What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-03 compared with 2023-11-03 · 269 added, 470 removed, 205 unchanged (78% of the section changed)

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References to the “Operating Partnership,” our “Operating Company” and the “OP” refer to DigitalBridge Operating Company, LLC, a Delaware limited liability company and the operating company of the Company, and its consolidated subsidiaries.

Our Organization

We are a leading global digital infrastructure investment manager, deploying and managing capital across the digital ecosystem, including data centers, cell towers, fiber networks, small cells, and edge infrastructure.

Our diverse global investor base includes public and private pensions, sovereign wealth funds, asset managers, insurance companies, and endowments.

At September 30, 2023, we had $75 billion of assets under management ("AUM"), composed of assets managed on behalf of limited partners/investors of investment vehicles we manage, and separately, our shareholders.

At March 31, 2024, we had $33 billion of fee earning equity under management ("FEEUM").

We are headquartered in Boca Raton, Florida, with key offices in New York, Los Angeles, London, Luxembourg and Singapore, and have approximately 300 employees.

We operate as a taxable C Corporation, except for certain subsidiaries in the Operating segment that have elected to be taxed as real estate investment trusts.

We conduct substantially all of our activities and hold substantially all of our assets and liabilities through our Operating Company.

At September 30, 2023, we owned 93% of the Operating Company as its sole managing member.

The Company conducts its business through two reportable segments:

(i) Investment Management;

and (ii) Operating, the Company's direct co-investment in digital infrastructure assets held by its portfolio companies.

• Investment Management— This segment represents the Company's global investment management platform, deploying and managing capital on behalf of a diverse base of global institutional investors.

The Company's investment management platform is composed of a growing number of long-duration, private investment funds designed to provide institutional investors access to investments across different segments of the digital infrastructure ecosystem.

In addition to its flagship value-add digital infrastructure equity offerings, the Company's investment offerings have expanded to include core equity, credit and liquid securities.

The Company earns management fees based upon the assets or capital managed in investment vehicles, and may earn incentive fees and carried interest based upon the performance of such investment vehicles, subject to achievement of minimum return hurdles.

The amount of incentive fees and carried interest recognized, a portion of which is allocated to employees and former employees, may be highly variable from period to period.

Through the end of May 2022, earnings from the Investment Management segment were attributed 31.5% to Wafra, a private investment firm, prior to the Company's redemption of Wafra's interest in the investment management business.

• Operating— This segment is composed of balance sheet equity interests in digital infrastructure portfolio companies, which generally earn rental income from providing use of digital asset space and/or capacity through leases, services and other agreements.

The Company owned interests in two portfolio companies:

Vantage SDC, a stabilized hyperscale data center business (DBRG ownership of 13% at September 30, 2023 and December 31, 2022), and DataBank, an edge colocation data center business (DBRG ownership of 11% at December 31, 2022 and through the final close of the recapitalization and deconsolidation in mid-September 2023;

thereafter, the Company's remaining 9.87% interest in DataBank is presented within Corporate and Other) (Note 10 to the consolidated financial statements).

DataBank and Vantage SDC are portfolio companies managed by the Company under its Investment Management segment with respect to equity interests funded through third party capital.

We operate as a taxable C Corporation and conduct substantially all of our activities and hold substantially all of our assets and liabilities through our Operating Company.

At March 31, 2024, we owned 93% of the Operating Company as its sole managing member.

Our Investment Management Platform

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• Our DBP series of funds focus on value-add digital infrastructure, investing in and building businesses across the digital infrastructure sector.

• Core Equity invests in digital infrastructure businesses and assets with long-duration cash flow profiles, primarily in more developed geographies.

• Core Equity invests in digital infrastructure businesses and assets with long-duration cash flow profiles, primarily in more developed geographies (the Strategic Assets Fund, or "SAF").

• DigitalBridge Credit is our private credit strategy that delivers credit solutions to corporate borrowers in the digital infrastructure sector globally through credit financing products such as first and second lien term loans, mezzanine debt, preferred equity and construction/delay-draw loans, among other products.

• Our Liquid Strategies are fundamental long-only and long-short public equities strategies with well-defined mandates, leveraging the network and intellectual capital of our platform to build liquid portfolios of high quality, undervalued businesses across digital infrastructure, real estate, and technology, media, and telecom.

• InfraBridge is focused on mid-market investments in the digital infrastructure and related sectors of transportation and logistics, and energy transition.

• InfraBridge is focused on mid-market investments in the digital infrastructure and related sectors of transportation and logistics, and energy transition (the Global Infrastructure Fund ("GIF") series of funds).

Significant Developments

The following summarizes significant developments that affected our business and results of operations in 2024 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

• We have raised approximately $5.4 billion of capital to-date in 2023, primarily $2.2 billion for DigitalBridge Partners III, LP ("DBP III"), the third series in our flagship value-add strategy, and syndications through various co-investment vehicles.

DBP III will begin accruing fee income following its first closing on November 1, 2023.

• 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 Global Infrastructure Fund ("GIF") series.

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

• The recapitalization of DataBank, which commenced in August 2022 and completed in September 2023, resulted in the sale of a portion of DataBank's equity interest to new investors totaling $2.2 billion.

The Company's ownership interest in DataBank decreased from 21.8% to 11.0% as of November 2022 and decreased further to 9.87% in September 2023.

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).

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 fee income in our Investment Management segment.

The completion of the recapitalization on September 14, 2023 resulted in a deconsolidation of DataBank.

The deconsolidation deleveraged the Company's balance sheet by removing $4.6 billion of assets, $3.0 billion of liabilities and $1.4 billion of noncontrolling interests, representing DataBank's balance sheet as of mid-September 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, and remeasured its remaining 9.87% equity interest in DataBank at a fair value of $434 million which resulted in an unrealized gain of $275 million.

The total gain of $279 million, along with the Company's remaining equity interest in DataBank, are presented within Corporate and Other.

In 2023, DataBank's operating results were included in the Company's Operating segment through the date of completion of the recapitalization on September 14, 2023.

Following deconsolidation on that date, the Company's consolidated financial statements no longer include the operating results and assets and liabilities of DataBank in their entirety and instead reflect only the Company’s interest in DataBank.

The Company's share of future changes in the fair value of DataBank will be reflected in principal investment income within Corporate and Other, consistent with the accounting treatment of the Company's general partner interests in other sponsored funds.

• 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.

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 shareholders (composed of the Company's fund investments as GP affiliate, warehoused investments, and the Company's interest in portfolio companies consolidated 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 (on an undepreciated basis as it relates to the Company's interest in portfolio companies 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, net asset value ("NAV") or gross asset value ("GAV"), pursuant to the terms of each underlying investment management agreement.

Presented below are total AUM and FEEUM by product:

(In billions) September 30, 2023 December 31, 2022

Assets Under Management

$ 74.6 $ 52.8

Fee Earning Equity Under Management

DBP infrastructure equity $ 11.3 $ 11.2

InfraBridge Global Infrastructure 5.1 —

Core Equity, Credit and Liquid Strategies 2.6 2.0

Co-invest vehicles 8.5 6.5

Separately capitalized portfolio companies 2.4 2.5

$ 29.9 $ 22.2

The following table summarizes changes in FEEUM:

Nine Months Ended

September 30, 2023

(In billions)

Fee Earning Equity Under Management

Balance at January 1 $ 22.2

Market activity and other (3)

Balance at September 30 $ 29.9

(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).

Excludes capital raised in 2023 for which fees have not been activated totaling $1.5 billion.

