income $ 927,506 $ 762,750 $ 164,756

Interest income 8,791 7,206 1,585

Fee income 172,673 180,826 (8,153)

Interest income 30,107 8,791 21,316

Other income 14,286 13,432 854

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Depreciation and amortization 576,911 539,695 37,216

Impairment loss — 25,079 (25,079)

Compensation expense, including carried interest 301,875 178,058 123,817

Compensation expense, including incentive fee and carried interest allocation 447,543 301,875 145,668

Administrative expenses 123,184 109,490 13,694

Settlement loss — 5,090 (5,090)

Total expenses 1,779,597 1,488,225 291,372

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Other loss, net (170,555) (21,412) (149,143)

Equity method earnings (losses), including carried interest 226,477 (260,579) 487,056

Equity method earnings, including carried interest 397,754 226,477 171,277

Loss before income taxes (407,826) (317,361) (90,465)

Income tax benefit 100,538 47,063 53,475

Income tax benefit (expense) (13,467) 100,538 (114,005)

Loss from continuing operations (421,293) (216,823) (204,470)

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(321,797) (310,097) (11,700)

Preferred stock redemption 4,992 — 4,992

Preferred stock repurchases/redemptions (1,098) 4,992 (6,090)

Preferred stock dividends 61,567 70,627 (9,060)

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Property operating income

Operating segment

Lease income $ 806,965 $ 701,706 $ 105,259

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884,526 762,750 121,776

Lease income 42,980 — 42,980

$ 927,506 $ 762,750 164,756

Property operating expense

Property operating income and expense amounts were higher in 2021, reflecting the operating results for a full fiscal year in 2021 for zColo's 39 colocation data centers and Vantage SDC's 12 hyperscale data centers, acquired in December 2020 and July 2020, respectively.

2021 also included additional acquisitions with another five zColo colocation data centers, and in the Vantage SDC portfolio, an add-on acquisition plus additional lease-up of expanded capacity and existing inventory.

Total real estate carrying value in our Digital Operating segment stood at $4.97 billion at December 31, 2021 compared to $4.45 billion at December 31, 2020.

Our portfolio includes 69 data centers in the U.S., three in Canada, one in the U.K., and five in France.

Operating segment $ 376,255 $ 316,178 $ 60,077

Other 13,190 — 13,190

$ 389,445 $ 316,178 73,267

Operating Segment

Property operating income and expense are higher in 2022, reflecting 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 and 2022.

Additionally, 2022 included $6.0 million of fees received from lease terminations in the Vantage SDC portfolio.

Total real estate carrying value in our Operating segment increased to $5.92 billion at December 31, 2022 compared to $4.97 billion at December 31, 2021 following the DataBank March 2022 acquisition.

At December 31, 2022, our Operating segment portfolio includes 75 data centers in the U.S., three in Canada, one in the U.K., and five in France.

December 31, 2022 December 31, 2021

Operating segment

Number of data centers (1)

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% Utilization Rate (% Leased)

On a same store basis, property operating income and expense also increased in 2021, reflecting an increase in leased square footage.

Additionally, higher power costs were incurred in connection with inclement weather conditions in 2021, with the incremental cost largely billed to our colocation tenants.

Interest Income

Interest income was $1.6 million higher.

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

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

(1) In 2022, DataBank acquired a previously leased data center.

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

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

Our interest in the temporarily warehoused investment was transferred to our new sponsored fund and the investment was deconsolidated in December 2022.

Year Ended December 31,

(In thousands) 2022 2021 Change

Digital Investment Management

Investment Management

Management fees

5 unchanged sentences

$ 172,673 $ 180,826 (8,153)

Fee income was higher by $97.5 million.

The increase was driven by:

(i) the successful fundraising for DBP II beginning November 2020 with a final close in December 2021 at $8.3 billion of total commitments, having raised $4.2 billion in 2021;

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

The increase in fees from DBP II and new co-invest vehicles were partially offset by lower fees from DBP I in 2021 with a change in its fee base from committed capital to contributed capital following the first closing of DBP II.

Other income increased $0.5 million, which can be attributed primarily to higher professional service fees incurred on behalf of and reimbursable by our managed investment vehicles.

Fee income was $8.2 million lower in 2022.

The decrease was driven by an absence of incentive fees from our Liquid Strategies ($7.2 million in 2021) given the unfavorable performance of equity markets in 2022, lower service fees from portfolio companies following the expiration of a service agreement in the fourth quarter of 2021, and a one-time advisory fee in 2021.

Management fees increased $1.3 million in 2022, There were higher management fees in 2022 attributed to capital raised through the recapitalization of DataBank, new co-investment vehicles, sub-advisory accounts and additional capital calls by directly managed portfolio companies.

However, this was largely offset by a catch-up of DBP II fees in 2021 for the 2020 period and one-time fee adjustments in 2022, including for excess organizational costs of DBP II which were credited to investors as a fee reduction.

Interest Income

Interest income was $21.3 million higher at $30.1 million in 2022.

The increase can be attributed to warehoused credit investments originated or acquired during 2022, paid-in-kind interest on an unsecured promissory note in connection with the sale of our Wellness Infrastructure business in February 2022, and interest earned on money market deposits.

Other income increased $0.9 million to $14.3 million in 2022.

The increase was primarily due to dividend income from our equity interest in a third party non-traded REIT and loan origination fees earned in connection with a loan syndication, partially offset by lower professional service fees incurred on behalf of and reimbursable by our managed investment vehicles.

Interest Expense

1 unchanged sentence

(In thousands) 2022 2021 Change

Digital Investment Management $ 4,766 $ — $ 4,766

Digital Operating

Investment Management segment $ 10,872 $ 4,766 $ 6,106

Operating segment

159,409 125,387 34,022

2 unchanged sentences

$ 198,498 $ 186,949 11,549

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

Digital Operating— The increase of $47.4 million is attributed to:

(i) a full year of interest expense in 2021 incurred on debt financing the Vantage SDC and zColo portfolios, acquired in July 2020 and December 2020, respectively;

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

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

This increase was partially offset by lower interest expense on the DataBank portfolio following its March 2021 and October 2021 securitization transactions which meaningfully reduced its cost of debt.

The weighted average interest rate on DataBank's outstanding debt was 6.08% per annum in 2020 and 2.35% per annum in 2021.

Overall, at December 31, 2021, our data center portfolio was financed by an aggregate $4.22 billion of outstanding debt principal ($3.23 billion at December 31, 2020), bearing a combined weighted average interest rate of 2.88% per annum (3.69% per annum at December 31, 2020).

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

Corporate-level Debt— Interest expense was $13.3 million higher.

This increase can be attributed to:

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

and (ii) debt conversion expense of $25.1 million recognized in connection with an early exchange of $161.3 million of our 5.75% exchangeable notes into shares of our class A common stock in the fourth quarter of 2021 (refer to Note 8 to the consolidated financial statements).

This increase was partially offset by lower interest expense on our corporate credit facility that was terminated in July 2021, which included a proportional write-off of deferred financing costs in June 2020 following a reduction in the facility amount.

Investment Management Segment— This represents interest on the portion of our securitized financing facility allocated to the Investment Management segment.

Interest expense for 2022 reflects a full year of expense compared to a partial year for 2021, as the securitization closed in July 2021, as well as additional expense from drawdowns on the VFN during 2022.

Operating Segment— The increase of $34.0 million is attributable to 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;

(iii) our securitized financing facility beginning July 2021 which is partially allocated to the Operating segment;

and (iv) higher variable interest rates.

At December 31, 2022, our data center portfolio was financed by an aggregate $4.63 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 3.71% per annum (2.88% per annum at December 31, 2021).

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

(i) debt partially funding the acquisition of tower assets in June 2022 prior to the transfer to our new sponsored fund in December 2022;

(ii) our securitized financing facility beginning in July 2021 that is partially allocated to our DigitalBridge Credit and Liquid Strategies investments on the balance sheet;

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

Corporate-level Debt— Interest expense decreased $39.7 million in 2022.

The decrease was driven by higher interest expense in 2021 due to:

(i) $25.1 million of debt conversion expense in connection with an early exchange of $161 million of our 5.75% exchangeable notes into class A common stock in the fourth quarter;

and (ii) interest expense on our corporate credit facility that was terminated in July 2021.

The early exchange of our 5.75% exchangeable notes in 2021 along with an additional $60 million in March 2022 resulted in the extinguishment of higher cost corporate debt, which contributed to lower interest expense in 2022.

