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Item 7. Management’s Discussion and Analysis

2024-02-23 compared with 2023-02-27 · 447 added, 522 removed, 227 unchanged (81% of the section changed)

3 unchanged sentences

Significant Developments

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

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 following summarizes significant developments that affected our business and results of operations in 2023 through the date of this filing.

• We repaid $200 million of 5.00% senior notes upon maturity in April 2023 using cash on hand, reducing our leverage and outstanding corporate debt to $378 million, with savings of $10 million in annual financing costs.

Investment Management

• In 2023 and through February 19, 2024, we have raised approximately $7.7 billion ($6.9 billion in 2023) of capital, primarily $3.2 billion ($2.7 billion in 2023) for DigitalBridge Partners III, LP ("DBP III"), the third series in our flagship value-add strategy, and syndications through various co-investment vehicles.

• In February 2023, we completed our previously announced acquisition of InfraBridge for $314 million cash consideration (net of cash assumed), subject to customary post-closing working capital adjustments, plus potential contingent payments based upon future fundraising for InfraBridge's third and fourth flagship funds under the InfraBridge GIF series of funds.

The acquisition comprises InfraBridge's investment management platform and fund sponsor investments.

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.

Type Products Description December 31, 2022 December 31, 2021

Assets under Management (1)

$ 51.3 $ 43.6

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 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.

Third party AUM is based upon the cost basis of managed investments as reported by each underlying vehicle as of the reporting date and may include uncalled capital commitments.

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 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 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.

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

The acquisition added $5.1 billion in fee earning equity under management ("FEEUM"), comprising primarily GIF II and GIF I investment funds.

DataBank and Vantage SDC

Discontinuance of Operating segment

• On December 31, 2023, following the deconsolidation of both DataBank and Vantage SDC (as discussed in Note 9 to the consolidated financial statements), the Operating segment was discontinued and its activities thereof qualified as discontinued operations.

The presentation of the operating results of DataBank and Vantage SDC as income (loss) from discontinued operations on the consolidated statement of operations, and on the consolidated balance sheets, as assets and liabilities of discontinued operations, was applied retrospectively to all periods presented.

The deconsolidation in 2023 deleveraged the Company's balance sheet by removing $8.55 billion of assets, $5.94 billion of liabilities and $2.06 billion of noncontrolling interests in investment entities.

Subsequent to deconsolidation, the Company's consolidated financial statements include only its equity investment in DataBank (9.5% at December 31, 2023) and its consolidated funds' investment in Vantage SDC (aggregated to 38.3% interest in Vantage SDC, of which the Company's share is 12.8% at December 31, 2023), carried at fair value, along with noncontrolling interests representing the limited partners of the consolidated funds, and changes in fair value of these investments.

The Company's investments in DataBank and Vantage SDC are presented in Corporate and Other, consistent with the treatment and presentation of the Company's other consolidated funds and of its interest as general partner affiliate in other sponsored investment vehicles.

Recapitalization of DataBank

• In September 2023, the recapitalization of DataBank, which commenced in August 2022, was completed and resulted in its deconsolidation.

A total of $2.2 billion of equity in DataBank was sold to new investors.

The recapitalization implied 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 translated into additional investment management fee revenue.

The Company received its share of net proceeds from the sale totaling $475 million ($425 million in 2022 and $49 million in 2023), including its share of carried interest, net of allocation to employees and former employees, totaling $48 million ($20 million in 2022 and $28 million in 2023).

In connection with the deconsolidation, the Company realized a $3.7 million gain from the sale of its equity interest in the final closing of the recapitalization in September 2023, and remeasured its remaining equity interest in DataBank at a fair value of $434 million which resulted in an unrealized gain of $275 million, presented within Corporate and Other.

• Our investment in BrightSpire Capital, Inc.

BRSP), which was our largest remaining non-digital investment, was fully disposed in March 2023 for approximately $202 million in net proceeds.

• A non-cash charge of $133 million in fair value write-down was recorded in March 2023 on an unsecured promissory note from the 2022 sale of our Wellness Infrastructure business.

This resulted from foreclosure of certain assets within the Wellness Infrastructure portfolio by its mezzanine lender.

Fund Performance Metrics

Certain performance metrics for our key investment funds from inception through December 31, 2023 are presented in the table below.

Excluded are funds with less than one year of performance history as of December 31, 2023, funds and separately managed accounts in the liquid strategy, co-investment vehicles and separately capitalized portfolio companies.

The historical performance of our funds is not indicative of their future performance nor indicative of the performance of our other existing funds or of any of our future funds.

An investment in DBRG is not an investment in any of our funds and these fund performance metrics are not indicative of the performance of DBRG.

($ in millions) Inception Date (2)

Total Commitments Invested Capital (3)

Available Capital (4)

Investment Value MOIC (7) (9)

Unrealized Realized (5)

Gross Net Gross Net

DBP I Mar-2018 $4,059 $4,668 $228 $6,126 $1,140 $7,266 1.6x 1.4x 16.8% 12.3%

DBP II Nov-2020 8,286 7,544 974 8,505 686 9,191 1.2x 1.1x 12.1% 9.1%

SAF Nov-2022 1,110 867 476 878 12 890 1.0x 1.0x 3.7% 0.7%

GIF I Mar-2015 1,411 1,488 406 1,279 1,070 2,349 1.6x 1.4x 10.0% 7.4%

GIF II Jan-2018 3,382 3,117 26 2,771 95 2,866 0.9x 0.8x <0% <0%

Credit I Dec-2022 697 368 426 324 77 401 1.1x 1.1x 16.8% 10.1%

(1) Performance metrics are presented in aggregate for main fund vehicle, its parallel vehicles and alternative investment vehicles.

(2) Inception date represents first close date of the fund, except for Credit I which is the first capital call date.

InfraBridge funds were acquired in Feb-2023.

(3) Invested capital represents the original cost and subsequent fundings to investments.

Invested capital includes financing costs and investment related expenses which are capitalized.

With respect to InfraBridge funds, such costs are expensed during the period and excluded from their determination of invested capital.

(4) Available capital represents unfunded commitments, including recallable capital.

(5) Realized value represents proceeds from dispositions that have closed and all earnings from both realized and unrealized investments, including interest, dividend and ticking fees.

(6) Total value is the sum of unrealized fair value and realized value of investments.

(7) Total investment gross multiple of invested capital (MOIC) is calculated as total value of investments, that is realized proceeds and unrealized fair value, divided by invested capital, without giving effect to allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized).

Total investment net MOIC is calculated as total value of investments, that is realized proceeds and unrealized fair value, divided by invested capital, after giving effect to allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized).

MOIC calculations exclude capital not subject to fees and/or carried interest, including general partner and general partner affiliate capital.

MOICs are calculated at the fund level and do not reflect MOICs at the individual investor level.