(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 $7.7 billion or 35% to $29.9 billion at September 30, 2023, driven by the addition of $5.1 billion of InfraBridge FEEUM, and new capital raised, primarily through co-investment vehicles.

The subsequent first closing of DBP III in November 2023 further contributed an additional $2.2 billion increase to FEEUM.

Capital Raise

• In 2024 through April 2024, we have raised $1.14 billion of capital, primarily $0.5 billion for DigitalBridge Partners III ("DBP III"), the third series in our flagship value-add strategy, and $0.3 billion for the second series of our credit strategy.

To date, total third party capital raised for DBP III stands at $3.2 billion.

• As of the end of April 2024, we have further reduced our leverage with full exchange/redemption of our remaining $78.4 million of 5.75% senior notes, which will result in annual interest savings of approximately $4.5 million.

$73.4 million of note principal was exchanged for 8.2 million shares of the Company's class A common stock and $5.0 million of note principal was redeemed for cash.

Fund Performance Metrics

Certain performance metrics for our key investment funds from inception through September 30, 2023 are presented in the table below.

Excluded are funds with less than one year of performance history as of September 30, 2023, funds and separately managed accounts in the liquid strategy, co-investment vehicles and separately capitalized portfolio companies.

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

An investment in DigitalBridge Group, Inc.

is not an investment in any of our funds and these fund performance metrics are not indicative of the performance of DigitalBridge Group, Inc.

Certain performance metrics for our key investment funds from inception through March 31, 2024 are presented in the table below.

Excluded are funds with less than one year of performance history as of March 31, 2024, 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)

Commitments Invested Capital (3)

Total Commitments Invested Capital (3)

Available Capital (4)

Investment Value MOIC (7) (9)

Total Unfunded Unrealized Realized (5)

DigitalBridge Partners, LP Mar-2018 $4,059 $494 $4,584 $494 $5,991 $1,139 $7,130 1.6x 1.4x

DigitalBridge Partners II, LP Nov-2020 $8,286 $974 $7,681 $979 $8,340 $662 $9,002 1.2x 1.1x

Global Infrastructure Fund I, LP Mar-2015 $1,411 $406 $1,479 $406 $1,125 $1,055 $2,180 1.5x 1.3x

Global Infrastructure Fund II, LP Jan-2018 $3,382 $106 $2,993 $106 $2,773 $64 $2,837 0.9x 0.9x

(1) Listed herein are main fund vehicles.

Unrealized Realized (5)

Gross Net Gross Net

DBP I Mar-2018 $4,059 $4,836 $98 $6,274 $1,214 $7,488 1.5x 1.4x 15.9% 11.3%

DBP II Nov-2020 8,286 6,964 1,103 7,850 817 8,667 1.2x 1.2x 11.0% 7.7%

SAF Nov-2022 1,110 884 220 936 13 949 1.1x 1.1x 8.5% 5.6%

GIF I Mar-2015 1,411 1,507 406 1,240 1,091 2,331 1.5x 1.4x 9.4% 6.9%

GIF II Jan-2018 3,382 3,169 26 2,608 105 2,713 0.9x 0.8x <0% <0%

Credit I Dec-2022 697 394 377 352 86 438 1.1x 1.1x 17.2% 10.8%

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

(2) First close date of the fund.

InfraBridge funds were acquired in Feb-2023.

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

The manager/general partner of the InfraBridge funds were acquired in Feb-2023.

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

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

(4) Available capital includes recallable 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 unrealized fair value and realized value of investments divided by invested capital, without giving effect to allocation of expenses and general partner carried interest.

Excludes capital attributable to the general partner, general partner affiliate and any other capital that is not subject to fees and/or carried interest.

Gross MOIC is calculated at the fund level and does not reflect gross MOIC at the individual investor level.

(8) Total investment net MOIC is calculated as unrealized fair value and realized value of investments 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 carried interest).

Excludes capital attributable to the general partner, general partner affiliate and any other capital that is not subject to fees and/or carried interest.

Net MOIC is calculated at the fund level and does not reflect net MOIC at the individual investor level.

(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) Gross internal rate of return (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 (taking into account the benefit of any credit facility at the fund level) to the date of investment distributions.

For unrealized investments, assumes a liquidating distribution equal to the investment fair value, net of amounts funded through the fund's credit facility, if any.

Gross IRR is calculated at the fund level and does not reflect gross IRR of any individual investor 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 capital not subject to fees and/or carried interest, including general partner and general partner affiliate capital.

If an investment is later syndicated to one or more third-party investors, the IRRs set forth herein will include cash flows associated with such syndication.

This treatment of syndication transactions was implemented in fiscal year 2024 and applied on a life-to-date basis for all funds presented.

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

The exclusion of recycled capital generally causes invested and realized amounts to be lower and MOICs to be higher than had recycled capital been included.

In addition, for funds that utilize a subscription line credit facility in advance of receiving capital contributions from investors, reported IRRs may be higher or lower than if such facility had not been utilized.

Results of Operations

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

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

(In thousands) 2023 2022 Change 2023 2022 Change

Total revenues

Investment Management $ 237,655 $ 166,667 $ 70,988 $ 393,577 $ 338,408 $ 55,169

Operating 214,377 225,387 (11,010) 681,100 655,596 25,504

Corporate and Other 25,048 37,798 (12,750) 77,496 85,314 (7,818)

$ 477,080 $ 429,852 47,228 $ 1,152,173 $ 1,079,318 72,855

Income (Loss) from continuing operations

Investment Management $ 100,014 $ 46,065 $ 53,949 $ 132,387 $ 104,917 $ 27,470

Operating (79,707) (93,772) 14,065 (270,704) (253,341) (17,363)

Corporate and Other 261,073 17,022 244,051 93,033 (195,593) 288,626

$ 281,380 $ (30,685) 312,065 $ (45,284) $ (344,017) 298,733

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

Investment Management $ 52,391 $ 24,233 $ 28,158 $ 50,502 $ 37,900 $ 12,602

Operating (10,191) (15,881) 5,690 (31,489) (43,512) 12,023

Corporate and Other 236,642 16,909 219,733 70,697 (152,026) 222,723

$ 278,842 $ 25,261 253,581 $ 89,710 $ (157,638) 247,348

Total revenues increased $47.2 million or 11% in the quarter-to-date comparison and $72.9 million or 7% in the year-to-date comparison.

• Investment Management— Revenues were $71.0 million or 42.6% higher at $237.7 million in the quarter-to-date comparison, and $55.2 million or 16% higher at $393.6 million in the year-to-date comparison, attributed to fee income and gross carried interest (before management allocation).

(a) Fee income contributed:

• $24.0 million of the increase at $66.1 million in the quarter-to-date comparison;

• $62.0 million of the increase at $192.8 million in the year-to-date comparison.

The increase in fee income is attributed to additional capital raised since October 2022 that has started accruing income for both periods under comparison, and InfraBridge funds acquired in February 2023.

(b) Gross carried interest (before management allocation) was:

• $47.2 million higher in the quarter-to-date comparison at $168.9 million in 2023 from $121.7 million in 2022 (of which distributions were $27.9 million in 2023 and $123.5 million in 2022);

• $8.0 million lower in the year-to-date comparison at $193.4 million in 2023 from $201.4 million in 2022 (of which distributions were $28.4 million in 2023 and $123.5 million in 2022).

Distributed carried interest arose from the first liquidation of investment by DBP I in 2022 and the DataBank recapitalization in 2022 and 2023.