Investment Expense

Investment expense was $14.7 million higher.

The increase was related primarily to a full year of management fees paid to Vantage for the day-to-day operations of Vantage SDC beginning the end of July 2020, fees paid in 2021 for transitional services in connection with the zColo portfolio, and reimbursable due diligence costs incurred in our investment management business.

Investment expense increased $5.6 million to $33.9 million in 2022.

The increase is attributable largely to compensatory expense recognized in connection with equity awards granted to the management team of Vantage Data Centers Holdings, LLC ("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 investment in 2022.

These increases were partially offset by lower costs in 2022 in connection with transition services for DataBank's acquisition of zColo.

Transaction-Related Costs

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

Transaction-related costs increased by $4.3 million to $10.1 million in 2022, attributed to the acquisition of InfraBridge, partially offset by lower costs related to unconsummated investments.

Depreciation and Amortization

Increase in depreciation and amortization reflects a full year of expense in 2021 on real estate and intangible assets acquired from Vantage SDC in July 2020 and zColo in December 2021, and in connection with an add-on acquisition and additional lease-up of expanded capacity and existing inventory in the Vantage SDC portfolio in 2021.

Impairment Loss

There was no impairment loss in 2021.

Impairment loss of $25.1 million in 2020 pertains to:

(i) a management contract intangible due to reduced cash flows from the original Vantage contract, which was replaced by a new fee stream

from third party capital raised in our acquisition of Vantage SDC;

(ii) right-of-use lease asset on certain corporate office leases due to reduced need for office space based upon the Company’s operations;

and (iii) corporate aircraft that was written down to recoverable value prior to its sale in January 2021.

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.

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;

and (ii) a decrease in amortization expense on lease intangibles following the expiration of short term leases in our colocation data center business.

Compensation Expense

5 unchanged sentences

437,443 301,875 135,568

Total compensation expense was $123.8 million higher, driven primarily by:

• compensation cost associated with data center employees of zColo who became employees of the Company following the zColo acquisition in December 2020;

• higher severance payments, including acceleration of equity-based compensation in 2021;

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

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

Equity-based compensation — Databank Recapitalization

10,100 — 10,100

$ 447,543 $ 301,875 145,668

Compensation expense increased $135.6 million, excluding accelerated equity awards resulting from the DataBank recapitalization as discussed below.

The increase 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.

Additionally, there was an increase in cash compensation in 2022, driven by (i) higher headcount supporting our growing investment management business and at DataBank following the expiration of a transitional services arrangement in connection with its zColo acquisition and expansion of its data center portfolio;

and (ii) higher allocation of the contingent consideration received from Wafra as additional management compensation in 2022 (refer to Note 10 to the consolidated financial statements in Item 15 of this Annual Report).

These increases were partially offset by significant severance payments in 2021.

Equity-based compensation, however, decreased in 2022, attributed largely to stock award acceleration in 2021 and reversal of expense in 2022 related to dividend equivalent rights which are subject to fair value adjustments.

The DataBank recapitalization transaction in October 2022 triggered an accelerated vesting of certain profits interest units that had been issued by DataBank to its employees.

As a result, $10 million of additional equity based compensation was recorded for the Operating segment, of which $7.8 million was attributable to noncontrolling interests in investment entities.

Administrative Expenses

Administrative expense increased $30.7 million, attributable largely to administrative costs associated with our new zColo portfolio, growth in our Digital Operating business, placement fees incurred in fundraising for DBP II, and higher professional fees.

Settlement Loss

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

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

Other loss was $21.4 million in 2021 and $6.5 million in 2020.

The larger loss in 2021 was driven by a write-off of an equity investment that was determined to be unrecoverable.

Additionally, both 2021 and 2020 included losses from an increase in value of the Blackwells settlement liability prior to its settlement in June 2021 based upon an increase in the DBRG stock price, which was more pronounced in 2021 (refer to Note 13 to the consolidated financial statements).

However, these losses were partially offset in both years, more so in 2021, by fair value increases in marketable equity securities held by our consolidated digital liquid securities funds.

Equity Method Earnings (Losses)

Administrative expenses increased $13.7 million to $123.2 million in 2022.

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

Other loss increased by $149.1 million from $21.4 million in 2021 to $170.6 million in 2022.

Losses in the 2022 were driven by:

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

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

(iii) fair value decrease in credit investments given the rising interest rate environment (prior to transfer of warehoused investments to a third party sponsored CLO and to our sponsored fund in August and December 2022);

and (iv) decrease in the net asset value ("NAV") of our equity investment in a non-traded healthcare REIT.

These losses were partially offset by a $63.7 million gain to recognize a decrease in fair value of the warrants issued to Wafra from its initial measurement in May 2022 (refer to Note 11 to the consolidated financial statements).

In the 2021, the losses were driven by a write-off of an equity investment that was determined to be unrecoverable and an increase in value of the settlement liability with Blackwells Capital, LLC ("Blackwells") prior to its settlement in June 2021 (refer to Note 11 to the consolidated financial statements in Item 15 of this Annual Report).

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

Equity Method Earnings

Year Ended December 31,

(In thousands) 2022 2021 Change

Digital Investment Management $ 101,811 $ 13,039 $ 88,772

Investment Management $ 382,463 $ 101,811 $ 280,652

Other 15,291 124,666 (109,375)

$ 397,754 $ 226,477 171,277

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

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

The unrealized carried interest recognized to-date are in connection with investment vehicles that are in the early stage of their lifecycle.

Other— These amounts were driven primarily by our investment in BRSP for which we recorded earnings of $41.2 million in 2021 and losses of $298.2 million in 2020.

The large loss in 2020 can be attributed to a $254.5 million

impairment charge on our equity investment in BRSP (excluding amounts associated with BRSP shares and units held by NRF Holdco that is presented as discontinued operations).

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

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

However, our basis difference adjustment (as discussed in Note 5 to consolidated financial statements) more than offset our share of loss from BRSP in 2021 while partially reducing our loss from BRSP in 2020.

Additionally, we recorded a $44.3 million gain in 2021 from our equity investment in a healthcare real estate investor/manager following an acquisition of the investee in conjunction with a merger of the investee's co-sponsored non-traded REITs.

In connection with this transaction, we received distributions of $7.8 million cash and units in the operating company of the new combined non-traded healthcare REIT, valued at its net asset value.

2021 also included higher unrealized gains from an equity investment following a merger of the investee into a special purpose acquisition company in 2021, and our limited partnership interests in DBP I and DBP II, specifically our share of fair value increases on the underlying investments of these funds.

Income Tax Benefit

Income tax benefit increased $53.5 million, which can be attributed primarily to the following:

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

• increase in compensation expense, primarily significant severance costs in 2021;

partially offset by

• higher income tax expense on our investment management business resulting from significant growth in fee income in 2021;

• deferred tax expense recognized in 2021 on an unrealized gain from our equity investment in a non-traded healthcare REIT (as discussed under "—Equity Method Earnings (Losses)" ).

Investment Management— These amounts represent predominantly gross carried interest from our general partner interests in sponsored investment vehicles prior to allocations to management.

2022 included $152.5 million of gross carried interest distributed in connection with the recapitalization of DataBank and sales of investments by DBP I and DBP II.

There was also higher unrealized gross carried interest recognized for DBP I and DBP II in 2022.

Our share of net carried interest after management allocations was $63.7 million (of which $32.6 million has been distributed to us) in 2022 and $20.3 million unrealized in 2021.

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

In the interim period, carried interest may be reversed as a function of continuing accrual of preferred returns over time while fair value of underlying investments remain largely consistent.

Other— The equity method gain in 2022 can be attributed to our share of net income from BRSP and earnings from our investment in DBP I and DBP II, representing distributions from realized investments and unrealized fair value increases on the investments of these funds.

These gains were largely offset by $60.4 million of impairment charge recorded in the third and fourth quarter of 2022 on our equity investment in BRSP.

The equity method gain in 2021 was driven by:

• $44.3 million gain from our equity investment in a healthcare real estate investor/manager following an acquisition of the investee in conjunction with a merger of the investee's co-sponsored non-traded REITs.

In connection with this transaction, we received distributions of $7.8 million cash and units in the operating company of the newly combined non-traded healthcare REIT, valued at its net asset value.