(8) Internal rate of return (IRR) calculations generally follow the mechanics set forth in the applicable fund limited partnership agreement (LPA).

Gross IRR represents annualized time-weighted return on invested capital based upon total value of investments, that is realized proceeds and unrealized fair value, without giving effect to allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized).

Gross IRR is calculated from the date of investment fundings (inclusive of the effect of third-party credit financing) to the date of investment distributions.

For unrealized investments, assumes a liquidating distribution equal to the investment fair value, net of third party credit financing.

Gross IRR is calculated at the fund level and does not reflect gross IRR at the individual investor level due to timing of investor level inflows and outflows, among other factors.

Net IRR is gross IRR after giving effect to allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized).

Net IRR is calculated at the individual investor level based upon timing and amount of fee-paying third party investor level inflows and outflows, and excludes syndicated proceeds and capital not subject to fees and/or carried interest, including general partner and general partner affiliate capital.

(9) If an LPA provides that a fund investment that is later syndicated to one or more third-party investors shall be treated as if the syndicated portion of such investment never occurred, the Net IRR and MOICs set forth herein will typically reflect such treatment of the syndicated portion of such investment as this is more consistent with the calculation of the preferred return which determines our ability to earn carried interest.

Our funds generally permit us to recycle certain capital distributed to limited partners during certain time periods.

The inclusion of recycled capital generally causes invested and realized amounts to be higher and IRRs and MOICs to be lower than had recycled capital not been included.

In addition, for funds that utilize third-party credit financing in advance of receiving capital contributions from investors, reported IRRs may be higher or lower than if such financing had not been utilized.

Results of Operations

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"Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2022 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 2022 and 2021.

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.

The Company determined that the following qualified as discontinued operations in 2023:

its investment in BRSP prior to disposition in March 2023;

and its interests in two consolidated digital infrastructure portfolio companies, previously reported in the Company’s former Operating segment, prior to a full deconsolidation and discontinuance of the Operating segment on December 31, 2023.

For all prior periods presented:

(i) on the December 31, 2022 consolidated balance sheets, the equity method investment in BRSP (2022:

$218.0 million previously included in equity and debt investments) and the assets of the portfolio companies previously consolidated in the former Operating segment totaling $8.1 billion have been reclassified to assets of discontinued operations, while the liabilities of the portfolio companies previously consolidated in the former Operating segment totaling $5.3 billion have been reclassified to liabilities of discontinued operations;

and (ii) on the 2022 and 2021 consolidated statements of operations, the loss from BRSP of $37.3 million in 2022 and earnings of $41.2 million in 2021, previously included in equity method earnings (losses), and the net loss of the portfolio companies previously consolidated in the former Operating segment totaling $324.2 million and $223.5 million, respectively, have been reclassified to income (loss) from discontinued operations.

In 2023, the Company also determined that principal investment income from its equity interest as general partner and general partner affiliate in its sponsored investment vehicles, and its entitlement to carried interest allocation, represent a core component of returns in its investment management business.

Accordingly, beginning in 2023, principal investment income and carried interest allocation are now presented within total revenues on the consolidated statements of operations, previously presented as equity method earnings (losses) and equity method earnings—carried interest, respectively, both of which are no longer applicable as separate financial statement line items following the changes discussed herein.

Prior periods have been reclassified to conform to current presentation.

The discussion of our consolidated results of operations for the prior year periods of 2022 and 2021 in our 2022 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 2 Summary of Significant Accounting Policies—Discontinued Operations, Note 4 Investments and Note 18 Segment Reporting.

A comparative discussion of our consolidated results of operations for 2023 and 2022 is presented below.

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

The following table summarizes the results from continuing operations of our Investment Management segment and the remaining results denoted as "Corporate and Other" which reconciles to our consolidated results from continuing operations.

Year Ended December 31,

(In thousands) 2023 2022 Change

Continuing operations

Total revenues

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

Operating 884,874 763,199 121,675

Investment Management segment $ 645,884 $ 564,508 $ 81,376

Corporate and Other 175,499 130,263 45,236

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Income (Loss) from continuing operations

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

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

Investment Management segment $ 205,362 $ 186,084 $ 19,278

Corporate and Other 160,261 (245,897) 406,158

$ 365,623 $ (59,813) 425,436

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

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

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

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

Investment Management segment $ 110,483 $ 69,884 $ 40,599

Corporate and Other 130,796 (152,454) 283,250

$ 241,279 $ (82,570) 323,849

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.

Total revenues increased $126.6 million or 18%.

• Investment Management— Revenues were $81.4 million or 14% higher at $645.9 million, attributed to fee revenue and gross carried interest (before management allocation).

(a) Fee revenue contributed a $91.1 million increase to $267.2 million.

The increase in fee revenue is attributed to additional capital raised throughout 2022 and 2023 and InfraBridge funds acquired in February 2023.

(b) This was partially offset by gross carried interest (before management allocation) which decreased $15.3 million to $363.1 million in 2023 from $378.3 million in 2022 (of which distributions were $28.4 million in 2023 and $152.5 million in 2022).

The higher carried interest in 2022 was driven by distributions, which arose from the first liquidation of investment by DBP I and the DataBank recapitalization.

Otherwise, unrealized carried interest was higher in 2023, attributed largely to DataBank, DBP II and co-investment vehicles, partially offset by DBP I.

• Corporate and Other— Revenues represent largely our share of earnings, primarily fair value changes, from our general partner affiliate investments, particularly from the DBP funds, and in 2023, InfraBridge funds and DataBank.

2022 also included income from warehoused investments.

Revenues were higher in 2023 due to fair value increases in fund investments, driven by DataBank in the fourth quarter of 2023, partially offset by the sale of warehoused investments to our sponsored funds and to a third party sponsored CLO in the second half of 2022.

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

Income from continuing operations attributable to DBRG was $241.3 million in 2023, compared to a loss of $82.6 million in 2022.

• Investment Management— In 2023, income from continuing operations attributable to DBRG increased $40.6 million to $110.5 million.

The increase in 2023 was driven by higher net carried interest of $30.5 million, representing the amount attributable to OP.

2023 net income was driven largely by unrealized carried interest from DataBank.

In comparison, 2022 net income included higher unrealized carried interest from DBP I, which has a larger allocation to management, resulting in lower OP share.

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).

• Corporate and Other— Income from continuing operations attributable to DBRG of $130.8 million in 2023 reflected a $278.7 million gain recognized in connection with the recapitalization and deconsolidation of DataBank in September 2023, of which $3.7 million was realized and $275 million unrealized (Note 9 to the consolidated financial statements).

This was partially offset by a $133 million write-down of an unsecured promissory note related to the sale of our Wellness Infrastructure business in February 2022 (Note 10 to the consolidated financial statements).

In comparison, loss from continuing operations attributable to DBRG of $152.5 million in 2022 included a $133 million debt extinguishment loss in connection with an early exchange of our 5.75% exchangeable notes (Note 7 to the consolidated financial statements).

The amounts quoted herein are prior to allocating approximately 7% of net income (loss) to OP noncontrolling interest to arrive at amounts attributable to DBRG.

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

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(In thousands) 2023 2022 Change

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

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

Interest income 30,107 8,791 21,316

Fee revenue $ 264,117 $ 172,673 $ 91,444

Carried interest allocation 363,075 378,342 (15,267)

Principal investment income 145,448 56,731 88,717

Other income 48,743 87,025 (38,282)

Total revenues 821,383 694,771 126,612

Property operating expense 389,445 316,178 73,267

Interest expense 24,540 42,926 (18,386)

Investment expense 33,887 28,257 5,630

Investment-related expense 3,155 23,219 (20,064)

Transaction-related costs 10,823 10,129 694

Depreciation and amortization 36,651 44,271 (7,620)

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

Administrative expenses 123,184 109,490 13,694

Compensation expense—cash and equity-based 206,892 154,752 52,140

Compensation expense—incentive fee and carried interest allocation 186,030 202,286 (16,256)

Administrative expense 83,782 94,122 (10,340)

Total expenses 551,873 571,705 (19,832)

Other income (loss)

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

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

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

Other gain (loss), net 96,119 (169,747) 265,866

Income (Loss) before income taxes 365,629 (46,681) 412,310

Income tax benefit (expense) (6) (13,132) 13,126

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

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

Net loss (569,997) (816,911) 246,914

Income (Loss) from continuing operations 365,623 (59,813) 425,436

Income (Loss) from discontinued operations (320,458) (510,184) 189,726

Net income (loss) 45,165 (569,997) 615,162

Net income (loss) attributable to noncontrolling interests:

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Operating Company 9,138 (32,369) 41,507

Net loss attributable to DigitalBridge Group, Inc.

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

185,280 (321,797) 507,077

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

Preferred stock repurchases (927) (1,098) 171

Preferred stock dividends 58,656 61,567 (2,911)

Net loss attributable to common stockholders $ (382,266) $ (385,716) 3,450

Property Operating Income and Expense

Year Ended December 31,

(In thousands) 2022 2021 Change

Property operating income

Operating segment

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

Data center service revenue 77,561 61,044 16,517

884,526 762,750 121,776

Lease income 42,980 — 42,980

$ 927,506 $ 762,750 164,756

Property operating expense

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)

Leasehold 49 50

(In thousands, except %)

Max Critical I.T.

Square Feet or Total Rentable Square Feet

Leased Square Feet

% Utilization Rate (% Leased)

(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.

Net income (loss) attributable to common stockholders $ 127,551 $ (382,266) 509,817

Year Ended December 31,

(In thousands) 2023 2022 Change

Investment Management

Management fees

2 unchanged sentences

3,229 — 3,229

Other fee income

Other fee revenue

2,600 2,751 (151)

$ 264,117 $ 172,673 91,444

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

Fee revenue increased $91.4 million or 53%.

The increase was driven by management fees from InfraBridge beginning February 2023, adding $54.8 million, as well as capital raised throughout 2022 and 2023, primarily from DBP III which held its first close in November 2023 ($4.5 million), our core equity fund which held its first close in November 2022 ($8.7 million), DataBank recapitalization, and various co-investment vehicles.

Incentive fees in 2023 were attributed to our liquid securities strategy.

Carried Interest Allocation

Year Ended December 31,

(In thousands) 2023 2022 Change

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

Operating segment

Carried interest allocation

Distributed $ 28,403 $ 152,450 $ (124,047)

Unrealized 334,672 225,892 108,780

$ 363,075 $ 378,342 (15,267)

Other investment-level debt 11,734 660 11,074

Corporate-level debt 16,483 56,136 (39,653)

Carried interest allocation represents gross carried interest from our general partner interests in sponsored investment vehicles prior to allocations to management and Wafra.

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 distributed.

Distributed carried interest arose from the DataBank recapitalization in September 2023 ($27.9 million) and in the second half of 2022 ($77.4 million), and additionally, the liquidation of investments by DBP I and DBP II in the second half of 2022 ($75.1 million).

Unrealized carried interest was higher in 2023, driven by our DataBank investment, DBP II and co-investment vehicles, partially offset by a lower carried interest amount for DBP I.

Principal Investment Income

Principal investment income represents the Company's proportionate share of net income (loss) from investments in its sponsored investment vehicles, which is predominantly unrealized gain (loss) from changes in fair value of underlying fund investments.

Principal investment income increased $88.7 million to $145.4 million in 2023, driven by unrealized fair value increases related to investments in DataBank, DBP funds and related co-investment vehicles.

The increase in 2023 was partially offset by distribution income in 2022 from DBP realized investments.

Other income decreased $38.3 million to $48.7 million in 2023.

2022 included (a) property operating income of $43.0 million from a tower portfolio, acquired in June 2022 as a warehoused investment and transferred to our core equity fund in December 2022;

and (b) interest income from warehoused investments that were transferred to our credit fund during the second half of 2022, and amounts previously accrued on our Wellness Infrastructure promissory note that was written off in the first quarter of 2023 (totaling $23.3 million in 2022).

The decrease was partially offset by:

(i) higher interest income from money market deposits and beginning in 2023, from our subordinated notes in a collateralized loan obligation (increase totaling $15.2 million), (ii) incremental costs reimbursable by our managed investment vehicles that are grossed up as other income and expense (increased $5.9 million), and (iii) dividend income from our credit fund beginning the third quarter of 2022 (increased $5.7 million).

Interest Expense

Year Ended December 31,

(In thousands) 2023 2022 Change

Interest expense

Corporate debt $ 23,606 $ 32,472 $ (8,866)

Non-recourse investment-level debt 934 10,454 (9,520)

$ 24,540 $ 42,926 (18,386)

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 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.

Corporate Debt— Interest expense decreased $8.9 million driven by repayment of our 5.00% convertible notes in April 2023 (decreased $7.7 million) and to a lesser extent, lower interest expense on our securitized debt with a lower outstanding balance on the VFN in 2023 (decreased $0.6 million).

Additionally, the early exchange of our 5.75% exchangeable notes for common stock in March 2022 contributed a $0.6 million decrease in interest expense.

Non-Recourse Investment-Level Debt— Interest expense decreased $9.5 million.

2022 included interest expense on outstanding debt balance in connection with the financing of warehoused tower assets and credit investments (totaling $9.5 million), all of which were repaid in the second half of 2022.

Investment-Related Expense

Investment-related expense decreased $20.1 million to $3.2 million in 2023.

2022 included property operating expense of $13.2 million and third party professional service costs of $2.6 million from a tower portfolio acquired in June 2022 as a warehoused investment and transferred to our core equity fund in December 2022.

Additionally, higher costs were incurred in 2022 that are reimbursable by our managed investment vehicles.

Transaction-Related Costs

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.

Transaction-related costs were $10.8 million in 2023 and $10.1 million in 2022, composed of costs incurred in the acquisition of InfraBridge ($8.9 million and $7.3 million, respectively) and unconsummated deal costs.

Depreciation and Amortization

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

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.

Depreciation and amortization expense decreased $7.6 million in 2023.

The decrease was driven by the sale of warehoused tower assets acquired in June 2022 to our core equity fund in December 2022 ($18.8 million) and accelerated amortization on an investment management contract intangible in connection with the 2022 Recapitalization ($2.0 million).

The decrease was partially offset by amortization expense on InfraBridge intangible assets acquired in February 2023 ($15.2 million).

Compensation Expense

1 unchanged sentence

(In thousands) 2023 2022 Change

Cash and equity-based compensation

Cash compensation and benefits $ 151,295 $ 123,471 $ 27,824

Equity-based compensation 55,597 31,281 24,316

Incentive and carried interest compensation 202,286 65,890 136,396

$ 206,892 $ 154,752 52,140

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.

Incentive and carried interest compensation allocation $ 186,030 $ 202,286 (16,256)

Cash and equity-based compensation— Compensation expense increased $52.1 million.

The increase in cash compensation of $27.8 million in 2023 is primarily attributed to InfraBridge ($27.9 million in 2023, of which $6.5 million represent deferred bonus amounts funded by the seller in the InfraBridge acquisition).

Equity-based compensation expense was $24.3 million higher in 2023, driven by performance-based awards that met their target in 2023 (increased $11.0 million in 2023) and generally higher equity awards granted, partially offset by full vesting in 2022 of equity awards in connection with sale of the Wellness Infrastructure business in February 2022 (decreased $3.4 million in 2023).

Incentive and carried interest compensation allocation— 2022 had included $57.3 million of carried interest compensation expense that was fully recognized in connection with the first closing of the DataBank recapitalization.

No further compensation expense was recognized in subsequent closings of the DataBank recapitalization.

Excluding the expense associated with the recapitalization in 2022, incentive and carried interest compensation was $41.0 million higher in 2023, largely driven by unrealized carried interest from DataBank.

Administrative Expenses

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

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

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

$ 397,754 $ 226,477 171,277

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.

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.

Total administrative expenses decreased $10.3 million, driven by lower legal costs (decreased $27.6 million), partially offset by increases in other administrative costs such as other third-party professional services and travel-related expenses (totaling $11.5 million), some of which are reimbursable by our managed investment vehicles.

Other Gain (Loss), Net

2023 recorded an other gain of $96.1 million while there was an other loss of $169.7 million in 2022.

Both periods under comparison had the following significant items:

• In September 2023, $278.7 million gain recognized in connection with the deconsolidation of DataBank, of which $3.7 million was realized and $275.0 million unrealized (Note 9 to the consolidated financial statements);

• In March 2023, $133 million fair value write-down on an unsecured promissory note from the 2022 sale of our Wellness Infrastructure business compared with a fair value write-down of $28.7 million in 2022;

• In March 2022, $133 million debt extinguishment loss in connection with an early exchange of our 5.75% exchangeable notes.

Excluding these significant one-off events, a net loss of $47.8 million and $8.7 million would have been recognized in 2023 and 2022, respectively.

The net loss in 2023 can be further attributed to a $21.2 million loss due to an increase in the liability fair value of warrants issued to Wafra and $34.7 million of write-downs in other equity investment fair values, partially offset by

$12.1 million net gain on marketable equity securities held by our consolidated liquid funds.

In comparison, the smaller net loss in 2022 resulted from a $60.9 million net loss on marketable equity securities held by our consolidated liquid funds and a net loss of $7.6 million from our other equity investments, largely offset by a $63.7 million gain due to a decrease in the liability fair value of warrants issued to Wafra.

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

Income tax expense was not material in 2023 and $13.1 million in 2022.

2023 reflects primarily the income tax effect of foreign subsidiaries, largely the InfraBridge investment management business in the United Kingdom.

The Company has otherwise established a full valuation allowance on the deferred tax assets of its taxable U.S.

entities, resulting in no net U.S.

income tax effect for these entities in 2023.

Income tax expense in 2022 can be attributed to the establishment of a valuation allowance against the Company's deferred tax asset balance, which offsets the deferred tax benefit from deferred tax assets recognized during 2022.

Income (Loss) from Discontinued Operations

Year Ended December 31,

(In thousands) 2023 2022 Change

Revenues $ 90,412 $ 843,659 $ (753,247)

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

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

Property operating income $ 774,226 $ 953,727 $ (179,501)

Other income 8,895 21,559 (12,664)

Total revenues 783,121 975,286 (192,165)

Property operating expense 329,762 412,924 (83,162)

Interest expense 174,722 268,519 (93,797)

Depreciation and amortization 448,900 534,979 (86,079)

Compensation and other expenses 136,097 203,669 (67,572)

Impairment loss — 35,985 (35,985)

Equity method earnings (losses) (15,188) (45,489) 30,301

Other gain (loss), net 2,671 13,682 (11,011)

Income (Loss) from discontinued operations before income taxes (318,877) (512,597) 193,720

Income tax benefit (expense) (1,581) 2,413 (3,994)

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

Loss from discontinued operations attributable to noncontrolling interests:

Income (Loss) from discontinued operations (320,458) (510,184) $ 189,726

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

Investment entities (260,120) (302,072) 41,952

Operating Company (4,339) (15,893) 11,554

Loss from discontinued operations attributable to DigitalBridge Group, Inc.

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

$ (55,999) $ (192,219) 136,220

Discontinued operations represent primarily the operations of the following businesses:

(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.

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.

Discontinued operations represent primarily the operations of the Operating segment prior to deconsolidation in 2023 (Note 9) and Wellness Infrastructure prior to its disposition in February 2022.

The Operating segment and Wellness Infrastructure business generally record a net loss, taking into account the effects of real estate depreciation and related intangible asset amortization.

Within the Operating segment, there was a full year of operations for DataBank and Vantage SDC in 2022 while 2023 included only 8.5 months of operations for DataBank prior to its deconsolidation.

Loss from discontinued operations in 2023 also included $9.7 million impairment of BRSP shares prior to disposition in March 2023, as well as unrealized losses on various remaining investments and legal costs associated with remaining discontinued businesses and investments.

In 2022, loss from discontinued operations can also be attributed to a $92.1 million write-off of unamortized deferred financing costs on the Wellness Infrastructure debt assumed by the buyer and $35 million impairment loss based upon final carrying value of the Wellness Infrastructure net assets upon disposition, as well as $60.4 million of impairment on BRSP shares, partially offset by our share of BRSP earnings prior to disposition of $23.0 million.

Operating Metrics

Assets Under Management and Fee Earning Equity Under Management

We present below our AUM and FEEUM, which are key operating metrics in the alternative investment management industry.

Our calculation of AUM and FEEUM may differ from other investment managers, and as a result, may not be directly comparable to similar measures presented by other investment managers.

Assets Under Management

AUM represents the total capital for which we provide investment management services.

AUM is generally composed of (a) third party capital managed by the Company and its affiliates, including capital that is not yet fee earning, or not subject to fees and/or carried interest;

and (b) assets invested using the Company's own balance sheet capital and managed on behalf of the Company's stockholders (composed of the Company's fund investments as GP affiliate, warehoused investments, and as of December 31, 2023, the Company's interest in portfolio companies previously in the Operating segment).

Third party AUM is based upon invested capital as of the reporting date, including capital funded through third party financing, and committed capital for funds in their commitment stage.

Balance sheet AUM is based upon the carrying value of the Company's balance sheet investments as of the reporting date (at December 31, 2022 prior to deconsolidation, on an undepreciated basis as it relates to the Company's interest in portfolio companies previously consolidated in the Operating segment).

Fee Earning Equity Under Management

FEEUM represents the total capital managed by the Company and its affiliates which earns management fees and/or incentive fees or carried interest.

FEEUM is generally based upon committed capital, invested capital, NAV or GAV, pursuant to the terms of each underlying investment management agreement.

Presented below are total AUM and FEEUM by product:

(In billions) December 31, 2023 December 31, 2022

Assets Under Management

$ 80.1 $ 52.8

Fee Earning Equity Under Management

DBP infrastructure equity $ 13.0 $ 11.2

InfraBridge Global Infrastructure 5.1 —

Core Equity, Credit and Liquid Strategies 2.8 2.0

Co-invest vehicles 9.5 6.5

Separately capitalized portfolio companies 2.4 2.5

$ 32.8 $ 22.2

The following table summarizes changes in FEEUM:

December 31, 2023

(In billions)

Fee Earning Equity Under Management

Balance at January 1 $ 22.2

Market activity and other (3)

Balance at December 31 $ 32.8

(1) Inflows include closing on new capital raised where fees are earned on committed capital, deployment of capital where fees are earned on invested capital, new subscriptions where fees are based on NAV, other changes in invested capital such as the effect of recapitalization and syndication, and FEEUM from acquired investment vehicles ($5.1 billion from InfraBridge in 2023).

(2) Outflows include redemptions and withdrawals in Liquid Strategies, realizations where fees are based on invested capital, other changes in invested capital such as the effect of recapitalization and syndication, change in fee basis from committed to invested capital and expiration of fee paying capital.

(3) Market activity and other include changes in investment value based on NAV or GAV, and the effect of foreign exchange rates.

FEEUM increased by $10.6 billion or 48% to $32.8 billion at December 31, 2023, driven by the addition of $5.1 billion of InfraBridge FEEUM, and new capital raised, primarily DBP III of $2.7 billion and various co-investment vehicles.

Non-GAAP Supplemental Financial Measures

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

Resulting from the significant growth in our 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.

We report the following non-GAAP financial measures attributable to the Operating Company:

Distributable Earnings (“DE”) and Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) on a Company-wide basis, and specific to our Investment Management segment, Fee Related Earnings (“FRE”) and FRE before the effects of new investment strategies, as represented by Investment Management Adjusted EBITDA.

DE and FRE are the most common metrics utilized in the investment management sector.

We believe these non-GAAP financial measures supplement and enhance the overall understanding of our underlying financial performance and trends, and facilitate comparison among current, past and future periods and to other companies in similar lines of business.

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

For the same reasons, we believe these non-GAAP measures are useful to the Company’s investors and analysts.

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.

On December 31, 2023, t he Operating segment was discontinued following full deconsolidation of the portfolio companies in the Operating segment , at which time, the activities thereof qualified as discontinued operations.

Accordingly, the Company-wide measures of DE and Adjusted EBITDA exclude the Operating segment for both 2023 and the comparative period of 2022.

These non-GAAP financial measures should be considered as a supplement to and not an alternative or in lieu of GAAP net income (loss) as measures of operating performance, or to cash flows from operating activities as indicators of liquidity.

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 fully comparable to those calculated by our peers.

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

(In thousands) Year Ended December 31, 2022

Year Ended December 31,

(In thousands) 2023 2022

Attributable to Operating Company:

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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:

DE increased approximately $63 million to $48.6 million in 2023, which reflects the growth in our investment management business as noted in "— Investment Management FRE" below.

2022 was also burdened with a higher income tax expense that had included a full valuation allowance established against our U.S.

deferred tax assets.

Adjusted EBITDA .

Adjusted EBITDA was approximately $50 million higher at $103.6 million in 2023, largely consistent with DE.

Adjusted EBITDA is derived as DE adjusted to generally exclude the effects of our capital structure and leverage.

Refer to the reconciliation from DE to Adjusted EBITDA below.

Investment Management FRE .

IM FRE increased $54 million or 65% to $137.9 million in 2023, resulting from continued growth in our investment management business as FEEUM grew $10.6 billion, reflecting primarily fee revenue from new capital raised for DBP III and various co-investment vehicles, and FRE contributed from the acquisition of InfraBridge in February 2023.

Additionally, our share of 2022 IM FRE was net of $12.3 million attributed to Wafra, whose interest in the IM business was redeemed in May 2022.

Distributable Earnings

DE generally represents the net realized earnings of the Company and is an indicative measure used by the Company to assess ongoing operating performance and in making decisions related to distributions and reinvestments.

Accordingly, we believe DE provides investors and analysts transparency into the measure of performance used by the Company in its decision making.

DE reflects the ongoing operating performance of the Company’s core business by generally excluding non-cash expenses, income (loss) items that are unrealized and items that may not be indicative of core operating results.

This allows the Company, and its investors and analysts to assess its operating results on a more comparable basis period-over-period.

DE is calculated as an after-tax measure that differs from GAAP net income (loss) from continuing operations as a result of the following adjustments to net income (loss):

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.

restructuring charges;

other gain (loss);

unrealized principal investment income (loss);

non-cash depreciation and amortization expense, non-cash impairment charges (if any);

amortization of deferred financing costs, debt premiums and discounts;

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

non-cash equity-based compensation costs;

preferred stock redemption gain (loss);

and straight-line adjustment to lease income and expense.

Transaction-related costs are incurred in connection with acquisitions and include costs of unconsummated transactions, while restructuring charges are related primarily to severance and retention costs.

These costs, along with other gain (loss) amounts, are excluded from DE as they are related to discrete items, are not considered part of our ongoing operating cost structure, and are not reflective of our core operating performance.

Other items excluded from DE are generally non-cash in nature, including income (loss) items that are unrealized, or otherwise do not represent current or future cash obligations such as amortization of deferred financing costs and straight-line lease adjustment.

These items are excluded from DE as they do not contribute to the measurement of DE as a net realized earnings measure that is used in decision making related to distributions and reinvestments.

Income taxes applied in the determination of DE generally represents GAAP income tax related to continued operations, and includes the benefit of deductions available to the Company on certain expense items excluded from DE (for example, equity-based compensation).

As the income tax benefit arising from these excluded expense items do affect actual income tax paid or payable by the Company in any one period, the Company believes their inclusion in DE is appropriate to more accurately reflect amounts available for distribution.

The items we have excluded from DE are generally consistent with the exclusions made by our peers, which we believe allows for better comparability to the DE presented by our peers.

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.

Adjusted EBITDA is a supplemental measure derived from DE and generally presents the Company’s core operating performance on a pre-tax basis, based upon recurring revenues and independent of our capital structure and leverage.

We believe Adjusted EBITDA is useful to investors as an indicative measure of the Company’s profitability that is recurring and sustainable and allows for better comparability of the Company’s performance relative to its peers independent of capital structure and leverage.

However, because Adjusted EBITDA is calculated without the effects of certain recurring cash charges, including interest expense, preferred stock dividends, and income taxes, its usefulness as a performance measure may be limited.

Adjusted EBITDA is calculated as DE adjusted to generally exclude the following items attributable to the Operating Company that are included in DE:

interest expense as included in DE and income tax benefit (expense) as included in DE consistent with an EBITDA measure, preferred stock dividends, placement fee expense, and our share of incentive fees and distributed carried interest net of associated compensation expense.

Items excluded from Adjusted EBITDA include preferred stock dividends as Adjusted EBITDA removes the effects to earnings associated with the Company's capital structure, and placement fees as they are inconsistent in amount and frequency depending upon timing of fundraising for our funds.

Additionally, Adjusted EBITDA excludes incentive fees and distributed carried interest net of associated compensation expense to be consistent with the FRE measure for our Investment Management segment, as discussed further below.

Distributable Earnings and Adjusted EBITDA Reconciliation

(In thousands) Year Ended December 31, 2022

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

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

Net loss attributable to Operating Company (414,635)

Year Ended December 31,

(In thousands) 2023 2022

Net income (loss) attributable to common stockholders $ 127,551 $ (382,266)

Net income (loss) attributable to noncontrolling interests in Operating Company 9,138 (32,369)

Net income (loss) attributable to Operating Company 136,689 (414,635)

Transaction-related and restructuring charges 45,860 64,334

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

Other (gain) loss, net (89,700) 161,981

Unrealized principal investment income (145,448) (42,531)

Unrealized carried interest allocation, net of associated expense allocation (150,998) (120,423)

Equity-based compensation cost 55,596 32,581

Depreciation and amortization expense 36,651 44,271

Straight-line adjustment to lease (income) and expense, net (1,008) (14,025)

Amortization of deferred financing costs, debt premiums and discounts 2,784 4,537

Preferred stock redemption (gain) loss (927) —

Income tax effect on certain of the foregoing adjustments — (328)

Adjustments attributable to noncontrolling interests in investment entities (1)

(169,559) (248,033)

DE of discontinued operations (2)

328,682 518,271

Distributable Earnings, after tax—attributable to Operating Company

48,622 (14,000)

Adjustments attributable to Operating Company :

Interest expense included in DE 21,328 35,619

Income tax expense included in DE 13,266

Income tax (benefit) expense included in DE 6 13,180

Preferred stock dividends 58,656 61,566

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

Principal investment income included in DE (277) (11,221)

Placement fees 3,698 —

Distributed incentive fee and carried interest, net of associated expense allocation (27,893) (31,463)

IM segment other income and investment-related expense, net, included in DE (580) (316)

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.

$ 103,560 $ 53,596

(1) Noncontrolling interests' share of adjustments pertain largely to discontinued operations, other gain (loss) of consolidated funds, unrealized carried interest allocation and unrealized principal investment income.

(2) Equity method earnings (loss) from BRSP and the operating results of the portfolio companies previously consolidated in the Operating segment, which qualified as discontinued operations in March 2023 and December 2023, respectively, are included in DE of discontinued operations for all periods presented.

Investment Management FRE and Investment Management Adjusted EBITDA

Investment Management FRE is presented as Investment Management Adjusted EBITDA, further adjusted to exclude FRE associated with new investment strategies, as discussed below.

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

Investment Management FRE is measured as recurring fee revenue that is not subject to future realization events and other income (inclusive of cost reimbursements associated with administrative expenses), net of the following:

compensation expense (excluding non-cash equity-based compensation, and incentive and carried interest compensation expense), administrative expense (excluding placement fee expense and straight-line adjustment to lease expense) and FRE associated with new investment strategies.

In reconciling Investment Management FRE to GAAP net income (loss), adjustments are made to first arrive at Investment Management Adjusted EBITDA, which generally excludes the following:

our share of incentive fees and carried interest net of associated compensation expense;

unrealized principal investment income (loss);

other gain (loss);

transaction-related and restructuring charges;

non-cash equity-based compensation costs;

straight-line adjustment to lease expense;

placement fee expense;

investment expense;

and in line with an EBITDA measure, non-cash depreciation and amortization expense, interest expense, and income tax benefit (expense).

Consistent with an FRE measure, Investment Management Adjusted EBITDA excludes incentive fees and carried interest net of associated compensation expense, as these are not recurring fee revenue and are subject to variability given that they are performance-based and/or dependent upon future realization events.

In calculating Investment Management FRE which reflects the Company’s Investment Management segment as a stabilized business, Investment Management Adjusted EBITDA is further adjusted to exclude Start-Up FRE.

Start-Up FRE is 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.

The Company evaluates new investment strategies on a regular basis and excludes Start- Up FRE from Investment Management FRE until such time as a new strategy is determined to form part of the Company’s core investment management business.

We believe that Investment Management FRE and Investment Management Adjusted EBITDA are useful measures to investors as they reflect the Company’s profitability based upon recurring fee streams that are not subject to future realization events, and without the effects of income taxes, leverage, non-cash expenses, income (loss) items that are unrealized and other items that may not be indicative of core operating results.

This allows for better comparability of the profitability of the Company’s investment management business on a recurring and sustainable basis.

Investment Management FRE Reconciliation

(In thousands) Year Ended December 31, 2022

Investment Management

Net income $ 186,084

Year Ended December 31,

(In thousands) 2023 2022

Net income (loss)—Investment Management

$ 205,362 $ 186,084

Interest expense, net of interest income 8,834 10,377

Investment expense, net of reimbursement 324

Depreciation and amortization 22,155

Equity-based compensation 15,845

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

Investment-related expense, net of reimbursement 116 324

Depreciation and amortization expense 35,260 22,155

Equity-based compensation cost 33,862 15,845

Incentive fee and carried interest allocation, net of associated expense allocation (180,273) (176,016)

Straight-line rent expense 1,049 1,844

Placement fees 3,698 —

Transaction-related and restructuring charges 26,259 18,402

Equity method earnings, excluding carried interest 26,958

Other loss, net 3,341

Income tax expense 7,815

Unrealized principal investment income (4,223) (4,121)

Other (gain) loss, net 2,526 3,341

Income tax (benefit) expense 1,694 7,815

Investment Management Adjusted EBITDA

134,164 86,050

Start-up FRE 3,751 9,739

Investment Management FRE

137,915 95,789

Attributable to redeemable noncontrolling interests (1)

Investment Management FRE—attributable to Operating Company

$ 137,915 $ 83,474

(1) Wafra's interest in the investment management business was redeemed in May 2022.

Liquidity and Capital Resources

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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.

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:

• our general partner and general partner affiliate commitments to our investment vehicles;

• acquisitions of target investment management businesses;

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

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

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• our operations, including compensation, administrative and overhead costs;

• 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;

• dividends to our preferred and common stockholders;

• our liability for corporate and other taxes;

• obligation for lease payments on our corporate offices.

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 fees or carried interest;

• fees received from our investment management business, including our share of distributed net incentive fees and carried interest;

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

• availability under our VFN;

• availability under our Variable Funding Notes ("VFN");

• issuance of additional term notes under our corporate securitization;

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• proceeds from full or partial realization of investments;

• investment-level financing;

• proceeds from public or private equity and debt offerings.

At December 31, 2023, our liquidity position was approximately $475 million, composed of corporate unrestricted cash and including the full $300 million availability under our VFN.

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.

Significant Liquidity and Capital Activities in 2023

Sources of Funds

• $49 million net proceeds from the September 2023 recapitalization of DataBank

• $202 million in net proceeds from full disposition of our BRSP shares in March 2023

Uses of Funds

• Acquisition of InfraBridge in February 2023 for $314 million, net of cash assumed

• $200 million repayment of our convertible senior notes upon maturity in April 2023

• $90 million contingent earnout payment to Wafra in March 2023.

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.

Preferred Stock— We have outstanding preferred stock totaling $822 million, bearing a weighted average dividend rate of 7.135% per annum, with aggregate dividend payments of $14.7 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.

Debt Obligations

As of the date of this filing, our corporate debt is composed of a securitized financing facility and exchangeable senior notes issued by the OP, all of which are recourse to the Company, as described in Note 7 to the consolidated financial statements.

($ in thousands) Outstanding Principal Interest Rate

(Per Annum) Maturity or Anticipated Repayment Date Years Remaining to Maturity

Corporate debt:

Securitized financing facility—fixed rate

$ 300,000 3.93 % September 2026 2.7

Exchangeable senior notes—fixed rate

78,422 5.75 % July 2025 1.5

Investment Commitments

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

Fund Commitments —As general partner, we typically have minimum capital commitments to our sponsored funds.

With respect to our flagship value-add DBP fund series, and InfraBridge funds, we have made additional capital commitments as a general partner affiliate alongside our limited partner investors.

Our fund capital investments further align our interests to our investors.

As of December 31, 2023, we have unfunded commitments totaling $260 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.

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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.

The remaining contingent consideration of $35 million will become payable in March 2024.

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

The current estimated fair value of the contingent consideration is $11 million.

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.

The warehoused investments are transferred to the investment vehicle if and 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.

Nevertheless, investment warehousing is undertaken only if it is determined that we will have sufficient liquidity through the anticipated warehousing period.

At December 31, 2023, warehoused investments aggregate to $52 million at cost.

Carried Interest Clawback

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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.

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.

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

Generally, the Company, through the OP, has guaranteed the clawback obligation of its subsidiaries that act as general partner or special limited partner of its respective sponsored funds, for the benefit of these funds and their limited partners.

At December 31, 2023, the Company has no liability for clawback obligations on distributed carried interest.

Lease Obligations

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.

At December 31, 2023, we had $49 million of operating lease obligations on our corporate offices, which will be funded through corporate operating cash.

The lease obligation amount represents 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.

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

Convertible and exchangeable senior notes 278,422 5.21 % 0.9

Non-recourse investment-level secured debt:

Fixed rate 3,640,235 2.72 %

Variable rate 994,000 8.40 %

4,634,235 3.71 % 3.0

Total debt $ 5,212,657

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

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

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

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

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.

As of the date of this filing, we have $378 million of outstanding principal on our corporate debt, as discussed above under " —Debt Obligation.

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 $300 million is available to be drawn on our 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 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.

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

Management fee revenue 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.

Incentive fees are recognized as fee revenue 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.

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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 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.

Investments— Our investments, primarily in our sponsored funds as general partner affiliate, generate cash largely through capital appreciation upon liquidation.

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.

In March 2023, our BRSP shares were fully disposed for net proceeds of $202 million.

As of the date of filing, we have other marketable equity securities that are available for future monetization totaling $32 million, valued as of December 31, 2023.

Public Offerings

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Operating Activities

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.

Cash inflows from operating activities are generated primarily through fee-related earnings, including incentive fees, distributions of our share of net carried interest, distribution of earnings from our general partner affiliate interests in our sponsored funds, and prior to deconsolidation of the portfolio companies in the Operating segment during 2023, net operating income from investment properties.

Our operating activities generated net cash inflows of $233.6 million in 2023 and $262.6 million in 2022.

Investing Activities

Investing activities include primarily cash outlays for acquisition of real estate, origination or acquisition of warehoused loans and disbursement on subsequent drawdowns, and new equity investments and subsequent contributions.

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.

Investing activities relate to business combinations;

general partner and general partner affiliate investments in sponsored funds, including subsequent drawdown of commitments and return of investments, primarily from realized fund investments;

origination or acquisition of warehoused investments and subsequent repayments, sales and transfers of warehoused investments;

and prior to deconsolidation of portfolio companies in the Operating segment in 2023, acquisition of real estate.

Our investing activities generated net cash outflows of $979.0 million in 2023 and $1.9 billion in 2022.

Cash outlays in 2023 can be attributed primarily to the acquisition of InfraBridge and deconsolidation of DataBank and Vantage SDC, partially offset by proceeds from the sale of BRSP shares and proceeds from DataBank recapitalization.

2022 cash outlays were driven by the acquisitions of TowerCo and data centers in the Operating segment.

• Business combination —In 2023, we paid $314.3 million (net of cash assumed) for the acquisition of InfraBridge.

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

In 2023, equity investments recorded net cash inflows of $190.3 million, attributed primarily to $201.6 million from the sale of BRSP shares, return of capital from a non-digital equity investment following a final sale of its underlying assets, and investing activities of our consolidated liquid funds which hold marketable equity securities.

These cash inflows were partially offset by funding of our general partner and general partner affiliate commitments, net of return of capital.

2022 saw net cash inflows of $11.6 million, largely representing the trading activities in marketable equity securities by our consolidated liquid funds, and a return of capital from the first sale of investment by DBP I, partially offset by funding of our general partner and general partner affiliate commitments, net of return of capital.

• Debt investments —Our debt investments generated minimal net cash inflows in 2023 and 2022.

Having relinquished all of our warehoused debt investments in 2022, the only cash activity with respect to debt investments in 2023 was the full repayment of a loan held by DataBank of $6.8 million.

In 2022, there was a net cash inflow of $44.8 million.

Disbursements for additional fundings and acquisitions 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 sponsored credit fund and to a third party sponsored collateralized loan obligation.

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

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.

Net cash outflows in 2023 was $653.5 million, attributed to DataBank's data center acquisition in Dallas and capital expenditures in our data center portfolio, including payments for build-out of expansion capacity and lease-up within the Vantage SDC portfolio, partially offset by $21.5 million of proceeds, net of carried interest distribution, from the recapitalization of DataBank.

Also included in cash outflows was cash deconsolidated related to DataBank, Vantage SDC and our credit fund totaling $229.2 million.

2022 saw net cash outflows of $2.0 billion, attributed primarily to the acquisition of TowerCo and, to a lesser extent, to DataBank's acquisition of five data centers, data center capital expenditures, and payments for build-out of expansion capacity and lease-up within the Vantage SDC portfolio.

Also contributing to the cash outflows was cash assumed by the buyer, net of proceeds received, in the sale of real estate investment holding entities in our Wellness Infrastructure business and property-level cash transferred related to the transfer of our interest in TowerCo to our sponsored fund in December 2022.

Financing Activities

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

We also draw upon our securitized financing facility to finance our investing and operating activities, as well as have the ability to raise capital in the public markets through issuances of preferred stock, common stock and private placement notes.

Accordingly, we incur cash outlays for payments on our investment-level and corporate debt, dividends to our preferred stockholders and common stockholders (common dividends 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.

We may draw upon our securitized financing facility to finance our 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 primarily for payments on our corporate debt, and dividends to our preferred stockholders and common stockholders.

Separately, prior to their deconsolidation in 2023, portfolio companies in the Operating segment financed their investing activities largely through investment-level secured debt and incured cash outlays for debt servicing and distributions to their third party investors who represent noncontrolling interests.

Financing activities generated net cash inflows in both years.

• In 2023, the net cash inflows of $58.2 million represent primarily $484.5 million of additional investment-level debt in the Operating segment, largely offset by repayment of our $200 million 5.00% convertible senior notes, $90 million contingent consideration payment to Wafra, $89.5 million distributed for capital redeemed by a noncontrolling interest in a consolidated liquid fund, and income distribution to noncontrolling interests in Vantage SDC.

• The financing net cash inflows of $923.8 million in 2022 were 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 sponsored fund upon the transfer of our equity interests in TowerCo to the fund.

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

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

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.

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

Guarantees and Off-Balance Sheet Arrangements

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Critical Accounting Policies and Estimates

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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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 fair value of investments held by our sponsored investment vehicles represent a primary input in the determination of carried interest allocation together with corresponding compensation expense, and principal investment income (loss) which is our share of income (loss) from equity interests in our sponsored funds.

The investments held by our 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.

Equity method investments and loans receivable, if any, for which fair value option is elected, are also revalued each quarter and are similarly subject to the inherent uncertainties and assumptions applied in estimating fair values.

Carried Interest Allocation

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

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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.

A portion of carried interest is allocated to certain employees, former employees and to Wafra, 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 the fair value of the underlying investments held by these vehicles.

Therefore, carried interest may be subject to significant fluctuations between periods driven by fair value changes of underlying fund investments over time.

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

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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, deterioration in current and/or projected earnings;

significant near-term lease expirations;

decline in occupancy;

or other customer or market conditions that would negatively affect property operating cash flows.

The carrying amount of real estate held for investment is not recoverable if it exceeds the undiscounted future net cash flows expected to be generated by the property, including any estimated proceeds from eventual disposition of the property.

If multiple outcomes are under consideration, the Company may apply either a probability-weighted cash flows approach or the single-most-likely estimate of cash flows approach, whichever is more appropriate under the circumstances.

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:

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

available market information such as competition levels, leasing trends, occupancy trends, lease rates, and market prices of similar properties recently sold or currently being offered for sale;

and capitalization rates.

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

Equity Method Investments

Significant equity method investments that are subject to periodic impairment assessment include the Company's investment in BRSP.

Indicators of impairment on equity method investments generally include the Company's shortened hold period assumptions;

significant deterioration in earnings performance, asset quality, or business prospects of the investee;

or significant adverse change in the industry, economic, or market environment of the investee.

If indicators of impairment exist, the Company estimates the fair value of its equity method investment, which considers factors such as the estimated enterprise value of the investee, fair value of the investee's underlying net assets, or net cash flows to be generated by the investee, and for equity method investees with publicly-traded equity, the traded price of the equity securities in an active market.

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;

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

or the Company's ability and intent to hold the investment until recovery of its carrying value.

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.

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, 2023, the Company's goodwill is associated with its Investment Management and Operating segments.

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The assessment of goodwill for impairment may initially be performed based on qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value, including goodwill.

If so, a quantitative assessment is performed, and to the extent the carrying value of the

reporting unit exceeds its fair value, impairment is recognized for the excess up to the amount of goodwill assigned to the reporting unit.

If so, a quantitative assessment is performed, and to the extent the carrying value of the reporting unit exceeds its fair value, impairment is recognized for the excess up to the amount of goodwill assigned to the reporting unit.

Alternatively, the Company may bypass a qualitative assessment and proceed directly to a quantitative assessment.

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The Company determined that there were no indicators of impairment to goodwill in 2023.

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

Certain loans receivable are classified under Level 3 of the fair value hierarchy, with the measurement of fair value using at least one unobservable input that is significant and requiring management judgment.

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.

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

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.

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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 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, 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.

Acquired assets are generally composed of equity interests in managed investment vehicles and investment management related intangibles such as investment management contracts and investor relationships.

Equity interests in managed investment vehicles are valued based upon their latest net asset value.

Identifiable intangible assets such as management contracts and investor relationships 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:

(i) construction costs for buildings and improvements;

(ii) cost per kilowatt and costs of design, engineering, construction and installation for data center infrastructure;

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.

expected future cash flows, reinvestment rates by existing investors in our investment management business, and discount rates.

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

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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 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.

Discussion of i) 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, and ii) entities deconsolidated during 2023 are included in Note 15 and Note 9, respectively, to the consolidated financial statements in Item 15 of this Annual Report.

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