In terms of unrealized carried interest, the higher amounts in 2023 was driven by DBP funds and a DataBank investment that was not subject to recapitalization.

In comparison, 2022 included a reversal of unrealized carried interest for some of these funds.

• Operating— Revenues in the quarter-to-date comparison decreased due to the deconsolidation of DataBank in mid-September 2023.

However, in the year-to-date comparison, the effect of deconsolidation was more than offset by higher revenues contributed by data center acquisitions in the DataBank portfolio and additional lease-up of expanded capacity in Vantage SDC during 2022.

• Corporate and Other— Revenues represent largely our share of earnings from our general partner affiliate investments in the DBP and InfraBridge funds, and additionally, income from warehoused investments in 2022.

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

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

Income from continuing operations attributable to DBRG was $278.8 million in 2023 and $25.3 million in 2022 in the quarter-to-date period, and $89.7 million in 2023 with a loss of $157.6 million in 2022 in the year-to-date period.

• Investment Management— In 2023, net income increased $28.2 million to $52.4 million in the quarter-to-date comparison and $12.6 million to $50.5 million in the year-to-date comparison.

The higher 2023 results were driven by an increase in carried interest of $31.6 million in the quarter-to-date period and $21.4 million in the year-to-date period, representing the OP's share, partially offset by higher operating costs attributed to the Investment Management segment in 2023 in line with the growth in business.

Additionally, the higher net income in the year-to-date comparison was partially offset by $3.7 million of placement fees and $3.5 million of higher transaction costs, primarily for the InfraBridge acquisition in 2023.

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

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

• Operating— The 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 in 2022, decreased from 22% to 13% as of September 2022, and was at 11% in 2023 prior to deconsolidation in September 2023.

• Corporate and Other— Both periods 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 as of September 30, 2023 (Note 10 to the consolidated financial statements).

Additionally, included within the 2023 year-to-date period was a $133 million write-down of an unsecured promissory note related to the sale of our Wellness Infrastructure business in February 2022 (Note 11 to the consolidated financial statements).

In comparison, the 2022 year-to-date period included a $133 million debt extinguishment loss in connection with an early exchange of our 5.75% exchangeable notes (Note 8 to the consolidated financial statements).

The amounts quoted herein are prior to allocating 7% of 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.

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

(In thousands) 2023 2022 Change 2023 2022 Change

Fee income $ 65,240 $ 41,263 $ 23,977 $ 190,108 $ 128,418 $ 61,690

Carried interest allocation 168,891 121,698 47,193 193,389 201,398 (8,009)

Three Months Ended March 31,

(In thousands) 2024 2023 Change

Fee revenue $ 72,955 $ 59,126 $ 13,829

Carried interest allocation (reversal) (8,478) (54,756) 46,278

Principal investment income 2,845 3,562 (717)

Property operating income 214,058 244,336 (30,278) 679,738 681,098 (1,360)

Other income 7,071 10,564 (3,493)

Total revenues 74,393 18,496 55,897

Property operating expense 94,481 105,987 (11,506) 289,838 287,280 2,558

Interest expense 5,192 8,131 (2,939)

Investment expense 5,728 9,510 (3,782) 16,732 26,262 (9,530)

Transaction-related costs 760 8,527 (7,767)

Placement fees 15 — 15 3,668 — 3,668

Depreciation and amortization 9,167 6,875 2,292

Compensation expense—cash and equity-based 51,184 47,471 3,713

Compensation expense—incentive fee and carried interest allocation 72,865 80,831 (7,966) 72,110 109,548 (37,438)

Administrative expenses 24,077 29,909 (5,832) 76,346 84,147 (7,801)

Compensation expense—incentive fee and carried interest allocation (reversal) (6,714) (36,831) 30,117

Administrative and other expenses 24,310 20,447 3,863

Total expenses 83,899 54,620 29,279

Other income (loss)

Other gain (loss), net (5,894) (144,514) 138,620

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(29,628) (197,797) 168,169

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

Preferred stock dividends 14,660 14,676 (16)

Net income (loss) attributable to common stockholders $ (44,288) $ (212,473) 168,185

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

(In thousands) 2023 2022 Change 2023 2022 Change

Total revenues were $74.4 million in 2024 compared to $18.5 million in 2023, driven by significant variability in unrealized carried interest and an increase in fee revenue, primarily benefiting from continued fundraising.

The key components of revenue are discussed in more detail below.

Three Months Ended March 31,

(In thousands) 2024 2023 Change

Management fees

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Incentive fees

— — — 1,040 — 1,040

Other fee income

Other fee revenue

230 1,099 (869)

$ 72,955 $ 59,126 13,829

Fee income increased $24.0 million or 58% in the quarter-to-date comparison and $61.7 million or 48% in the year-to-date comparison.

The increase was driven by management fees from InfraBridge beginning February 2023, adding $14.2 million in the quarter-to-date period and $40.8 million in the year-to-date period, as well as from capital raised since October 2022 where fees have been activated, primarily from co-investment vehicles, our new core equity fund, and the DataBank recapitalization.

Additionally, incentive fees in 2023 were attributed to our liquid securities strategy.

Fee revenue increased $13.8 million or 23% as FEEUM increased $4.8 billion or 17% from $27.7 billion at March 31, 2023 to $32.5 billion at March 31, 2024.

The higher fee revenue was driven by our third flagship fund, DBP III, which held its first close in November 2023 ($9.3 million) and InfraBridge funds, acquired in February 2023, that contributed a full quarter of fees in 2024 ($3.4 million).

Incentive fees in both periods were attributed to our liquid securities strategy.

Other fees were higher in 2023, attributed largely to loan origination fees in connection with syndication of our credit investments.

Carried Interest Allocation

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

(In thousands) 2023 2022 Change 2023 2022 Change

Three Months Ended March 31,

(In thousands) 2024 2023 Change

Carried interest allocation

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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 the carried interest is distributed.

Distributed carried interest arose from the DataBank recapitalization in the third quarter of 2023 ($27.9 million) and 2022 ($72.3 million), and additionally, the first liquidation of investment by DBP I in the third quarter of 2022 ($51.2 million).

In terms of unrealized carried interest, the higher amounts in 2023 was driven by DBP funds and a DataBank investment that was not subject to recapitalization.

In comparison, 2022 included a reversal of unrealized carried interest for some of these funds.

There was a higher net reversal of unrealized carried interest in 2023 compared to 2024, with reversals in both periods driven by DBP II.

As DBP II is still in the early stage of its lifecycle, the carried interest reversal is a function of continuing accrual of preferred returns over time at a higher rate than fair value increases on its underlying investments.

In 2024, this reversal was partially offset by co-investment vehicles and our credit fund that recently began accruing carried interest.

Principal Investment Income

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

Principal investment income increased $6.4 million in the quarter-to-date comparison to $17.9 million and $17.5 million in the year-to-date comparison to $51.9 million.

The increase was driven by unrealized fair value appreciation on the underlying fund investments, primarily the DBP funds, and additionally, in the year-to-date comparison, the InfraBridge funds.