• our share of earnings from our investment in DBP I and DBP II, driven by unrealized fair value changes on their underlying investments.

• 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.

• our share of net income from BRSP and gain from partial sale of our BRSP shares.

Income Tax Benefit (Expense)

There was an income tax expense of $13.5 million in 2022 and an income tax benefit of $100.5 million in 2021.

Income tax expense in 2022 reflects primarily the establishment of valuation allowance against the Company's deferred tax asset balance.

With respect to deferred tax assets recognized during the year, as these were largely associated with full valuation allowance, there was no resulting net effect to the income tax provision in 2022.

Realizability of deferred tax assets is discussed further in Note 17 to the consolidated financial statements, included in Item 15 of this Annual Report.

The deferred tax benefit in 2021 was driven primarily by a write-off of significant deferred tax liabilities at DataBank, attributed to DataBank's election of REIT status beginning with the 2021 taxable year, and also NOL generated by the Company's previously designated TRS.

Loss from Discontinued Operations

3 unchanged sentences

Expenses (248,184) (1,282,168) 1,033,984

Other loss (111,679) (356,337) 244,658

Income tax expense (49,900) (39,671) (10,229)

Other gain (loss) 6,320 (111,679) 117,999

Income tax benefit (expense) 2,748 (49,900) 52,648

Loss from discontinued operations (148,704) (600,088) 451,384

5 unchanged sentences

Discontinued operations represent primarily the operations of the following businesses:

(1) Wellness Infrastructure;

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

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

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

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

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

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

Impairment of our investment assets in 2021 was partially offset by significantly less depreciation and amortization expense and various gains recognized during the year, including a gain on extinguishment of debt on the hotel portfolio that was sold in September 2021.

A detailed income statement on discontinued operations is included in Note 12 to the consolidated financial statements and the monetization of our discontinued businesses is discussed further under " —Business.

Preferred Stock Redemption

In connection with a full redemption of Series G preferred stock in August 2021 and partial redemption of Series H preferred stock in November 2021, net income attributable to common stockholders was reduced by $5.0 million in aggregate, representing the excess of the $25.00 per share redemption price over the carrying value of the preferred stock that is net of issuance cost.

The net loss in 2022 is attributed to the disposition of NRF Holdco, LLC ("NRF Holdco") in February 2022, specifically, a write-off of unamortized deferred financing costs on the Wellness Infrastructure debt assumed by the buyer, impairment loss based upon final carrying value of the Wellness Infrastructure net assets upon disposition, and a write-down in value of an equity investment upon disposition of its remaining assets.

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 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.

A detailed income statement on discontinued operations is included in Note 22 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 in August 2021 and Series H in November 2021, net loss attributable to common stockholders was increased by $5.0 million, representing the excess of the $25.00 per share redemption price over the carrying value of the preferred stock which was net of issuance cost.

Non-GAAP Supplemental Financial Measures

We report funds from operations ("FFO") as an overall non-GAAP supplemental financial measure.

For the Digital Operating segment, we also report earnings before interest, tax, depreciation and amortization for real estate ("EBITDA re "), which is a non-GAAP supplemental financial measure widely used by the equity REIT industry.

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

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

Funds from Operations

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

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

(iii) gain from sale of depreciable real estate;

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

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

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

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

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

The following table presents a reconciliation of net income (loss) attributable to common stockholders to FFO attributable to common interests in OP and common stockholders, both of which include results from discontinued operations.

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

Year Ended December 31,

(In thousands) 2021 2020 2019

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 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 Investment Management 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.

As we evaluate profitability based upon continuing operations, these non-GAAP measures exclude results from discontinued operations.

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

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 the Operating Company were as follows:

(In thousands) Year Ended December 31, 2022

Attributable to Operating Company:

Distributable Earnings $ 37,060

Adjusted EBITDA 108,278

Investment Management FRE 83,474

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:

transaction-related costs;

restructuring charges (primarily severance and retention costs);

realized and unrealized gains and losses, except realized gains and losses related to digital assets, including fund investments, in Corporate and Other;

depreciation, amortization and impairment charges;

debt prepayment penalties and amortization of deferred financing costs, debt premiums and debt discounts;

our share of unrealized carried interest, net of associated compensation expense;

equity-based compensation expense;

equity method earnings, except fund investments, to reflect only cash dividends declared by BRSP;

effect of straight-line lease income and expense;

impairment of equity investments directly attributable to decrease in value of depreciable real estate held by the investee;

non-revenue enhancing capital expenditures necessary to maintain operating real estate;

and income tax effect on certain of the foregoing adjustments.

Income taxes included in DE reflect the benefit of deductions arising from certain expenses that are excluded from the calculation of DE, such as equity-based compensation, as these deductions do decrease actual income tax paid or payable by the Company in any one period.

We believe that DE is a meaningful supplemental measure as it reflects the ongoing operating performance of our core business by generally excluding items that are non-core in nature, and allows for better comparability of operating results period-over-period and to other companies in similar lines of business.

Adjusted EBITDA

Adjusted EBITDA represents DE adjusted to exclude:

interest expense as included in DE, income tax expense or benefit as included in DE, preferred stock dividends, equity method earnings as included in DE, placement fee expense, our share of realized carried interest and incentive fees net of associated compensation expense, certain investment costs for capital raising that are not reimbursable by our sponsored funds, and capital expenditures as deducted in DE.

We believe that Adjusted EBITDA is a meaningful supplemental measure of performance because it presents the Company’s operating performance independent of its capital structure, leverage and non-cash items, which allows for better comparability against entities with different capital structures and income tax rates.

However, because Adjusted EBITDA is calculated before recurring cash charges including interest expense and taxes and does not deduct capital expenditures or other recurring cash requirements, its usefulness as a performance measure may be limited.

Distributable Earnings and Adjusted EBITDA reconciliation

(In thousands) Year Ended December 31, 2022

Net loss attributable to common stockholders $ (382,266)

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

Net loss attributable to noncontrolling common interests in Operating Company (40,511) (302,720) (93,027)

Real estate depreciation and amortization ($110,314, $340,360 and $512,508 related to discontinued operations)

595,527 561,195 548,766

Impairment of real estate ($300,038, $1,956,662 and $347,158 related to discontinued operations)

300,038 1,956,662 351,395

Gain on sale of real estate — discontinued operations

(41,782) (41,912) (1,524,290)

Net loss attributable to noncontrolling interests in Operating Company (32,369)

Net loss attributable to Operating Company (414,635)

Transaction-related and restructuring charges 100,989

Other (gains) losses, net (excluding realized gains or losses related to digital assets and fund investments in Corporate and Other) 178,769

Unrealized carried interest, net of associated compensation expense (117,466)

Equity-based compensation expense 54,232

Depreciation and amortization 589,582

Straight-line rent (revenue) and expense, net (21,462)

Amortization of acquired above- and below-market lease values, net (78)

Impairment loss 35,985

Non-revenue enhancing capital expenditures (40,515)

Debt prepayment penalties and amortization of deferred financing costs, debt premiums and debt discounts 114,902

Adjustment to equity method earnings, excluding fund investments, to reflect BRSP cash dividend declared 574

Income tax effect on certain of the foregoing adjustments (534)

Adjustments attributable to noncontrolling interests in investment entities (1)

(535,756) (638,709) 719,225

FFO attributable to common interests in OP and common stockholders ($(34,842), $(704,165) and $(534,574) related to discontinued operations)

$ (108,200) $ (1,216,266) $ (1,150,138)

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

Year Ended December 31,

(In thousands) 2021 2020 2019

FFO adjustments attributable to noncontrolling interests in investment entities:

Real estate depreciation and amortization ($31,696, $83,622 and $168,787 related to discontinued operations)

$ 426,443 $ 259,543 $ 170,024

Impairment of real estate — discontinued operations

110,051 403,770 111,231

Gain on sale of real estate — discontinued operations

(738) (24,604) (1,000,480)

$ 535,756 $ 638,709 $ (719,225)

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

(ii) income tax benefit or expense;

(iii) depreciation and amortization;

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

(v) gain on disposition of depreciated real estate;

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

and (vii) adjustments to reflect the Company's share of EBITDA re from investments in unconsolidated ventures.

EBITDA re represents a widely known supplemental measure of performance, EBITDA, but for real estate entities, which we believe is particularly helpful for generalist investors in REITs.

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

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

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

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

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

EBITDA re was immaterial in 2019 as the Company acquired its first real estate portfolio in the Digital Operating segment in late December 2019.