Property Operating Income and Expense

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

(In thousands) 2023 2022 Change 2023 2022 Change

Property operating income

Operating segment

Lease income $ 196,339 $ 206,141 $ (9,802) $ 619,985 $ 598,263 $ 21,722

Data center service revenue 16,995 18,925 (1,930) 56,993 56,903 90

Other property operating income 724 257 467 2,760 314 2,446

214,058 225,323 (11,265) 679,738 655,480 24,258

Lease income — 19,013 (19,013) — 25,618 (25,618)

$ 214,058 $ 244,336 (30,278) $ 679,738 $ 681,098 (1,360)

Property operating expense

Operating segment $ 94,481 $ 100,051 $ (5,570) $ 289,838 $ 278,798 $ 11,040

Other — 5,936 (5,936) — 8,482 (8,482)

$ 94,481 $ 105,987 (11,506) $ 289,838 $ 287,280 2,558

Operating Segment

Property operating income and expenses were lower in the quarter-to-date comparison, reflecting the effects of deconsolidating DataBank in mid-September 2023.

Absent the deconsolidation and assuming a full month of activity in September 2023 for DataBank, total property operating income and expenses in the Operating segment would have increased approximately 8% and 7%, respectively, in the quarter-to-date comparison.

In the year-to-date comparison, property operating income and expenses were higher as a result of additional acquisitions throughout 2022, including DataBank's acquisition of four data centers in March 2022, and within the Vantage SDC portfolio, additional lease-up of expanded capacity and existing inventory.

This increase was partially offset by higher lease termination fees of $5.8 million quarter-to-date and $5.0 million year-to-date recognized in property operating income, primarily from the Vantage SDC portfolio, and the effects of deconsolidating DataBank in mid-September 2023.

At September 30, 2023, the Operating segment portfolio was composed of 10 data centers in the U.S.

and three in Canada, following the deconsolidation of DataBank.

September 30, 2023 December 31, 2022

Operating segment (1)

Number of data centers

Leasehold — 49

(In thousands, except %)

Max Critical I.T.

Square Feet or Total Rentable Square Feet

Leased Square Feet

% Utilization Rate (% Leased)

(1) Amounts at September 30, 2023 reflect remaining operations in the Operating segment after deconsolidation of DataBank.

This represents property operating income and expense from a tower portfolio, acquired in June 2022 as a warehoused investment and transferred to our core equity fund in December 2022.

Other income decreased $0.1 million in the quarter-to-date comparison to $10.9 million, but increased $3.0 million in the year-to-date comparison to $37.0 million.

Key drivers are higher interest income from money market deposits and beginning in 2023, from our subordinated notes in a collateralized loan obligation (increase totaling $3.5 million quarter-to-date and $16.6 million year-to-date) and dividend income from our consolidated credit fund (increased $2.0 million quarter-to-date and $5.5 million year-to-date).

However, these amounts were partially offset by interest income in 2022 from warehoused investments that were

transferred to our new 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 $8.3 million quarter-to-date and $20.2 million year-to-date in 2022).

Interest Expense

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

(In thousands) 2023 2022 Change 2023 2022 Change

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 of $2.8 million was a net decrease of $0.7 million from 2023.

The change was driven by fair value decrease in InfraBridge funds and the Company's co-investment in an InfraBridge portfolio company ($11.9 million), largely offset by fair value increase in the DataBank funds ($9.8 million) and distribution of interest income from our credit fund ($1.2 million).

Other income was $3.5 million lower at $7.1 million in 2024.

2023 had higher interest income from money market deposits and dividend income from our credit fund ($4.6 million), which was partially offset by incremental costs reimbursable by InfraBridge funds in 2024 that are grossed up as other income and expense ($1.0 million).

Total expenses was $83.9 million in 2024 compared to $54.6 million in 2023, primarily attributed to the change in unrealized carried interest compensation.

Changes in the various expense items are discussed below.

Interest Expense

Corporate debt $ 5,133 $ 8,295 $ (3,162) $ 18,471 $ 24,645 $ (6,174)

Non-recourse investment-level debt 44,761 44,737 24 154,641 118,805 35,836

$ 49,894 $ 53,032 (3,138) $ 173,112 $ 143,450 29,662

Corporate Debt— Interest expense decreased $3.2 million in the quarter-to-date comparison and $6.2 million in the year-to-date comparison driven by repayment of our 5.00% convertible notes in April 2023 (decreased $2.7 million quarter-to-date and $5.0 million year-to-date) and to a lesser extent, lower interest expense on our securitized debt with a lower outstanding balance on the VFN in 2023 (decreased $0.5 million for both quarter-to-date and year-to-date).

Additionally, in the year-to-date period, the early exchange of our 5.75% exchangeable notes for common stock in March 2022 contributed a $0.7 million decrease in interest expense.

Non-Recourse Investment-Level Debt— Interest expense was consistent in the quarter-to-date comparison but increased $35.8 million in the year-to-date comparison.

Interest expense on investment-level debt in the Operating segment increased $4.6 million quarter-to-date and $42.5 million year-to-date, reflecting higher outstanding debt balance and higher interest rates on new debt in 2023, partially offset by the deconsolidation of DataBank in mid-September 2023.

Included in the year-to-date increase is also the net effect of writing off unamortized deferred financing costs and debt premium on refinanced debt in the first half of 2023 totaling $13.8 million.

The increase in interest expense in the Operating segment was partially offset by interest expense on outstanding debt balance in 2022 in connection with the financing of warehoused tower assets and credit investments (totaling $4.3 million quarter-to-date and $6.7 million year-to-date), all of which were repaid in the second half of 2022, and additionally in the quarter-to-date period, a decrease in interest expense ($0.3 million) on lower outstanding debt balance of our consolidated credit fund.

Investment Expense

Investment expense decreased $3.8 million in the quarter-to-date comparison to $5.7 million and $9.5 million in the year-to-date comparison to $16.7 million.

2022 had included additional expenses, primarily:

(i) third party costs attributed to our warehoused tower assets that were transferred to our core equity fund in December 2022 ($1.2 million quarter-to-date and $1.7 million year-to-date in 2022);

(ii) transition services that ended in the second quarter of 2022 related to DataBank's acquisition of zColo ($1.0 million year-to-date in 2022);

(iii) higher compensatory expense in 2022 in connection with equity awards granted to the management team of Vantage who perform the day-to-day operations of Vantage SDC ($1.9 million higher year-to-date 2022);

and (iv) higher costs incurred in 2022 that are reimbursable by our managed investment vehicles.

Interest expense decreased $2.9 million to $5.2 million in 2024 due to full repayment of the $200 million 5.00% convertible notes upon maturity in April 2023.

Transaction-Related Costs

In the quarter-to-date comparison, transaction-related costs were $3.0 million lower at $0.9 million, largely due to costs incurred in connection with unconsummated investments in 2022.

In the year-to-date comparison, transaction-related costs were $3.7 million higher at $10.5 million, driven by the InfraBridge acquisition.

Placement Fees

Placement fees of $3.7 million in 2023 were incurred in connection with fundraising for DBP III and co-investment vehicles.

Transaction-related costs were $7.8 million lower in 2024 at $0.8 million, as 2023 included costs associated with InfraBridge acquisition ($7.0 million) and unconsummated deals.

Depreciation and Amortization

Depreciation and amortization expense decreased $17.6 million in the quarter-to-date comparison and $10.4 million in the year-to-date comparison.

Depreciation and amortization expense in the Operating segment decreased $11.9 million quarter-to-date and $7.8 million year-to-date, driven by the combined effects of deconsolidating DataBank in mid-September 2023, and higher amortization of lease intangibles from lease terminations in 2022 and expiration of short term leases at DataBank, partially offset by additional expenses related to data center acquisitions and improvements placed in service.

Additionally, the sale of warehoused tower assets acquired in June 2022 to our core equity fund in December 2022 also contributed to a decrease in depreciation and amortization expenses ($8.4 million quarter-to-date and

$11.3 million year-to-date).

These decreases were partially offset by amortization expense on InfraBridge intangible assets acquired in February 2023 ($4.1 million quarter-to-date and $11.1 million year-to-date).

Depreciation and amortization expense increased $2.3 million in 2024 due to a full quarter of amortization on InfraBridge intangible assets acquired in February 2023.

Compensation Expense

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

(In thousands) 2023 2022 Change 2023 2022 Change

Three Months Ended March 31,

(In thousands) 2024 2023 Change

Cash and equity-based compensation

2 unchanged sentences

$ 51,184 $ 47,471 3,713

Operating segment

Cash and equity-based compensation

21,598 30,574 (8,976) 75,212 70,759 4,453

$ 74,714 $ 65,544 9,170 $ 232,356 $ 183,878 48,478

Incentive and carried interest compensation allocation $ 72,865 $ 80,831 $ (7,966) $ 72,110 $ 109,548 $ (37,438)

Cash and equity-based compensation— Excluding the Operating segment, compensation expense increased $18.1 million in the quarter-to-date comparison and $44.0 million in the year-to-date comparison.

Equity-based compensation expense was higher in 2023, driven by performance-based awards that met their target in 2023 (increased $1.9 million quarter-to-date and $14.7 million year-to-date), awards granted in 2023 with shortened vesting periods (increased $3.1 million in both quarter-to-date and year-to-date), and the effect of award modifications in the fourth quarter of 2022 (increased $3.6 million year-to-date), partially offset by full vesting in 2022 of an LTIP grant and awards in connection with sale of the Wellness Infrastructure business in February 2022 (decrease totaling $3.4 million year-to-date).

There was also an increase in cash compensation in 2023, attributed largely to InfraBridge ($7.2 million quarter-to-date and $19.3 million year-to-date, of which $1.8 million and $4.8 million, respectively, represent deferred bonus amounts funded by the seller in the InfraBridge acquisition) and higher severance and retention costs.

In the Operating segment, the third quarter of 2022 had included $10.1 million of equity-based compensation due to an accelerated vesting of profits interest units issued by DataBank that was triggered by the first closing of the DataBank recapitalization.

Excluding the acceleration, compensation expense increased $1.1 million in the quarter-to-date comparison and $14.6 million in the year-to-date comparison.

The higher compensation expense in 2023 can be attributed to new stock awards and higher headcount at DataBank.

In the quarter-to-date comparison, the increase was partially offset by the effect of deconsolidating DataBank in mid-September 2023.

Incentive and carried interest compensation allocation— The third quarter of 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, incentive and carried interest compensation increased $49.5 million in the quarter-to-date comparison and $16.9 million in the year-to-date comparison, driven by carried interest from the DBP funds quarter-to-date and in both periods under comparison, carried interest from the DataBank investment that was not subject to recapitalization.

Administrative Expenses

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

(In thousands) 2023 2022 Change 2023 2022 Change

Administrative expenses $ 16,552 $ 22,509 $ (5,957) $ 52,740 $ 60,938 $ (8,198)

Administrative expenses — Operating segment

7,525 7,400 125 23,606 23,209 397

$ 24,077 $ 29,909 (5,832) $ 76,346 $ 84,147 (7,801)

Total administrative expenses decreased $5.8 million in the quarter-to-date comparison and $7.8 million in the year-to-date comparison, driven by lower legal costs.

Additionally, in the year-to-date period, the decrease in legal costs ($17.3 million) were partially offset by increases in other administrative costs such as other third-party professional services and travel-related expenses (totaling $5.9 million).

Incentive fee and carried interest compensation allocation (reversal) $ (6,714) $ (36,831) $ 30,117

Cash and equity-based compensation— The increase can be attributed to a full quarter of cash compensation in 2024 for InfraBridge which was acquired in February 2023 and additional headcount to support our growing investment management business.

Incentive and carried interest compensation allocation— The net reversal in compensation expense is consistent with the movement in carried interest, as discussed above.

Administrative and Other Expenses

Administrative and other expenses increased $3.9 million to $24.3 million, which can be attributed largely to placement fees in 2024 for DBP III fundraising.

Other Gain (Loss), Net

In the quarter-to-date comparison, other gain was $254.8 million in 2023 and $25.9 million in 2022.

The year-to-date comparison had other gain of $100.5 million in 2023 and other loss of $170.2 million in 2022.

Both periods under comparison had the following significant items:

• In September 2023, $278.7 million of gain recognized in connection with the deconsolidation of DataBank, of which $3.7 million was realized and $275.0 million unrealized (Note 10 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;

• 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, quarter-to-date period would have recorded a loss of $23.9 million in 2023 compared to a gain of $26.8 million in 2022, and year-to-date period would have recorded losses of $44.9 million in 2023 and $36.2 million in 2022.

Other loss of $23.9 million in the third quarter of 2023 reflected primarily an increase in the liability fair value of warrants issued to Wafra of $12.4 million and net loss on marketable equity securities of $9.7 million, including those held by our consolidated liquid funds.

In contrast, other gain of $26.8 million in the third quarter of 2022 was driven by a decrease in the warrant liability fair value of $32.4 million and net gain on non-designated derivatives of $9.9 million in connection with our warehoused investments, partially offset by net loss of $8.9 million on marketable equity securities held largely by our consolidated liquid funds, and additionally, unrealized foreign exchange losses.

In the year-to-date period, other loss increased $8.7 million to $44.9 million in 2023, driven by an increase in the warrant liability fair value of $81.1 million and net write-down in value of warehoused investments of $13.2 million, largely offset by net gain of $63.4 million on marketable equity securities, including those held by our consolidated liquid funds, net gains on non-designated derivatives in 2022 of $16.0 million in connection with our warehoused investments, and additionally, decrease in unrealized foreign exchange losses.

Other loss was $5.9 million in 2024 compared to $144.5 million in 2023.

Other loss in 2024 was driven by $5.1 million loss due to an increase in the liability fair value of previously issued warrants and $3.3 million write-down in other equity investment fair value, partially offset by $2.0 million net gain on marketable equity securities of our consolidated liquid funds

Other loss in 2023 was driven by (i) a $133.3 million fair value write-down in March 2023 on an unsecured promissory note from the 2022 sale of our Wellness Infrastructure business, (ii) $13.7 million write-down in other equity investment fair value, and (iii) $4.5 million loss due to an increase in the liability fair value of previously issued warrants.

This was partially offset by $8.6 million net gain on marketable equity securities of our consolidated liquid funds.

Income Tax Benefit (Expense)

In 2023, income tax benefit of $0.1 million was recorded quarter-to-date and income tax expense of $4.2 million year-to-date.

In 2022, income tax benefit was recorded in both periods of $7.8 million quarter-to-date and $17.8 million year-to-date.

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

The net income tax benefit in the third quarter of 2023 resulted from deferred tax benefit associated with an InfraBridge subsidiary.

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

entities, resulting in no U.S.

income tax provision for these subsidiaries in 2023, outside of the Operating segment.

Income tax benefit in 2022 can be attributed primarily to deferred tax benefit on net operating losses of a subsidiary.

A valuation allowance was subsequently established against this deferred tax asset in the fourth quarter of 2022.

Income tax expense was $1.2 million in 2024 and $1.1 million in 2023.

2024 reflects primarily the income tax effect of foreign subsidiaries, in particular, the InfraBridge investment management business in Europe that was acquired in February 2023.