Year Ended December 31,

(In thousands) 2021 2020 Change

Digital Operating

Total revenues $ 763,199 $ 313,283 $ 449,916

Property operating expenses (316,178) (119,729) (196,449)

Transaction-related costs and investment expense (21,835) (6,704) (15,131)

Compensation and administrative expense (113,080) (51,965) (61,115)

Other loss, net (1,293) (245) (1,048)

$ 310,813 $ 134,640 176,173

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

Year Ended December 31,

(In thousands)

Digital Operating

Net loss $ (230,841) $ (132,063)

Interest expense 125,387 77,976

DE of discontinued operations (13,222)

Distributable Earnings, after tax—attributable to Operating Company

Adjustments attributable to Operating Company :

Interest expense included in DE 57,525

Income tax expense included in DE 13,266

Preferred stock dividends 61,567

Equity method earnings included in DE (38,800)

Realized carried interest, net of associated compensation expense (31,463)

Non-revenue enhancing capital expenditures deducted from DE 8,892

Non pro-rata allocation of income (loss) to noncontrolling interests 231

Adjusted EBITDA—attributable to Operating Company

(1) Noncontrolling interests' share of adjustments pertain largely to depreciation and amortization and unrealized carried interest, net of associated compensation expense.

Investment Management FRE

Investment Management FRE is calculated as recurring fee income and other income inclusive of cost reimbursements associated with administrative expenses, and net of compensation expense (excluding equity-based compensation, carried interest and incentive compensation) and administrative expense (excluding placement fees and straight-line rent expense).

Investment Management FRE is used to assess the extent to which direct base compensation and operating expenses are covered by recurring fee revenues in the investment management business.

We believe that Investment Management FRE is a useful supplemental performance measure because it may provide additional insight into the profitability of the overall investment management business.

Investment Management FRE is measured as Adjusted EBITDA for the Investment Management segment, adjusted to reflect the Company’s Investment Management segment as a stabilized business by excluding FRE associated with new investment strategies that have 1) not yet held a first close raising FEEUM;

or 2) not yet achieved break-even Adjusted EBITDA only for investment products that may be terminated solely at the Company’s discretion, collectively referred to as “Start-up FRE.” The Company evaluates new investment strategies on a regular basis and excludes Start-Up FRE from Investment Management FRE until such time a new strategy is determined to form part of the Company’s core investment management business.

Investment Management FRE reconciliation

(In thousands) Year Ended December 31, 2022

Investment Management

Net income $ 186,084

Interest expense, net of interest income 10,377

Investment expense, net of reimbursement 324

Depreciation and amortization 22,155

Income tax benefit (79,075) (21,461)

$ 310,813 $ 134,640

The higher 2021 EBITDA re reflects the acquisition of Vantage SDC in July 2020, zColo in December 2020 and February 2021, and an add-on acquisition in the Vantage SDC portfolio in October 2021.

On a same store basis, EBITDA re was largely consistent.

While there was an increase in revenues attributed to an increase in rentable square footage, this was mostly offset by higher compensation and administrative costs as we ramped up resources to support the growth in business, additional costs incurred in the restructuring of DataBank's operations for REIT qualification, and unfavorable margins in our power component due to inclement weather conditions in 2021.

Equity-based compensation 15,845

Incentive fee and carried interest, net of associated compensation expense (207,095)

Straight-line rent expense 1,844

Transaction-related and restructuring charges 18,402

Equity method earnings, excluding carried interest 26,958

Other loss, net 3,341

Income tax expense 7,815

Investment Management Adjusted EBITDA

Start-up FRE 9,739

Investment Management FRE

Attributable to redeemable noncontrolling interests (12,315)

Investment Management FRE—attributable to Operating Company

Liquidity and Capital Resources

We regularly evaluate our liquidity position, debt obligations, and anticipated cash needs to fund our business and operations based upon our projected financial performance.

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

At December 31, 2022, our liquidity position was approximately $1 billion, including corporate unrestricted cash and the full $300 million availability under our VFN.

In February 2023, our liquidity position decreased by $323.5 million in connection with the InfraBridge acquisition.

With an all-cash acquisition, there is no resulting future debt burden.

Outside of our normal course operating activities, our significant liquidity needs in the immediate term include a $90 million contingent earnout payable to Wafra in March 2023 and repayment of $200 million of convertible notes maturing in April 2023.

The latter will result in a deleveraging of our corporate balance sheet.

We expect to satisfy these obligations with cash on hand.

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.

Our liquidity position is $1.1 billion, composed of corporate cash on hand at December 31, 2021 and the full $200 million availability under our VFN Notes.

We regularly evaluate our liquidity position, debt obligations, and anticipated cash needs to fund our operating and investing activities, based upon our projected financial and operating performance, and investment opportunities.

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

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

Significant Liquidity and Capital Activities

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

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

and (ii) VFN Notes with up to $200 million availability.

These Series 2021-1 Notes provide a lower cost of capital and extend our revolving credit maturity to 2026.

• In 2021, we reduced higher cost corporate indebtedness by $343 million, encompassing $193 million of corporate debt and $150 million of preferred stock.

• We completed the internalization of BRSP in April 2021 and received a one-time payment of $102 million for termination of the BRSP management contract.

• We sold 9.5 million BRSP shares in a secondary offering by BRSP in August 2021 for net proceeds of approximately $82 million.

• We monetized (i) our Wellness Infrastructure business in February 2022 for $151 million in cash, including cash distributions received from NRF Holdco prior to closing of the sale, and $155 million in note receivable;

and (ii) substantially all of our OED investments in December 2021 for $443 million in cash.

While we have sufficient liquidity to meet our operational needs, we continue to evaluate alternatives to manage our capital structure and market opportunities to strengthen our liquidity and to provide further operational and strategic flexibility.

Significant Liquidity and Capital Activities in 2022 and through February 2023

Sources of Funds

• $425 million in total proceeds received in the second half of 2022, including our share of net carried interest, from partially monetizing our interest in DataBank

• $428 million in return of capital from transfer of warehoused investments to newly formed sponsored funds and transfer of loans to a third party sponsored CLO in August and December 2022

• $100 million increase in our VFN availability to $300 million effective April 2022

• Monetization of our Wellness Infrastructure business in February 2022 for $161 million in cash

Uses of Funds

• Redemption of Wafra's minority interest in our investment management business in May 2022 through a combination of common stock issuance and $388.5 million in cash, following which, all net cash flows from our fee business accrue to us at 100%

• Repurchase of (i) $52.6 million of preferred stock at a discount to par, which generates future savings in preferred dividends, and (ii) $55 million of common stock

• Acquisition of InfraBridge in February 2023 for $323.5 million (including working capital, net of cash assumed)

Liquidity Needs and Sources of Liquidity

Our primary liquidity needs are to fund:

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

• acquisitions of target investment management businesses;

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

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

• our liability for corporate and other taxes;

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

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

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

• dividends to our preferred and common stockholders.

Our primary sources of liquidity are:

• 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;

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

• availability under our VFN Notes;

• availability under our VFN;

• issuance of additional term notes under our corporate securitization;

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• proceeds from public or private equity and debt offerings.

Liquidity Needs and Capital Activities

Stock Repurchases

In July 2022, our Board of Directors authorized a $200 million stock repurchase program which expires in June 2023, but may be extended, modified, or discontinued at any time by our Board of Directors.

During 2022, we repurchased approximately $108 million in aggregate of preferred and common stock.

As of December 31, 2022, $92 million of repurchase capacity remains available under the program.

Common Stock —The payment of common stock dividends and determination of the amount thereof is at the discretion of our Board of Directors.

The Company reinstated quarterly common stock dividends at $0.01 per share beginning the third quarter of 2022, having previously suspended common stock dividends from the second quarter of 2020 through the second quarter of 2022.

Preferred Stock— At December 31, 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.

Contractual Obligations, Commitments and Contingencies

Debt Obligation

Description of our debt is provided in Note 8 to the consolidated financial statements in Item 15 of this Annual Report.

Our contractual obligation for principal repayments on our debt at December 31, 2022 is as shown below.

Investment level secured debt is non-recourse to us and serviced through operating and/or investing cash generated by the respective borrower subsidiaries in our Operating segment and by our consolidated fund.