In 2024, current tax expense from the operating activities of the foreign InfraBridge entities was largely offset by deferred tax benefit driven by intangible asset amortization, resulting in an immaterial income tax expense.

The Company otherwise has operating losses and capital loss carryforwards that can be applied against current income tax

expense for its domestic entities, and have established a full valuation allowance on the deferred tax assets of these entities, resulting in no net income tax effect for its domestic entities.

Income (Loss) from Discontinued Operations

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

(In thousands) 2023 2022 Change 2023 2022 Change

Three Months Ended March 31,

(In thousands) 2024 2023 Change

Revenues $ 1,832 $ 233,634 $ (231,802)

Expenses (3,068) (335,649) 332,581

Other gain (loss) (12,961) (8,647) (4,314)

Income (Loss) from discontinued operations before income taxes (14,197) (110,662) 96,465

Income tax benefit (expense) 77 54 23

Income (Loss) from discontinued operations $ (14,120) $ (110,608) 96,488

4 unchanged sentences

$ (13,130) $ (23,058) 9,928

Loss from discontinued operations in 2023 was immaterial quarter-to-date, and in the year-to-date period, 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 discontinued businesses and investments.

Loss from discontinued operations in 2022 included $59.6 million of impairment on BRSP shares and losses incurred in connection with dispositions as well as fair value decreases on various remaining investments in the quarter-to-date period.

Additionally, the year-to-date loss also included the Wellness Infrastructure business that was disposed in February 2022, in particular, 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, partially offset by our share of BRSP earnings prior to disposition of $19.4 million.

Loss from discontinued operations in 2024 primarily included a loss associated with a guarantee in connection with a previous bulk sale of the Company's real estate investments.

The loss in 2023 represent primarily the operations of the former Operating segment and $9.7 million impairment of BRSP shares prior to disposition in March 2023, as discussed in Note 2 to the consolidated financial statements.

Operating Metrics

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

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 and our general partner capital.

AUM is generally composed of 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 our general partner and general partner affiliate capital committed to our funds.

AUM is largely determined based upon invested capital as of the reporting date, including capital funded through third party financing at the underlying portfolio companies;

and committed capital for funds in their commitment stage.

Our AUM is not based upon any definitions that may be set forth in the governing documents of our managed funds or other investment vehicles, and not calculated pursuant to any regulatory definitions.

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) March 31, 2024 December 31, 2023

Assets Under Management

$ 80.1 $ 80.1

Fee Earning Equity Under Management

DBP infrastructure equity $ 13.1 $ 13.0

InfraBridge Global Infrastructure 5.1 5.1

Core Equity, Credit and Liquid Strategies 2.9 2.8

Co-invest vehicles 9.9 9.5

Separately capitalized portfolio companies 1.5 2.4

$ 32.5 $ 32.8

The following table summarizes changes in FEEUM:

Three Months Ended March 31, 2024

(In billions)

Fee Earning Equity Under Management

Balance at January 1 $ 32.8

Market activity and other (3)

Balance at March 31

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

Amount was less than $100 million in the first quarter of 2024.

There was a marginal 1% decrease in FEEUM to $32.5 billion at March 31, 2024 compared to December 31, 2023.

In the first quarter of 2024, FEEUM contributed by DBP III capital raise and additional invested capital from other DBP funds were offset by the effects of various recapitalization and syndication of fund investments, resulting in a marginal net decrease in our fee base.

Non-GAAP Supplemental Financial Measures

We currently conduct our business through two reportable segments:

(i) Investment Management;

and (ii) Operating, our direct co-investment in digital infrastructure assets held by our portfolio companies.

In order to enhance a full understanding of our business, we present certain non-GAAP measures that allow for comparability with companies that operate in each of these two reportable segments.

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, which represents our core business, while presenting Adjusted EBITDA allows for some measure of comparability against companies that hold digital infrastructure assets similar to assets in our Operating segment.

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.

Fee Related Earnings (“FRE”) and Distributable Earnings (“DE”).

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

We present FRE and DE at the Operating Company level, which is net of amounts attributed to noncontrolling interests, composed largely of the limited partners's share of our consolidated funds and Wafra's share of earnings attributed to our general partner interest in certain funds.

Beginning in 2024, FRE is reported on a Company-wide basis, consistent with the entirety of the Company's business representing a single reportable segment (as discussed in Note 16 to the consolidated financial statements).

In prior periods, the Company had reported Investment Management FRE, which was an FRE measure specific to its previously reported Investment Management segment.

The Investment Management segment previously bore only operating costs that were directly attributable or otherwise can be subjected to a reasonable and systematic attribution to the investment management business.

Company-wide FRE includes all operating costs of the Company as a whole that fall within the definition of FRE.

Additionally, Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) is no longer reported as a non-GAAP financial measure in 2024 following the discontinuance of the Operating segment effective December 31, 2023.

Adjusted EBITDA was previously reported to facilitate an evaluation of the relative contribution of the Company's former Operating segment absent the effect of leverage as the Operating segment had higher leverage relative to the Company's own capital structure.

We believe the non-GAAP financial measures of FRE and DE 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 FRE and DE in evaluating the Company’s ongoing business performance and in making operating decisions.

For the same reasons, we believe FRE and DE are useful financial measures to the Company’s investors and analysts.

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

DE presented for 2023 comparative period has been recast to exclude the Operating segment which qualified as discontinued operations on December 31, 2023.

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:

Three Months Ended September 30,

(In thousands) 2023 2022

Attributable to Operating Company:

Distributable Earnings $ 35,048 $ 32,335

Adjusted EBITDA 33,591 29,097

Investment Management FRE 29,202 21,498

Fee-Related Earnings

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.

FRE represents recurring fee revenue, including incentive fees, that are not subject to realization events related to underlying fund investments, net of compensation and administrative expenses.

Such expenses generally exclude non-cash equity-based compensation, carried interest compensation, and placement fee expense.

Also, consistent with DE, FRE excludes costs associated with strategic corporate actions, which are considered non-core items, and presents costs reimbursable by our managed funds on a net basis (as opposed to a gross-up of other income and administrative costs).

Where applicable, FRE is adjusted for Start-Up FRE as defined below.

Fee revenues earned from consolidated funds and other investment vehicles are eliminated in consolidation.

However, because the fees are funded by and earned from third party investors in these consolidated vehicles who represent noncontrolling interests, our allocated share of net income from the consolidated funds and other vehicles is increased by the amount of fees that are eliminated.

The elimination of these fees, therefore, does not affect net income (loss) attributable to DBRG.

Accordingly, FRE is presented without giving effect to the elimination of fee revenue to the extent such fees meet the definition of FRE.

FRE does not include distributed carried interest as these are not recurring revenues and are subject to variability given that they are dependent upon realization events related to underlying fund investments.

Placement fees are also excluded from FRE as they are inconsistent in amount and frequency depending upon timing of fundraising for our funds.

Other items excluded from FRE include realized principal investment income (loss);

and interest, dividend and other income, all of which are not core to the investment management service business.

Unlike DE which is a post-tax measure, FRE does not incorporate the effect of income taxes as it is a pre-tax measure.

To reflect a stabilized investment management business, FRE is further adjusted to exclude Start-Up FRE, where applicable.

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 FRE 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 until such time as a new strategy is determined to form part of the Company’s core investment management business.

We believe that FRE is a useful measure to investors as it reflects the Company’s profitability based upon recurring fee streams that are not subject to realization events related to underlying fund investments, 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 in an investment management service business.