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

(In thousands) 2023 2024 2025 2026 2027 Total

Corporate-level Debt:

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

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

Non-recourse investment-level secured debt 228,792 879,503 1,175,250 1,750,690 600,000 4,634,235

Total $ 428,792 $ 879,503 $ 1,253,672 $ 2,050,690 $ 600,000 $ 5,212,657

We expect to repay the outstanding $200 million 5.00% convertible senior notes upon maturity in April 2023 with current cash on hand, which will result in a deleveraging of our corporate balance sheet.

In connection with an amortizing investment-level securitized debt with an anticipated repayment date in November 2023 (at December 31, 2022, $216 million expected principal repayment in 2023), our subsidiary in the Operating segment is looking to refinance the debt prior to its anticipated repayment date or otherwise, continue servicing the debt until such time a refinancing is executed.

Investment Commitments

As of December 31, 2021, we have unfunded commitments of $89 million to our DBP funds.

Fund Commitments —As of December 31, 2022, we have unfunded commitments of $112 million to our sponsored funds.

Generally, the timing for funding of these commitments is not known and the commitments are callable on demand at any time prior to their respective expirations.

Contingent Consideration

Wafra Redemption —In connection with the May 2022 redemption of Wafra's interest in our investment management business, additional contingent consideration is payable based upon future capital raise thresholds, with up to 50% payable in shares of our class A common stock at our election.

$90 million is payable in March 2023 based upon capital raised in 2022, and up to $35 million in March 2024 dependent upon cumulative capital raised through 2023.

InfraBridge Acquisition —In connection with the InfraBridge acquisition in February 2023, additional contingent consideration of up to $129 million may become payable based upon achievement of future fundraising targets for InfraBridge's third and fourth flagship funds.

Warehoused Investments

We temporarily warehouse investments on behalf of prospective sponsored investment vehicles that are actively fundraising.

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

Generally, the timing of future warehousing activities is not known.

Nevertheless, investment warehousing is undertaken only if we determine that there will be sufficient liquidity through the anticipated warehousing period.

In August and December 2022, we received a return of $428 million in total capital, inclusive of holding fees, from the transfer of investments to our new sponsored funds and to a third party sponsored CLO, along with repayment of corresponding debt.

This included $282 million in connection with TowerCo that was acquired in June 2022.

At December 31, 2022, we had $52 million of remaining warehoused equity investments.

Carried Interest Clawback

Depending on the final realized value of all investments at the end of the life of a fund (and, with respect to certain funds, periodically during the life of the fund), if it is determined that cumulative carried interest distributions have exceeded the final carried interest amount earned (or amount earned as of the calculation date), we are obligated to return the excess carried interest received.

Therefore, carried interest distributions may be subject to clawback if decline in investment values results in cumulative performance of the fund falling below minimum return hurdles in the interim period.

If it is determined that the Company has a clawback obligation, a liability would be established based upon a hypothetical liquidation of the net assets of the fund at reporting date.

The actual determination and required payment of any clawback obligation would generally occur after final disposition of the investments of the fund or otherwise as set forth in the governing documents of the fund.

If the related carried interest distributions received by the Company are subject to clawback, the previously distributed carried interest would be similarly subject to clawback from employees.

The Company generally withholds a portion of the distribution of carried interest to employees to satisfy their potential clawback obligation.

At December 31, 2022, the Company has no liability for clawback obligations on distributed carried interest.

Lease Obligations

At December 31, 2021, we have $142.8 million and $299.7 million of finance and operating lease obligations, respectively, that were assumed through acquisitions, principally leasehold data centers, and $42.8 million of operating lease obligations on our corporate offices.

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

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

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

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

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

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

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

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

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

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

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

Preferred Stock— At December 31, 2021, we have outstanding preferred stock totaling $884 million, bearing a weighted average dividend rate of 7.135% per annum, with aggregate dividend payments of $15.8 million per quarter.

Cash From Operations

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

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

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

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

Asset Monetization

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

As noted above, in completing our digital transformation, we monetized (i) our Wellness Infrastructure assets in February 2022 for $151 million in cash, including cash distributions received from NRF Holdco prior to closing of the sale, and $155 million in note receivable;

and (ii) the bulk of our OED portfolio in December 2021 for $443 million in cash.

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

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

At December 31, 2022, we had $40.5 million of operating lease obligations on our corporate offices, which are funded through corporate operating cash.

Additionally, there were $135.6 million and $285.9 million of finance and operating lease obligations, respectively, principally on leasehold data centers assumed through acquisitions, with such obligations satisfied through operating cash generated by the respective investment properties.

These lease obligation 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.

Scheduled future lease commitment amounts over the next five years and thereafter is presented in Note 19 to the consolidated financial statements in Item 15 of this Annual Report.

Sources of Liquidity

At December 31, 2022, we had $578 million of corporate-level debt, along with non-recourse investment level secured debt, as summarized below.

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

Weighted Average Years Remaining to Maturity (2)

Corporate-level debt:

Secured fund fee revenue notes $ 300,000 3.93 % 3.7

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4,634,235 3.71 % 3.0

Total debt (excluding amounts related to assets held for disposition) $ 4,922,722

Debt related to assets held for disposition (to be assumed by acquirer) $ 2,962,051

Total debt $ 5,212,657

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

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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 December 31, 2021, excluding debt classified as held for disposition, were as follows.

Year Ending December 31,

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

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

Convertible and exchangeable senior notes — 200,000 — 138,739 — — 338,739

Investment-level secured debt

Digital Operating 6,230 228,793 616,503 1,146,267 1,619,690 600,000 4,217,483

Other — 66,500 — — — — 66,500

Total $ 6,230 $ 495,293 $ 616,503 $ 1,285,006 $ 1,919,690 $ 600,000 $ 4,922,722

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 December 31, 2021 for extensions that are at the Company's option.

Securitized Financing Facility

As discussed above and further in Note 8 to the consolidated financial statements, we replaced our corporate credit facility with a securitized financing facility in July 2021 through the issuance of $300 million 3.933% Class A-2 Notes, and $200 million of VFN Notes, which is available to be drawn in full as of the date of this filing.

Corporate-level Debt

Securitized Financing Facility —Our securitized financing facility is subject to various covenants, including financial covenants that require the maintenance of minimum thresholds for debt service coverage ratio and maximum loan-to-value ratio, as defined.

As of the date of this filing, we are in compliance with all of the financial covenants, and the full amount is available to be drawn on our $300 million VFN.

Our securitized financing facility allows for the issuance of additional term notes in the future to supplement our liquidity.

The decision to enter into a particular financing arrangement is made after consideration of various factors including future cash needs, current sources of liquidity, demand for the Company’s debt or equity, and prevailing interest rates.

Senior Notes —We continue to reduce higher cost corporate indebtedness through early exchange of an additional $60 million of senior notes into common stock in March 2022, which generated net savings in interest payments.

Non-Recourse Investment-Level Secured Debt

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

Significant Developments

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

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

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

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

At December 31, 2021, $83.5 million was available to be drawn from the facility.

• Dispositions— Consolidated investment-level debt of $4 billion financing our hotel and OED portfolios, and $2.86 billion held by NRF Holdco (previously classified as held for disposition) have been assumed by the respective acquirers upon sale of our hotel and OED assets in 2021 and NRF Holdco in 2022, resulting in significant deleveraging of our balance sheet.

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

In 2022, disposition of investments resulted in further deleveraging of our balance sheet as follows:

• 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.

• $313 million of debt obtained in June 2022 to partially fund the acquisition of TowerCo was assumed by our sponsored fund in December 2022 in conjunction with the transfer of TowerCo assets to the fund.

Cash From Operations

Fee-Related Earnings— We generate FRE from our Investment Management segment, generally encompassing recurring fee income net of associated compensation and administrative expenses.

Following the redemption of Wafra's 31.5% interest in our investment management business in May 2022, 100% of Investment Management FRE is attributable to us.

Management fee income is generally a predictable and stable revenue stream.

Our ability to generate new management fee streams through establishing new investment vehicles and raising investor capital depends on general market conditions and availability of attractive investment opportunities as well as availability of debt capital.

Incentive Fees— Incentive fees, net of employee allocations, are earned based upon the financial performance of a vehicle above a specified return threshold, which is largely driven by appreciation in value of underlying investments.

Incentive fees are recognized as fee income when they are no longer probable of significant reversal.

As investment fair values and changes thereof could be affected by various factors, including market and economic conditions, incentive fees are by nature less predictable in amount and timing.

There were no incentive fees received in 2022.

Carried Interest Distributions— Carried interest is distributed generally upon profitable disposition of an investment if at the time of distribution, cumulative returns of the fund exceed minimum return hurdles.

Carried interest distributions are recognized in earnings net of clawback obligations, if any.

The amount and timing of carried interest distributions received may vary substantially from period to period depending upon the occurrence and size of investments realized by our sponsored funds.

In 2022, we received our share of realized carried interest of $32.6 million, net of allocation to employees and Wafra, in connection with the recapitalization of DataBank and sale of investments by DBP I and DBP II.

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

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

Asset Monetization

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

DataBank— In the second half of 2022, we partially monetized our interest in DataBank and received total proceeds of $405 million from our investment, excluding carried interest.

The incremental third party capital raised in the recapitalization also results in additional fee income in our Investment Management segment.

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.

Other Non-Digital Investments— We also have marketable equity securities, including our shares in BRSP, that are available for future monetization.

At December 31, 2022, the aggregate fair value of these investments was $235 million.

Public Offerings

We may offer and sell various types of securities under our shelf registration statement.

These securities may be issued from time to time at our discretion based on our needs and depending upon market conditions and available pricing.

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

We may offer and sell various types of securities from time to time at our discretion based upon our needs and depending upon market conditions and available pricing.

Consolidated Cash Flows

The following table summarizes the activities from our consolidated statements of cash flows, including discontinued operations.

Year Ended December 31,

(In thousands) 2022 2021

Cash, cash equivalents and restricted cash—beginning of period

$ 1,766,245 $ 963,008

Net cash provided by (used in):

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Financing activities 923,785 411,260

Effect of exchange rates on cash, cash equivalents and restricted cash (2,465) (2,825)

Cash, cash equivalents and restricted cash—end of period

$ 1,036,739 $ 1,766,245

Operating Activities

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

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

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 loans receivable during the warehousing period, 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 $262.6 million in 2022 and $248.2 million in 2021.

Notable items affecting operating cash flows included the following:

• In 2021, the higher operating cash flows included receipt of a $102.3 million one-time payment in connection with termination of the BRSP management agreement and growth in fee income following successful fund raising in our Digital Investment Management business.

Additionally, there was higher net operating cash flows from our Digital Operating segment, with a full year of operations in 2021 from portfolios acquired during 2020.

• In 2020, operating cash flows were negatively affected by the fallout from COVID-19 on our hospitality business that was sold in 2021, and also included $39.9 million of carried interest compensation payment realized from the sale of our light industrial portfolio in December 2019

Investing Activities

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

Our investing activities resulted in net cash inflows of $146.6 million in 2021 compared to net cash outflows of $1.9 billion in 2020.

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.

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 $146.6 million in 2021.

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

Outflows were significantly higher in 2020 totaling $2.1 billion, driven by the acquisition of Vantage SDC in July 2020 and zColo in December 2020.

In 2021, net cash outflows from real estate investing activities were $384.9 million.

This was driven by payments for add-on acquisition and expanded capacity in Vantage SDC and capital expenditures within the overall digital operating portfolio.

These outflows were partially offset by proceeds from sales of various properties in Europe and in our Wellness Infrastructure business in the first half of 2021, as well as sales of real estate investment holding entities in our hotel business in March and the OED portfolio in December, both of which were net of cash deconsolidated.

• Debt investments —Investing cash inflows in 2021 included $452.1 million from our debt investments, attributed to loan repayments, in particular a $305.0 million repayment received on two loans in our Irish loan portfolio, and $146.0 million in proceeds from sale of our loan investment holding entities in the OED portfolio in December, net of cash deconsolidated.

These cash inflows were partially offset by payments for loans acquired and warehoused for future digital credit vehicles, including a potential CLO, other loan disbursements and acquisition of additional N-Star CDOs at a discount by our Wellness Infrastructure segment.

In 2020, our debt investments generated a much smaller net cash inflow of $59.8 million as receipts from loan repayments were largely offset primarily by drawdowns on development loans.

• Equity investments —In 2021, our equity investments recorded net cash inflows of $104.6 million.

Significant sales of equity investments included 9.5 million BRSP shares for $81.8 million of cash, and sale of investment holding entities in the OED portfolio in December which generated proceeds of $177.8 million, net of cash deconsolidated.

Sales proceeds, along with return of capital distributions received from our investments, were partially offset primarily by funding of our digital fund commitments and draws on acquisition, development and construction ("ADC") loans that were accounted for as equity method investments prior to their sale in December.

2020 also recorded net cash inflows of $152.3 million from equity investments, attributed primarily to $179.1 million of net proceeds received from sale of our investment in RXR Realty and $87.4 million from recapitalization of our joint venture investment in Albertsons, both of which were partially offset by funding of our commitments to DBP I and additional draws on ADC loans.

Purchases and sales of equity investments include trading activities in marketable equity securities by our consolidated funds in the digital liquid strategy in both years, more so in 2021.

Net outflows were higher in 2022 totaling approximately $2.0 billion, attributed to the acquisition of TowerCo, DataBank's acquisition of five data centers, capital expenditures in our data center portfolio and payments for build-out of expansion capacity and lease-up within the Vantage SDC portfolio.

All of these outflows were partially offset by proceeds received from our Wellness Infrastructure sale and the transfer of our interest in TowerCo to our new sponsored fund in December 2022, all of which were net of property-level cash transferred to the buyer or fund.

2021 saw net cash outflows of $420.0 million, driven by add-on acquisitions in the Vantage SDC portfolio and capital expenditures in our Operating segment.

These outflows were partially offset by proceeds from sales in our Wellness Infrastructure segment, our hotel business and our OED portfolio, net of cash deconsolidated.

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

There was a net cash inflow of $44.8 million in 2022.

Disbursements for additional fundings and acquisition of warehoused loans during the year were more than offset by proceeds received from the subsequent transfer of the entire portfolio of warehoused loans to our new sponsored fund or to a third party sponsored CLO.

In 2021, net cash inflows of $452.1 million can be attributed to loan repayments, in particular a $305.0 million repayment received on two loans in our Irish loan portfolio, and $146.0 million in proceeds from sale of our loan investment holding entities in the OED portfolio, net of cash deconsolidated.

This was partially offset by acquisition or origination of warehoused loans, other loans disbursements, and acquisition of additional N-Star collateralized debt obligations ("CDOs") at a discount by our Wellness Infrastructure segment, which has since been disposed.

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

In 2022, our equity investments recorded net cash inflows of $11.6 million, largely representing the trading activities in marketable equity securities by our consolidated liquid funds, partially offset by additional contributions to our digital funds, net of return of capital.

2021 saw net cash inflows of $104.6 million in connection with our equity investments.

Significant sales of equity investments included 9.5 million BRSP shares for $81.8 million of cash, and sale of investment holding entities in the OED portfolio, which generated proceeds of $177.8 million, net of cash deconsolidated.

Net cash inflows were also generated from trading activities in marketable equity securities by our consolidated funds in the Liquid Strategies.

These inflows were partially offset by outflows attributed largely to funding of our digital fund commitments and draws on acquisition, development and construction or ADC loans that were accounted for as equity method investments prior to their sale in December 2021.

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 well as distributions to noncontrolling interests in our various investments.

Financing activities generated net cash inflows of $411.3 million in 2021 and $1.4 billion in 2020.

• In 2021, borrowings exceeded debt repayments at both the corporate and investment level, resulting in aggregate net cash inflows of $671.2 million.

At the corporate level, we replaced our credit facility with a securitized financing facility, from which we issued $300 million of Class A-2 Notes in July.

Investment-level financing activities included issuances of securitized notes and draws on variable funding notes by Vantage SDC to finance an add-on acquisition, future expansion capacity and capital expenditures, as well as by DataBank to refinance existing debt and fund future acquisition.

There was also repayment of debt financing various real estate in Europe that were sold during the year.

In terms of cash outflows, we redeemed $150.3 million of preferred stock, applying some of the proceeds from our Class A-2 Notes.

Dividend payments were $73.4 million, which is lower in 2021 following additional preferred stock redemptions and continued suspension of common stock dividends.

Additionally, distributions outpaced contributions from noncontrolling interests, resulting in net cash outflow of $16.9 million, with gross activities during the year associated with third party co-investors primarily in the OED portfolio prior to deconsolidation upon sale of our interests in December.

• The significant financing net cash inflows in 2020 were driven by $1.8 billion of net contributions from noncontrolling interests, of which $1.5 billion represented third party investors in Vantage SDC and zColo, primarily fee bearing capital that we raised, and a $253.6 million investment by Wafra in our digital investment management business.

Additionally, borrowings on our investment level debt exceeded repayments for a net cash inflow of $278.1 million, which included $550.0 million of debt drawn to finance our acquisition of zColo.

However, these financing cash inflows were partially offset by:

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

(ii) higher dividend payments of $185.8 million which included common stock dividends in the first quarter of 2020 in addition to preferred stock;

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

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

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, largely in our Operating segment.

Financing activities generated net cash inflows of $923.8 million in 2022 and $411.3 million in 2021.

• In 2022, the net cash inflow of $923.8 million was driven by financing for the acquisition of TowerCo and the DataBank data center acquisition through term loans and capital contributions from noncontrolling interests totaling $1.1 billion.

The TowerCo debt was subsequently assumed by our new sponsored fund upon transfer of our equity interest in TowerCo to the fund.

Additionally, cash inflows included our share of proceeds recorded in equity of $405.4 million from sale of a portion of our interest in our DataBank subsidiary in connection with the recapitalization of DataBank that was treated as an equity transaction.

These inflows were partially offset by $388.5 million of cash paid to redeem Wafra's interest in our 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 Operating segment.

Other notable cash outflows included preferred and common stock repurchases totaling $107.8 million and distributions to various noncontrolling interests.

Dividend payments were $64.0 million in 2022, which is lower than 2021 following preferred stock redemptions during 2021 and repurchases during 2022.

• The financing net cash inflows of $411.3 million in 2021 were driven by $671.2 million of borrowings exceeding debt repayments.

Investment-level financing activities included primarily issuances of securitized notes and draws on variable funding notes by Vantage SDC to finance an add-on acquisition, future expansion capacity and capital expenditures, as well as by DataBank to refinance existing debt and fund future acquisition.

There was also repayment of debt financing real estate in Europe that were sold during the year.

At the corporate level, we replaced our 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 for $86.8 million.

Additionally, distributions outpaced contributions from noncontrolling interests, resulting in a net cash outflow of $16.9 million.

Contributions from noncontrolling interests were 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 DBP, and additional consideration paid by Wafra for its investment in our investment management business.

These contributions were more than offset by distributions to third party co-investors, primarily in the OED portfolio prior to deconsolidation upon sale of our interests in December 2021.

Dividend payments were $73.4 million in 2021.

Guarantees and Off-Balance Sheet Arrangements

In connection with financing arrangements for certain unconsolidated ventures, we provided customary non-recourse carve-out guarantees.

We believe that the likelihood of making any payments under the guarantees is remote.

We have no guarantees or off-balance sheet arrangements that we believe are reasonable likely to have a material effect on our financial condition.

Critical Accounting Policies and Estimates

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

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

disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

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

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

Due to the inherently judgmental nature of the various projections and assumptions used, and unpredictability of economic and market conditions, actual results may differ from estimates, and changes in estimates and assumptions could have a material effect on our financial statements in the future.

In connection with our review and preparation of the financial statements, prior to and subsequent to each quarter end, we evaluate if prevailing events or changes in circumstances indicate that carrying values of the following assets may not be recoverable, in which case, an impairment analysis is performed.

Assets Held for Disposition

For assets that meet the criteria to be classified as held for disposition, impairment loss may be recognized in order to reduce the asset carrying amount to its estimated fair value less disposal costs.

Depending on specific circumstances at the time the asset is classified as held for disposition, fair value is generally estimated based upon either a letter of intent setting out preliminary terms for a potential acquisition by a buyer, a contracted sales price, or derived using market comparables or other indicative pricing in the market.

Until such time a disposition is consummated, the asset fair values may be subject to change, including the determination of disposal costs and various closing adjustments that may involve the application of estimates and assumptions.

If fair value is determined to have increased subsequent to classifying an asset as held for disposition, impairment loss may be reversed up to the amount of cumulative loss previously recognized.

For disposition of a portfolio of assets in bulk, the unit of account is the disposal group, which may require an allocation of the aggregate impairment loss to individual assets within the disposal group and such allocation could involve subjectivity and judgement.

In 2021, the Company classified its portfolio of OED investments, Other IM business and Wellness Infrastructure business as held for disposition and wrote down the carrying value of these assets, as discussed in Notes 1 and 11 of the consolidated financial statements.

Due to the inherently judgmental nature of the various projections and assumptions used and the unpredictability of economic and market conditions, actual results may differ from estimates, and changes in estimates and assumptions could have a material effect on our consolidated financial statements in the future.

Equity Method Earnings — Carried Interest

The Company recognizes carried interests from its equity method investments as general partner in investment vehicles that it sponsors.

Carried interest represents a disproportionate allocation of returns from the Company's sponsored investment vehicles based upon the extent to which cumulative performance of the vehicles exceeds minimum return hurdles pursuant to terms of their respective governing agreements.

Carried interest is subject to reversal until such time it is realized, which generally occurs upon disposition of all underlying investments of an investment vehicle, or in part with each disposition.

A portion of carried interest is allocated to certain employees, and is similarly subject to reversal if there is a decline in the cumulative carried interest amounts previously recognized.

The amount of carried interest recognized is based upon the cumulative performance of each investment vehicle if it were liquidated as of the reporting date, which in turn is largely driven by appreciation in value of the underlying investments held by these vehicles.

The investments held by sponsored vehicles are revalued each quarter, with the results subject to the Company's valuation review and approval process.

Fair value of the underlying investments is typically estimated using unobservable inputs and assumptions that involves significant judgement including, but not limited to, the financial performance of the portfolio company, economic conditions, foreign exchange rates, comparable transactions in the market, and equity prices for publicly traded securities, and is therefore subject to inherent uncertainties.

Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years.

Such assets arise from temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from NOL, capital loss and tax credit carryforwards.

Realization of deferred tax assets is dependent upon the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted taxable earnings and prudent and feasible tax planning strategies.

A valuation allowance for deferred tax assets is established if the Company believes it is more likely than not that all or some portion of the deferred tax assets will not be realized based upon the weight of all available positive and negative evidence.

The weight given to the evidence is commensurate with the extent to which it can be objectively verified.

The more negative evidence that exists, the more positive evidence is necessary and the more difficult it is to support a conclusion that a valuation allowance is not required.

In evaluating realizability of deferred tax assets, the Company considers various factors, including:

(1) nature of the deferred tax assets and liabilities, whether they are ordinary or capital;

(2) in which tax jurisdictions they were generated and timing of their reversal;

(3) taxable income in prior carryback years and projected taxable earnings exclusive of reversing temporary differences and carryforwards;

(4) length of time that carryovers can be utilized in the various tax jurisdictions;

(5) any unique tax rules that would impact the utilization of the deferred tax assets;

and (6) any tax planning strategies that could be employed to reasonably assure utilization of the tax benefit prior to expiration.

The projection of future taxable earnings to be generated by subsidiaries to which the deferred tax assets apply represent a critical estimate.

Key assumptions in this evaluation include the Company's forecast of future capital raises, and actual and planned business and operational changes, which are affected by future macroeconomic and Company-specific conditions and events.

These assumptions rely heavily on estimates and changes in estimates could result in an establishment or an increase in valuation allowance.

An established valuation allowance may be reversed in a future period if the Company subsequently determines it is more likely than not that all or some portion of the deferred tax assets will become realizable.

A discussion of valuation allowances established in 2022 is included in Note 17 to the consolidated financial statements in Item 15 of this Annual Report.

In connection with our review and preparation of the consolidated financial statements, prior to and subsequent to each quarter end, we evaluate if prevailing events or changes in circumstances indicate that carrying values of the following assets may not be recoverable, in which case, an impairment analysis is performed.

Real Estate Held for Investment

Triggering events that may indicate potential impairment of our real estate held for investment include, but are not limited to, the Company's shortened hold period assumptions;

deterioration in current and/or projected net operating income;

Triggering events that may indicate potential impairment of our real estate held for investment include, but are not limited to, deterioration in current and/or projected earnings;

significant near-term lease expirations;

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Impairment is recognized to reduce the carrying value of the property to its estimated fair value, generally based upon a discounted net cash flow analysis which applies a terminal capitalization rate at the end of the projection period to derive an exit value, or a direct capitalization approach which applies an overall capitalization rate to expected net operating income to estimate current property value.

Estimation of future net cash flows involves significant judgment and assumptions, including, but not limited to, the Company's anticipated hold period;

Estimation of future net cash flows involves significant judgment and assumptions, including, but not limited to:

probability-weighting to different cash flow scenarios or the determination of the single-most-likely cash flow scenario, where applicable;

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and capitalization rates.

Refer to Note 11 of the consolidated financial statements for a discussion of impairment recorded on real estate prior to their classification as held for disposition.

There was no impairment recorded on real estate held for investment in 2022.

Equity Method Investments

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Further consideration is made if a decrease in the fair value of equity method investments is other-than-temporary to determine if impairment loss should be recognized.

Assessment of other-than-temporary impairment may involve significant management judgment, including, but not limited to, consideration of the investee’s current and projected financial condition and earnings, business prospects and creditworthiness;

Assessment of other-than-temporary impairment may involve significant management judgment, including, but not limited to:

consideration of the investee’s current and projected financial condition and earnings, business prospects and creditworthiness;

significant and prolonged decline in traded price of the investee’s equity security;

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If management is unable to reasonably assert that an impairment is temporary or believes that the Company may not fully recover the carrying value of its investment, then the impairment is considered to be other-than-temporary.

Refer to Note 11 of the consolidated financial statements for a discussion of impairment recorded on equity method investments prior to their classification as held for disposition and to Note 5 for assessment of other-than-temporary impairment of our investment in BRSP in prior years, .

At December 31, 2021, the Company's goodwill is associated with its digital investment management and digital operating businesses.

Our investment in BRSP was determined to be other-than-temporarily impaired in 2022, as discussed further in Note 5 to the consolidated financial statements in Item 15 of this Annual Report.

At December 31, 2022, the Company's goodwill is associated with its Investment Management and Operating segments.

Goodwill is tested for impairment at the reporting unit to which it is assigned, which can be an operating segment or one level below an operating segment.

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The Company determined that there were no indicators of impairment to goodwill in 2022.

Refer to Note 11 of the consolidated financial statements for a discussion of impairment recorded on the Other IM goodwill in prior years, including triggering events, and methodology and inputs applied in estimating fair value of the Other IM reporting unit.

The Company carries certain assets at fair value on a recurring basis or at the time of initial acquisition.

The Company has elected the fair value option for all loans receivable effective January 1, 2020.

In a business combination or asset acquisition, all assets acquired and liabilities assumed are initially measured at fair value upon acquisition.

Allowance for Credit Losses

Debt Securities

A debt security is impaired if its fair value is below its amortized cost.

If the Company intends to sell the impaired debt security or is more likely than not will be required to sell the debt security before recovery of its amortized cost, the entire impairment amount is recognized in earnings as a write-off of the amortized cost basis of the debt security.

If the Company does not intend to sell or is not more likely than not required to sell the debt security before recovery of its amortized cost, the credit component of the loss is recognized in earnings as an allowance for credit loss, which may be subject to reversal for subsequent recoveries in fair value.

The non-credit loss component is recognized in other comprehensive income or loss.

The allowance is charged off against the amortized cost basis of the security if in a subsequent period, the Company intends to or more likely than not will be required to sell the security, or if the Company deems the security to be uncollectible.

The Company holds the subordinated notes of a third party sponsored CLO, classified under Level 3 of the fair value hierarchy.

Subordinated notes are the residual interest or equity tranche of a CLO, representing the most leveraged and illiquid tranche within the structure, and are subject to first loss exposure in the collateral pool.

Accordingly, the value of subordinated notes is highly sensitive to the performance of the underlying collateral of a CLO.

The use of unobservable inputs in estimating fair value necessitates the application of management judgement.

Factors considered in the valuation of CLO subordinated notes generally include:

expected loan default rates which are a function of the composition of the collateral pool (for example, credit rating and industry sector of the underlying loans), historical corporate loan defaults and market expectations for corporate debt performance under current economic conditions;

loss given default or severity rate;

loan prepayment rates;

reinvestment price during the reinvestment period;

redemption or call date following expiration of the reinvestment period;

and redemption or call price.

At December 31, 2022, fair value of the CLO subordinated notes was determined using a benchmarking approach, as described in Note 11 to the consolidated financial statements in Item 15 of this Annual Report.

The Company carries certain assets at fair value on a recurring or nonrecurring basis.

The Company has elected the fair value option for all loans receivable.

Loans Receivable

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Level 3 fair value for loans receivable are generally estimated based upon the income approach, applying a discounted cash flow model.

This involves a projection of principal and interest that are expected to be collected, and includes consideration of factors such as the financial standing and credit risk of the borrower or sponsor, operating results and/or value of the underlying collateral, and market yields for loans with similar credit risk and other characteristics.

collateral, and market yields for loans with similar credit risk and other characteristics.

In times of adverse economic conditions, the judgment applied in estimating unobservable inputs is subject to a greater degree of uncertainty.

Refer to Notes 13 and 11 of the consolidated financial statements for additional information on the inputs applied in estimating fair value of loans receivable.

Refer to Note 11 to the consolidated financial statements in Item 15 of this Annual Report for additional information on the inputs applied in estimating fair value of loans receivable.

In a business combination or asset acquisition, all assets acquired and liabilities assumed are measured at fair value as of the acquisition date.

Allocation of Purchase Consideration

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The estimation of fair value of the assets acquired and liabilities assumed involves significant judgment and assumptions.

Acquired assets are generally composed of real estate, lease right-of-use ("ROU") asset, lease-related intangibles, investment management related intangibles, and other identifiable intangibles such as customer contracts, customer relationships and trade names.

Acquired assets are generally composed of real estate, lease right-of-use ("ROU") asset, lease-related intangibles, investment management related intangibles such as investment management contracts and investor relationships, and other identifiable intangibles such as customer contracts, customer relationships and trade names.

The Company generally values real estate based upon their replacement cost for buildings (in an as-vacant state), improvements and data center infrastructure, and based upon comparable sales or current listings for land.

Lease ROU assets are measured based upon future lease payments over the lease term, adjusted for any lease incentives and capitalized direct leasing costs, and discounted at the incremental borrowing rate.

Identifiable intangible assets are typically valued using the income approach based upon net cash flows expected to be generated by the assets, discounted to present value.

Identifiable intangible assets, such as lease and management contracts, are typically valued using the income approach based upon net cash flows expected to be generated by the assets, discounted to present value.

Estimates applied include, but are not limited to:

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and (iii) for intangible assets, expected future cash flows, reinvestment rates by existing investors in our investment management business, lease renewal rates, customer attrition rates, discount rates, and useful lives.

These estimates are based upon assumptions that management believes a market participant would apply in

valuing the assets.

These estimates are based upon assumptions that management believes a market participant would apply in valuing the assets.

These estimates and assumptions are forward-looking and are subject to uncertainties in future economic, market and industry conditions.

Refer to Note 3 of the consolidated financial statements for additional discussion of the methodology and inputs applied in estimating fair value of assets acquired and liabilities assumed.

Equity Method Earnings — Carried Interest

The Company recognizes carried interests from its equity method investments as general partner in investment vehicles that it sponsors.

Fair value of the underlying investments is typically estimated using unobservable inputs and assumptions that involves significant judgement and is therefore subject to inherent uncertainties.

The investments held by sponsored vehicles are revalued each quarter, with the results subject to the Company's valuation review and approval process.

A portion of carried interest is allocated to certain employees, and is similarly subject to reversal if there is a decline in the cumulative carried interest amounts previously recognized.

Refer to Note 3 to the consolidated financial statements in Item 15 of this Annual Report for additional discussion of the methodology and inputs applied in estimating fair value of assets acquired and liabilities assumed.

Consolidation

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The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, depends upon facts and circumstances specific to an entity at the time of the assessment, and could change over time.

Note 14 to the consolidated financial statements discusses the Company's involvement in various types of entities that are considered to be VIEs and whether the Company is determined to be the primary beneficiary.

Note 12 to the consolidated financial statements in Item 15 of this Annual Report discusses the Company's involvement in various types of entities that are considered to be VIEs and whether the Company is determined to be the primary beneficiary.

Recent Accounting Updates

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

What changed 10-K

Item 7. Management’s Discussion and Analysis