This allows for better comparability of the Company's profitability on a recurring and sustainable basis and relative to its peers.

Distributable Earnings

1 unchanged sentence

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.

DE is an after-tax measure that reflects the ongoing operating performance of the Company’s core business by including earnings that are realized and generally excluding non-cash expenses, other 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):

Realized earnings included in DE are generally comprised of fee revenue, including all incentive fees, realized principal investment income (loss), distributed carried interest, interest and dividend income.

Income (loss) on principal investments is realized when the Company redeems all or a portion of its investment or when the Company receives or is due income such as dividends, interest or distributions of income.

The following items are excluded from DE:

transaction-related costs;

restructuring charges;

costs associated with strategic corporate actions which are considered to be non-core;

other gain (loss);

unrealized principal investment income (loss);

non-cash depreciation, amortization and impairment charges;

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

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);

straight-line adjustment to lease income and expense;

interest expense on finance

leases in the Operating segment, amortization of above and below market leases in the Operating segment;

straight-line adjustment to lease income and expense in the Operating segment, non-revenue enhancing capital expenditures necessary to maintain operating real estate in the Operating segment;

and income tax effect on certain of the foregoing adjustments.

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.

and preferred stock redemption gain (loss).

Transaction-related costs are incurred in connection with acquisitions and include legal costs post-acquisition and costs of unconsummated transactions.

Costs associated with strategic corporate actions represent non-core items, primarily severance and litigation-related 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.

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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.

Generally, the income tax effect associated with income and expense items excluded from the calculation of DE are similarly excluded from DE.

However, where the resulting income tax liability or benefit arising from these excluded items increase or decrease actual income tax paid or payable by the Company in any one period, the income tax effect of these items are included in DE (for example, equity-based compensation).

In connection with our Operating segment, non-revenue enhancing capital expenditures are excluded as these are not recurring capital expenditures and are not incurred to maintain and extend the useful life of operating digital assets that support the generation of revenues.

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 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 view Adjusted EBITDA as particularly helpful in evaluating the relative contribution of our Operating segment, absent the effects of leverage, as the consolidated portfolio companies in the Operating segment have higher leverage relative to the Company’s own capital structure.

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, income taxes, capital expenditures or other recurring cash requirements, 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, our share of incentive fees and distributed carried interest net of associated compensation expense, and capital expenditures in the Operating segment as deducted in DE.

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

Three Months Ended September 30,

Non-GAAP Results

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

Three Months Ended March 31,

(In thousands) 2024 2023 Change

Fee revenue $ 72,791 $ 60,098 $ 12,693

Cash compensation (36,893) (28,579) (8,314)

Administrative and other expenses (16,335) (17,096) 761

Start-Up FRE — 915 (915)

Fee-Related Earnings—attributable to Operating Company

19,563 15,338 4,225

Realized principal investment income (1)

2,301 2,332 (31)

Distributed carried interest and incentive fees subject to realization events, net of expense allocation 99 — 99

Interest, dividend and other income 4,375 (94) 4,469

Interest expense and preferred dividends (19,162) (21,948) 2,786

Placement fee and other expenses (3,698) (1,045) (2,653)

Income tax benefit (expense) (1,246) (1,098) (148)

Start-up FRE — (915) 915

Distributable Earnings, after tax—attributable to Operating Company

$ 2,232 $ (7,430) 9,662

(1) For purposes of DE, 2023 included distributions from a portfolio company in the former Operating segment.

Fee-Related Earnings .

FRE increased $4.2 million to $19.6 million, resulting from continued growth in our investment management business as FEEUM increased 17% from $27.7 billion at March 31, 2023 to $32.5 billion at March 31, 2024.

This reflects primarily fee revenue from new capital raised for DBP III and various co-investment vehicles, and the acquisition of InfraBridge in February 2023.

The increase in fee revenue was partially offset by higher compensation cost, which can be attributed to a full quarter of InfraBridge cash compensation in 2024 and additional headcount to support our growing investment management business.

Distributable Earnings .

DE was $2.2 million in the first quarter of 2024.

In comparison, DE was a negative $7.4 million in the first quarter of 2023, driven by a $7.1 million reversal of accrued interest income upon write-off of an unsecured promissory note from the 2022 sale of our Wellness Infrastructure business.

Distributable Earnings and Fee-Related Earnings Reconciliation

Three Months Ended March 31,

(In thousands) 2024 2023

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Net income (loss) attributable to Operating Company (47,626) (229,135)

Transaction-related and restructuring charges 7,522 23,249

Transaction-related and strategic corporate charges 7,556 18,277

Other (gain) loss, net 5,894 150,921

Unrealized principal investment income (468) (3,562)

Unrealized carried interest allocation, net of associated expense allocation (68,099) (1,228)

Equity-based compensation cost 18,621 18,619

Unrealized carried interest, net of expense (allocation) reversal 1,044 18,240

Equity-based compensation 9,214 10,770

Depreciation and amortization expense 9,167 6,875

Straight-line adjustment to lease (income) and expense, net (2,169) (8,895)

Amortization of acquired above-market and (below-market) leases, net (141) 80

Non-revenue enhancing capital expenditures (11,396) (10,992)

Finance lease interest expense, debt prepayment penalties and amortization of deferred financing costs, debt premiums and discounts 3,745 5,627

Amortization of deferred financing costs, debt premiums and discounts 664 794

Adjustments attributable to noncontrolling interests in investment entities (1)

2,667 (7,536)

DE of discontinued operations (2)

Distributable Earnings, after tax—attributable to Operating Company

OP share of (income) loss from discontinued operations (2) (3)

14,120 26,926

Adjustments attributable to Operating Company :

Interest expense included in DE 9,524 16,348

Income tax (benefit) expense included in DE 37 (7,839)

Preferred stock dividends 14,645 15,283

Principal investment income included in DE — (9,303)

Placement fees 15 —

Distributed incentive fee and carried interest, net of associated expense allocation (27,927) (20,258)

Non-revenue enhancing capital expenditures deducted from DE 2,249 2,531

Adjusted EBITDA—attributable to Operating Company

Distributable Earnings, after tax—attributable to Operating Company

2,232 (7,430)

(1) Noncontrolling interests' share of adjustments pertain largely to depreciation and amortization;

interest expense on finance leases, debt prepayment penalties and amortization of deferred financing costs, debt premiums and discounts;

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

and non-revenue enhancing capital expenditures.

(2) Equity method earnings (loss) from BRSP, which qualified as discontinued operations in March 2023, is 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 income 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 income 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

Three Months Ended September 30,

(In thousands) 2023 2022

Net income (loss)—Investment Management

Realized principal investment income (3)

(2,301) (2,332)

Interest expense, net of interest income 2,128 2,906

Investment expense, net of reimbursement 97 230

Depreciation and amortization expense 9,003 5,369

Equity-based compensation cost 7,218 2,654

Incentive fee and carried interest allocation, net of associated expense allocation (96,026) (40,867)

Straight-line rent expense 511 68

Placement fees 15 —

Transaction-related and restructuring charges 3,891 2,317

Unrealized principal investment income (1,451) (1,016)

Other (gain) loss, net 2,662 110

Distributed carried interest and incentive fees subject to realization events, net of associated expense allocation (99) —

Interest, dividend and other income (4,375) 94

Interest expense and preferred dividends 19,162 21,948

Placement fee and other expenses 3,698 1,045

Income tax (benefit) expense 1,246 1,098

Investment Management Adjusted EBITDA

28,047 19,099

Start-up FRE — 915

Investment Management FRE—attributable to Operating Company

Fee-Related Earnings—attributable to Operating Company

$ 19,563 $ 15,338

(1) Adjustments attributable to noncontrolling interests in investment entities pertain to other gain/loss attributed to limited partners of consolidated funds, management allocation of unrealized carried interest, and Wafra's share of unrealized carried interest and principal investment income attributed to our general partner interest in certain funds.

(2) OP share of discontinued operations represent primarily operating results of portfolio companies previously consolidated in the former Operating segment in 2023, net of associated noncontrolling interests in investment entities.

(3) For purposes of DE, 2023 included distributions from a portfolio company in the former Operating segment.

Liquidity and Capital Resources

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• our liability for corporate and other taxes;

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

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

• obligation for lease payments on our corporate offices.

Our primary sources of liquidity are:

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• issuance of additional term notes under our corporate securitization;

• third party co-investors in our consolidated investments and/or businesses;

• proceeds from full or partial realization of investments;

• investment-level financing;

• proceeds from public or private equity and debt offerings.

At September 30, 2023, our liquidity position was approximately $530 million, composed of corporate unrestricted cash and including the full $300 million availability under our VFN.

At March 31, 2024, our liquidity position was approximately $413 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.

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Significant Liquidity and Capital Activities in 2024

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.

• We continue to reduce higher cost corporate indebtedness through full exchange or redemption of the remaining $72.4 million of 5.75% senior notes as of the end of April 2024, which will result in annual interest savings of approximately $4.5 million.

• We settled the remaining $35 million contingent consideration payable to Wafra i n connection with the 2022 redemption of their investment in the Company's investment management business, 50% each in shares of the Company's Class A common stock and in cash.

Liquidity Needs and Capital Activities

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— 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.

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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 8 to the consolidated financial statements.

As of the date of this filing, our corporate debt is composed of our securitized financing facility, as summarized below.

($ in thousands) Outstanding Principal Interest Rate

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

Corporate debt:

Securitized financing facility—fixed rate

(Per Annum) Anticipated Repayment Date Years Remaining to Maturity

Class A-2 Notes

$ 300,000 3.93 % September 2026 2.5

Exchangeable senior notes—fixed rate

78,422 5.75 % July 2025 1.8

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

Corporate-level cash is not applied to service investment-level debt.

Investment Commitments

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

As of the date of filing, we have unfunded commitments totaling $245 million to our sponsored funds, including DBP III which had its first closing on November 1, 2023.

As of March 31, 2024, we have unfunded commitments totaling $259.8 million to our sponsored funds.

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

Contingent Consideration

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

Depending upon cumulative capital raised through 2023, up to $35 million of the remaining contingent consideration may 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.

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

At September 30, 2023, warehoused investments aggregate to $50 million at cost.

At March 31, 2024, warehoused investments aggregate to $51 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.

At September 30, 2023, the Company has no liability for clawback obligations on distributed carried interest.

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 March 31, 2024, the Company has no liability for clawback obligations on distributed carried interest.

Lease Obligations

At September 30, 2023, we had $50.0 million of operating lease obligations on our corporate offices, which are funded through corporate operating cash.

At March 31, 2024, we had $46 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.

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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 business, 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.

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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.

Investments— Our investments generate cash through income distributions and return of our invested capital.

Investments— Our investments, primarily in our sponsored funds as general partner affiliate, generate cash largely through capital appreciation upon liquidation, and interest income from our credit fund.

Asset Monetization

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

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

We have other marketable equity securities that are available for future monetization, with our share valued at $12.8 million at September 30, 2023.

We intend to monetize and recycle capital from our non-core investments through opportunistic asset sales.

At March 31, 2024, we have $32 million of marketable equity securities that are available for future monetization.

Public Offerings

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

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands) 2024 2023

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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, and distributions of earnings received from equity investments.

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

Our operating activities generated net cash inflows of $192.1 million in 2023 and $194.8 million in 2022.

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 former Operating segment during 2023, net operating income from investment properties.

Our operating activities generated net cash outflows of $27.0 million in 2024 and inflows of $19.7 million in 2023.

2023 cash inflows were driven largely by the operating activities of portfolio companies in the former Operating segment.

Investing Activities

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

These are partially offset by repayments, sales and transfers of warehoused investments, 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 $768.1 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, partially offset by the sale of BRSP shares.

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

• DataBank recapitalization and deconsolidation —In 2023, we received proceeds of $21.5 million, net of carried interest distribution, from the recapitalization of DataBank.

Following the recapitalization, DataBank was deconsolidated, effective September 14, 2023, resulting in the derecognition of $102.4 million of cash and restricted cash (Note 10).

Investing activities relate to 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;

business combinations;

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 $22.0 million in 2024 and $259.1 million in 2023.

• Equity investments —Equity investments generated net cash outflow in 2024 and inflows in 2023.

In 2024, equity investments recorded net cash outflows of $19.7 million, attributed primarily to net fundings of our general partner and general partner affiliate commitments in our sponsored funds, partially offset by proceeds from investing activities of our consolidated liquid funds which hold marketable equity securities.

2023 saw net cash inflows of $219.5 million, largely representing the $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, partially offset by funding of our general partner and general partner affiliate commitments, net of return of capital.

• Business combination —In 2023, we paid $313.2 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 $232.3 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 fund commitments.

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

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

Net cash outflows in 2023 was $613.1 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.

2022 saw net cash outflows of $1.9 billion, attributed primarily to the acquisition of TowerCo and, to a lesser extent, to DataBank's Houston portfolio acquisition, 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 in the sale of real estate investment holding entities in our Wellness Infrastructure business.

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

• 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, net cash inflows was relatively immaterial at $4.6 million as we had largely transferred our acquired or originated warehoused loans to our sponsored credit fund and to a third party sponsored collateralized loan obligation ("CLO").

• Real estate investments —Real estate investing activities generated net cash outflows of $163.2 million in 2023, attributable to capital expenditures in the data center portfolio of our former Operating segment.

There were no real estate investing activities in 2024.

Financing Activities

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, subsidiaries in the Operating segment, including DataBank prior to its deconsolidation in September 2023, finance their investing activities largely through investment-level secured debt and incur 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 $78.6 million represent primarily $489.9 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, $78.3 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 $741.8 million in 2022 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.

Additionally, cash inflows included our share of proceeds recorded in equity of $302.8 million from sale 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 $60.8 million and distributions to various controlling interests.

Accordingly, we incur cash outlays primarily for payments on our corporate debt, and dividends to our preferred stockholders and common stockholders.

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

Financing activities generated net cash outflows in 2024 and inflows in 2023.

• In 2024, net cash outflows of $48.5 million represent cash settlement of the Wafra contingent consideration of $17.5 million, $14.0 million of investor capital redeemed by our consolidated liquid funds, net of contribution, and $16.3 million payment of our preferred and common stock dividends.

This was partially offset by a $6.1 million syndication of our interest in a consolidated fund and Wafra's share of our general partner funding of commitments in DBP I.

• Net cash inflows of $26.8 million in 2023 were driven by additional investment-level debt in the former Operating segment, largely offset by $90 million settlement of Wafra contingent consideration.

Guarantees and Off-Balance Sheet Arrangements

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With respect to all critical estimates, we have established policies and control procedures which seek to ensure that estimates and assumptions are appropriately governed and applied consistently from period to period.

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

We believe that all

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis