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Item 1A. Risk Factors

2025-02-21 compared with 2024-02-23 · 110 added, 108 removed, 508 unchanged (30% of the section changed)

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Difficult market and political conditions could adversely impact our business, financial condition and results of operations.

Our business is materially affected by general economic and political conditions and events throughout the world, such as changes in interest rates, fiscal and monetary stimulus and withdrawal of stimulus, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls, national and international political circumstances (including wars, terrorist acts or security operations) and responses to widespread health events, such as the novel coronavirus (COVID-19) pandemic, and our ability to manage our exposure to these conditions may be very limited.

These conditions and/or events can adversely affect our business in many ways, including by reducing the ability of our funds to raise or deploy capital, reducing the value or performance of our investments and the investments made by our funds and making it more difficult for us and our managed vehicles to realize value from existing investments.

Our business is materially affected by general economic and political conditions and events throughout the world, such as changes in interest rates, fiscal and monetary stimulus and withdrawal of stimulus, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls, national and international political circumstances (including wars, terrorist acts or security operations) and responses to widespread health events, and our ability to manage our exposure to these conditions may be very limited.

existing investments.

Adverse changes in market and economic conditions in the United States or the countries or regions in which we or our funds invest would likely have a negative impact on the value of our assets and spending and demand for infrastructure and technology and, accordingly, our and our funds' financial performance, the market prices of our securities, and our ability to pay dividends.

and other developed economies have recently been experiencing higher-than-normal inflation rates.

It remains uncertain whether substantial inflation in the U.S.

and other developed economies will be sustained over an extended period of time or have a significant effect on the U.S.

or other economies.

Inflation, rising interest rates, declining employment levels, declining demand for digital infrastructure, declining real estate values or periods of general economic slowdown or recession, increasing political instability or uncertainty, or the perception that any of these events may occur have negatively impacted the digital infrastructure and real estate markets in the past and may in the future negatively impact the performance of our investments, resulting in a more difficult fund raising environment and reducing exit opportunities in which to realize the value of our investments.

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foreign investment, trade, taxation, economic, environmental and other policies, as well as the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the U.S.

and China or further escalations in the Russia-Ukraine war or Gaza-Israel conflict, could lead to disruption, instability and volatility in the global markets, which may also have an impact on our investments and exit opportunities in negatively impacted sectors or geographies.

and China or further escalations in the Russia-Ukraine war or conflicts in the Middle East, could lead to disruption, instability and volatility in the global markets, which may also have an impact on our investments and exit opportunities in negatively impacted sectors or geographies.

We have only a limited ability to change our portfolio promptly in response to changing economic, political or other conditions, which impedes us from responding quickly to changes in the performance of our investments and could adversely impact our business, financial condition and results of operations.

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Numerous factors increase our competitive risks, some of which are outside of our control, including that:

• Competition in the digital infrastructure sector has intensified as institutional investors, technology companies and

private equity firms increasingly target this asset class;

• a number of our competitors have more personnel and greater financial, technical, marketing and other resources than we do;

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Management fee or performance fee reductions on existing or future funds or co-investments, without corresponding decreases in our cost structure even if other revenue streams increase, would adversely affect our revenues and profitability.

The failure of the funds we manage to raise capital in sufficient amounts and on satisfactory terms could result in a decrease in AUM, performance fees and/or fee revenue and could have a material adverse effect on our financial condition and results of operations.

The failure of the funds we manage to raise capital in sufficient amounts and on satisfactory terms could result in a decrease in FEEUM, performance fees and/or fee revenue and could have a material adverse effect on our financial condition and results of operations.

Similarly, any modification of our existing fee arrangements or the fee structures for new funds could adversely affect our results of operations.

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We may also experience fluctuations in our results from quarter to quarter and year to year due to a number of other factors, including changes in the values of investments of the funds we manage, changes in the amount of distributions, dividends or interest paid in respect of investments, changes in our operating expenses, the degree to which we encounter competition and general economic and market conditions.

Such variability may lead to volatility in the trading price of our shares and cause our results for a particular period not to be indicative of our performance in a future period.

Such variability may lead to volatility in the trading price of our shares and cause our results for a particular period not to be

indicative of our performance in a future period.

It may be difficult for us to achieve steady growth in earnings and cash flow on a quarterly basis, which could in turn lead to large adverse movements in the price of our shares or increased volatility in the price of our shares in general.

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• complexity and costs of staffing and managing international operations;

• the burden of complying with multiple and potentially conflicting laws;

• the burden of complying with multiple and potentially conflicting laws, including ESG-related regulatory frameworks such as the European Union’s Sustainable Finance Disclosure Regulation (“SFDR”);

• changes in relative interest rates;

• translation and transaction risks related to fluctuations in foreign currency and exchange rates;

• translation and transaction risks related to fluctuations in foreign currency and exchange rates and our ability to structure and implement interest rate, foreign exchange and other hedging or derivative strategies;

• lack of uniform accounting standards (including availability of information in accordance with accounting principles generally accepted in the United States ("GAAP"));

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Our rapid growth has placed, and planned growth, if successful, will continue to place, significant demands on our legal, accounting, compliance and operational infrastructure and has increased expenses.

The complexity of these demands, and the expense required to address them, is a function not simply of the amount by which our assets under management has grown, but of the growth in the variety and complexity of, as well as the differences in strategy between, our different funds.

of, as well as the differences in strategy between, our different funds.

In addition, we are required to continuously develop our systems and infrastructure in response to the increasing sophistication of the investment management market and legal, accounting, regulatory and tax developments.

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We determine the fair value of the investments of each of our institutional private funds at least quarterly based on the fair value guidelines set forth by GAAP.

The fair value measurement accounting guidance establishes a hierarchal disclosure framework that ranks the observability of market inputs used in measuring

financial instruments at fair value.

The fair value measurement accounting guidance establishes a hierarchal disclosure framework that ranks the observability of market inputs used in measuring financial instruments at fair value.

The observability of inputs is impacted by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants.

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Fair values of such investments are determined by reference to (1) the market approach (i.e., multiplying a key performance metric of the investee company or asset, such as earnings before interest, income tax, depreciation and amortization ("EBITDA"), by a relevant valuation multiple observed in the range of comparable public entities or transactions, adjusted by management as appropriate for differences between the investment and the referenced comparables), (2) the income approach (i.e., discounting projected future cash flows of the investee company or asset and/or capitalizing representative stabilized cash flows of the investee company or asset) and (3) other methodologies such as prices provided by reputable dealers or pricing services, option pricing models and replacement costs.

We periodically engage independent valuation firms to assess and validate our valuation models;

however, there can be no assurance that these valuations accurately reflect market conditions.

The determination of fair value using these methodologies takes into consideration a range of factors including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, the multiples of comparable securities, current and projected operating performance and financing transactions subsequent to the acquisition of the investment.

Valuation approaches depend on key assumptions such as discount rates, growth projections, projected holding period and exit multiples, which are inherently uncertain and subject to change.

Our valuation approach often relies on applying exit multiples derived from comparable public companies or precedent transactions.

However, these multiples are subject to market fluctuations and may not accurately reflect actual exit values at the time of realization.

Uncertainty in the timing of exit and with respect to non-U.S.

dollar denominated investments, fluctuations in foreign exchange rates at the time of exit, further compounds valuation risks.

If market conditions deteriorate or if an investment must be sold under unfavorable circumstances, actual realized values may be significantly lower than those implied by our assumed exit multiples.

These valuation methodologies involve a significant degree of management judgment.

For example, as to investments that we share with another sponsor, we may apply a different valuation methodology than the other sponsor does or derive a different value than the other sponsor has derived on the same investment, which could cause some investors to question our valuations.

Because there is significant uncertainty in the valuation of, or stability of the value of, illiquid investments, the fair values of such investments as reflected in an institutional private fund’s net asset value do not necessarily reflect the prices that would be obtained by us on behalf of the institutional private fund when such investments are realized.

Because there is significant uncertainty in the valuation of, or stability of the value of, illiquid investments, including the effect of foreign exchange rates on non-U.S.

dollar denominated investments, the fair values of such investments as

reflected in an institutional private fund’s net asset value do not necessarily reflect the prices that would be obtained by us on behalf of the institutional private fund when such investments are realized.

Realizations at values significantly lower than the values at which investments have been reflected in prior institutional private fund net asset values would result in reduced earnings or losses for the applicable fund and the loss of potential management fees, carried interest and incentive fees.

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• investment allocations are reviewed at least annually by the chief compliance officer of our applicable registered investment adviser.

In addition, subject to compliance with the rules promulgated under the Investment Advisers Act and the governing documents of our managed investment vehicles, we have and may continue to allow a managed investment vehicle to enter into principal transactions with us or cross-transactions with other managed investment vehicles or strategic

For certain cross-transactions, we may receive a fee from, or increased fees from, the managed investment vehicle and conflicts may exist.

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If a new strategy or fund does not develop as anticipated and such investments are not ultimately transferred to a fund, we may not be able to dispose of such investments at an advantageous time and may be forced to realize losses on these retained investments.

We may also pursue growth through acquisitions of other investment management companies, such as our recent acquisition of InfraBridge.

We may also pursue growth through acquisitions of other investment management companies, such as our acquisition of InfraBridge.

To the extent we expand into new investment strategies, geographic markets and businesses and attempt to expand our business through acquisitions, we will face numerous risks and uncertainties, including risks associated with:

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• our ability to comply with new regulatory regimes.

Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar or from which we are currently exempt, and may lead to increased liability, litigation, regulatory risk, and expense.

If a new business generates insufficient revenue or if we are unable to efficiently manage our expanded operations, our results of operations may be adversely affected.

Moreover, if a new product, business, or venture developed internally or by acquisition is unsuccessful, we may decide to wind down, liquidate, and/or discontinue it.

Such actions could negatively impact our relationships with investors in those businesses, could subject us to litigation or regulatory inquiries and could expose us to additional expenses, including impairment charges and potential liability from investor or other complaints.

We do not directly control the operations of our portfolio companies and are therefore dependent on portfolio company management teams to successfully operate their businesses.

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While we have or expect to have various rights as an owner of the portfolio companies, our governance rights for certain portfolio companies may be shared with or limited by the rights of other investors.

We may have limited recourse under our management agreements or investment governing documents if we believe that in-place management teams (who are not our employees) or third-party management companies are not performing adequately.

We may have limited recourse under our management agreements or investment governing documents if

we believe that in-place management teams (who are not our employees) or third-party management companies are not performing adequately.

If our portfolio companies or management companies experience any significant financial, legal, accounting or regulatory difficulties, such difficulties could have a material adverse effect on us.

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The transition risks that could impact us and the investments of the funds we manage include those risks related to the impact of U.S.

and foreign climate- and ESG-related legislation and regulation, as well as risks arising from climate-related business trends.

and foreign climate-related legislation and regulation, as well as risks arising from climate-related business trends.

Moreover, our investments, and the investments of the portfolio companies of the funds we manage, are subject to risks stemming from the physical impacts of climate change.

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We also face business trend-related climate risks.

Certain fund investors are increasingly taking into account ESG factors, including climate risks, in determining whether to invest in the funds we manage.

causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.

We are subject to increasing focus by our fund investors, our stockholders, regulators and other stakeholders on environmental, social and governance matters.

Our fund investors, stockholders, regulators and other stakeholders are increasingly focused on ESG matters.

Certain fund investors, including public pension funds, consider our record of socially responsible investing and other ESG factors in determining whether to invest in our funds.

Similarly, certain of our stockholders, particularly institutional investors, use third-party benchmarks or scores to measure our ESG practices, and use such information to decide whether to invest in our common stock or engage with us to require changes to our practices.

If our ESG practices do not meet the standards set by these fund investors or stockholders, they may choose not to invest in our funds or exclude our stock from their investments, and we may face reputational challenges from other stakeholders.

The occurrence of any of the foregoing could have a material adverse impact on new fundraises and negatively affect the price of our stock.

In addition, there has also been an increased regulatory focus on ESG-related practices by investment managers by the SEC and other regulators.

If regulators disagree with the procedures or standards we use for ESG investing, or new regulation or legislation requires a methodology of measuring or disclosing ESG impact that is different from our current practice, our business and reputation could be adversely affected.

Conversely, anti-ESG sentiment has also gained momentum across the United States, with several states having enacted or proposed “anti-ESG” policies, legislation or issued related legal opinions.

For example, boycott bills target financial institutions that “boycott” or “discriminate against” companies in certain industries (e.g., energy and mining) and prohibit state entities from doing business with such institutions and/or investing the state’s assets (including pension plan assets) through such institutions, and ESG investment prohibitions require that state entities or managers/administrators of state investments make investments based solely on pecuniary factors without consideration of ESG factors.

If investors subject to such legislation viewed our funds or ESG practices, including our climate-related goals and commitments, as being in contradiction of such “anti-ESG” policies, legislation or legal opinions, such investors may not invest in our funds, our ability to maintain the size of our funds could be impaired, and it could negatively affect the price of our common stock.

Certain fund investors take into account climate risks, in determining whether to invest in the funds we manage.

Our reputation and investor relationships could be damaged as a result of our involvement, or the involvement of the funds we manage, in certain industries, portfolio companies or transactions associated with activities perceived to be causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.

We are subject to focus by our fund investors, our stockholders, regulators and other stakeholders on environmental, social and governance matters.

Many of our fund investors, stockholders, regulators and other stakeholders are focused on ESG matters.

Certain fund investors, including public pension funds, consider our record on such matters in determining whether to invest in our funds.

Similarly, certain stockholders, particularly institutional investors, use third-party benchmarks or scores to measure our ESG-related practices, and may use such information to decide whether to invest in our common stock or to seek to engage with us with respect to our practices.

If our ESG practices do not meet the standards set by these fund investors or stockholders, they may choose not to invest in our funds or exclude our common stock from their investments.

In addition, regulatory frameworks, such as the European Union’s SFDR, may increase our compliance costs and operational burdens.

Conversely, anti-ESG sentiment has been gaining momentum across the United States, with several states and the federal government having enacted or proposed policies or executive action restricting ESG-focused investment practices.

For example, boycott bills target financial institutions that “boycott” or “discriminate against” companies in certain industries, such as energy and mining.

These laws prohibit state entities from conducting business with or investing state assets, including pension plan funds, through such institutions, and certain ESG investment prohibitions require state entities or investment managers to base investment decisions solely on pecuniary factors, excluding the consideration of

If investors subject to such legislation viewed our funds or practices, as being in contradiction of such “anti-ESG” policies, legislation or related legal opinions, such investors may not invest in our funds.

These divergent stakeholder views expose us to competing pressures and increase litigation, regulatory and reputational risks that could have a material adverse impact on our ability to raise funds and negatively affect the price of our common stock.

Our use of artificial intelligence could expose us to various risks.

Employees of the Company have access to enterprise-grade artificial intelligence tools that are designed to operate

within secure environments.

Artificial intelligence technologies are susceptible to errors and other malfunctions which

could lead to operational challenges and reputational risks.

In addition, we may be subject to increasing regulations related to our use of these technologies, including regulations related to privacy, data security, and intellectual property rights, which could expose us to legal risks.

Risks Related to Our Organizational Structure and Business Operations

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Prior to our combination with DBH, Marc C.

Ganzi, our Chief Executive Officer, Benjamin Jenkins, our President, and certain other DBRG employees who are former senior DBH employees (collectively, "Former DBH Employees") made personal investments in certain portfolio companies and/or related vehicles (collectively, the “DBH Portfolio Companies”), which DBH acquired along with a consortium of third-party investors.

Ganzi, our Chief Executive Officer, Benjamin Jenkins, our President and Chief Investment Officer, and certain other DBRG employees who are former senior DBH employees (collectively, "Former DBH Employees") made personal investments in certain portfolio companies and/or related vehicles (collectively, the “DBH Portfolio Companies”), which DBH acquired along with a consortium of third-party investors.

In the DBH combination, we acquired the contracts to provide investment advisory and other business services to the DBH Portfolio Companies, while the Former DBH Employees retained their respective investments in the DBH Portfolio Companies.

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In such transactions, the Company takes a series of steps to mitigate the conflicts in the transactions, including, among others, obtaining approval from an independent committee of the board of directors for any related party transactions.

In addition, at the time of the Company's investment in Vantage SDC, Mr.

Ganzi and Mr.

Jenkins agreed to roll their entitlements to future carried interest in Vantage SDC into equity in Vantage SDC to further align their interests with the Company.

For additional information regarding payments to Messrs.

Ganzi and Jenkins relating to DataBank and Vantage SDC acquisitions, see Note 16 Transactions with Affiliates, in the Company’s consolidated financial statements.

In addition, at the time of the Company's investment in Vantage SDC, Messrs Ganzi and Jenkins agreed to roll their entitlements to future carried interest in Vantage SDC into equity in Vantage SDC to further align their interests with the Company.

Additional information regarding payments to Messrs.

Ganzi and Jenkins relating to DataBank and Vantage SDC acquisitions is included in Note 16 to the consolidated financial statements in Item 8 of this Annual Report.

Subject to our Code of Business Conduct and Ethics and related party transaction policies and procedures, as applicable, we may continue to enter into transactions or other arrangements with the DBH Portfolio Companies in which there are actual or potential conflicts of interests between us and Former DBH Employees.

Despite having related party transaction policies and procedures in place and having conflict mitigants in such transactions, such transactions may not be on terms as favorable to us as they would have been if they had been negotiated among unrelated parties.

Despite having related party transaction policies and procedures in place and having conflict mitigants in such transactions, such transactions may not

be on terms as favorable to us as they would have been if they had been negotiated among unrelated parties.

In addition, such transactions may result in future conflicts of interest if the continuing interests of the Former DBH Employees in the transaction (if any) are not aligned with the Company's.

The occurrence of a cybersecurity incident or a or a failure to implement effective information and cybersecurity policies, procedures and capabilities has the potential to disrupt our operations, cause material harm to our financial condition, result in misappropriation of assets, compromise confidential information and/or damage our business relationships.

The occurrence of a cybersecurity incident or a failure to implement effective information and cybersecurity policies, procedures and capabilities has the potential to disrupt our operations, cause material harm to our financial condition, result in misappropriation of assets, compromise confidential information and/or damage our business relationships.

As an asset manager, our business is highly dependent on information technology networks and systems, including systems provided by third parties over which we have no control.

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The risk of a cybersecurity incident or system or network disruption to networks and systems, including through cyber-attacks or cyber intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.

misappropriation of assets;

disruption of our operations, material harm to our financial condition, cash flows, and the market price of our common shares;

significant remediation expenses;

and increased cybersecurity protection and insurance costs.

A cybersecurity incident or a significant and extended disruption to our or our funds’ portfolio companies’ systems or systems provided by third parties caused by a third-party or by employee error, negligence or fraud, or a failure to report such an incident or significant and extended disruption in the timeframe required by law, may result in compromise or corruption of, or unauthorized access to or acquisition of, proprietary, confidential, or personal information collected in the course of conducting our business, misappropriation of assets, disruption of our operations, material harm to our financial condition, cash flows, and the market price of our common shares, significant remediation expenses, and increased cybersecurity protection and insurance costs.

A cybersecurity incident or disruption could also interfere with our ability to comply with financial reporting requirements or result in loss of competitive position, regulatory actions or increased regulatory scrutiny, litigation, breach of contracts, reputational harm, damage to our stakeholder relationships, or legal liability.

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In addition, the cost and operational consequences of responding to a cybersecurity incident or deficiency in our cybersecurity could be significant.

manage the risk of a cybersecurity incident or disruption, there can be no assurance that our cybersecurity efforts and measures will be effective or that attempted cybersecurity incidents or disruptions would not be successful or damaging.

And due to the complexity and interconnectedness of our information technology networks and systems, and those upon which we rely, the process of upgrading or patching our protective measures could itself create a risk of cybersecurity issues or system disruptions for the Company, as well as for clients who rely upon, or have exposure to, such information technology networks and systems.

Although we make efforts to maintain the security and integrity of our networks and systems, and the proprietary, confidential and personal information that resides on or is transmitted through them, and we have implemented various cybersecurity policies, procedures capabilities to manage the risk of a cybersecurity incident or disruption, there can be no assurance that our cybersecurity efforts and measures will be effective or that attempted cybersecurity incidents or disruptions would not be successful or damaging.

Due to the complexity and interconnectedness of our information technology networks and systems, and those upon which we rely, the process of upgrading or patching our protective measures could itself create a risk of cybersecurity issues or system disruptions for the Company, as well as for clients who rely upon, or have exposure to, such information technology networks and systems.

Moreover, data protection laws and regulations in the jurisdictions where we operate often require “reasonable,” “appropriate” or “adequate” technical and organizational cybersecurity measures, and the interpretation and application of those laws and regulations are often uncertain and evolving;

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A disruption or compromise of these systems could have a material adverse effect on the value of these businesses.

Our funds may invest in strategic assets having a national or regional profile or in infrastructure assets, the nature of which could expose them to a greater risk of being subject to a terrorist attack or cybersecurity breach than other assets or businesses.

Such an event may have material adverse consequences on other of our investment or assets of the same type or may require applicable portfolio companies to increase preventative cybersecurity measures or expand insurance coverage.

Such an event may have material adverse consequences on other of our investments or assets of the same type or may require applicable portfolio companies to increase preventative cybersecurity measures or expand insurance coverage.

We may not realize the anticipated benefits of our strategic partnerships and joint ventures.

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While we have developed and implemented policies and procedures designed to ensure strict compliance by us and our personnel with the FCPA and other anti-corruption laws, such policies and procedures may not be effective in all instances to prevent violations.

In addition, we may face an increased risk of such misconduct to the extent our investment in non-U.S.

addition, we may face an increased risk of such misconduct to the extent our investment in non-U.S.

markets, particularly emerging markets, increases.

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If we are unable to obtain adequate financing to fund or grow our business, it could have a material adverse effect on our ability to acquire additional assets and make our debt service payments, and our financial condition, results of operations and the ability to fund our distributions to our stockholders would be materially adversely affected.

Due to the fact that, as of this filing, we are no longer a “well-known seasoned issuer,” as such term is used in the SEC’s regulations, which otherwise would allow us to, among other things, file automatically effective Form S-3 registration statements, our capital-raising ability may be impaired.

During any period when we are not eligible to use Form S-3 or qualify as a “well known seasoned issuer,” we would be required to conduct offerings on an exempt basis or use a registration statement on Form S-1 to register securities with the SEC, which could hinder our ability to act quickly in raising capital to take advantage of market conditions and may increase our cost of raising capital.

Further, the expenses associated with raising capital using Form S-1 are generally greater than those associated with using Form S-3.

Changes in the debt financing markets or higher interest rates could negatively impact the value of certain assets or investments and the ability of our funds and their portfolio companies to access the capital markets on attractive terms, which could adversely affect investment and realization opportunities, lead to lower-yielding investments and potentially decrease our net income.

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Additionally, higher interest rates may create downward pressure on the price of digital infrastructure assets, increase the cost and availability of debt financing for the transactions our funds may pursue and decrease the value of fixed-rate debt investments made by our funds.

If our funds are unable to obtain committed debt financing for potential acquisitions or are

only able to obtain debt financing at unfavorable interest rates or on unfavorable terms, our funds may have difficulty completing acquisitions that may have otherwise been profitable or if completed, such acquisitions could generate lower than expected profits, each of which could lead to a decrease in our net income.

If our funds are unable to obtain committed debt financing for potential acquisitions or are only able to obtain debt financing at unfavorable interest rates or on unfavorable terms, our funds may have difficulty completing acquisitions that may have otherwise been profitable or if completed, such acquisitions could generate lower than expected profits, each of which could lead to a decrease in our net income.

Further, should the equity markets experience a period of sustained declines in values as a result of concerns regarding higher interest rates, our funds may face increased difficulty in realizing value from investments.

Our funds’ portfolio companies also regularly utilize the corporate debt markets in order to obtain financing for their operations.

To the extent monetary policy, tax or other regulatory changes or difficult credit markets render such financing difficult to obtain, more expensive or otherwise less attractive, this may also negatively impact the financial results of those portfolio companies and, therefore, the investment returns on our funds.

To the extent monetary policy, tax or other regulatory changes or difficult credit markets render such financing

difficult to obtain, more expensive or otherwise less attractive, this may also negatively impact the financial results of those portfolio companies and, therefore, the investment returns on our funds.

In addition, to the extent that market conditions and/or tax or other regulatory changes make it difficult or impossible to refinance debt that is maturing in the near term, some of our funds’ portfolio companies may be unable to repay such debt at maturity and may be forced to sell assets, undergo a recapitalization or seek bankruptcy protection.

Increases in interest rates could adversely affect the value of our investments and cause our interest expense to increase, which could result in reduced earnings or losses and negatively affect our profitability as well as the cash available for distribution to our stockholders.

The value of our investments in certain assets may decline if long-term interest rates continue to increase or remain elevated.

The value of our investments in certain assets may decline if long-term interest rates increase or remain elevated.

Declines in the value of our investments may ultimately reduce earnings or result in losses to us, which may negatively affect cash available for distribution to our stockholders.

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The securitization debt instruments are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the securitization co-issuers maintain specified reserve accounts to be used to make required payments in respect of the securitization notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified prepayment consideration in the case of the securitization term notes under certain circumstances, (iii) in the event that the securitization notes are not fully repaid by their applicable respective anticipated repayment dates, provisions relating to additional interest that will begin to accrue from and after such respective anticipated repayment dates and (iv) covenants relating to record keeping, access to information and similar matters.

The securitization notes are also subject to customary amortization events, including events tied to failure

to maintain stated debt service coverage ratios.

The securitization notes are also subject to customary amortization events, including events tied to failure to maintain stated debt service coverage ratios.

The securitization notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the securitization notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties and the termination for cause of certain limited partnership agreements of investment vehicles managed by us resulting in a specified percentage decrease of annualized recurring fees.

In the event that an amortization event occurs under the indenture which would require repayment of the securitization debt instruments or in the event of failure to repay or refinance the securitized debt instruments prior to the anticipated repayment date, the funds available to us would be reduced, which would in turn reduce our ability to operate and/or grow our business.

If our subsidiaries are not able to generate sufficient cash flow to service their debt obligations, they may need to refinance or restructure debt, sell assets, reduce or delay capital investments, or seek to raise additional capital.

If our subsidiaries are not able to generate sufficient cash flow to service their debt obligations,

they may need to refinance or restructure debt, sell assets, reduce or delay capital investments, or seek to raise additional capital.

If our subsidiaries are unable to implement one or more of these alternatives, they may not be able to meet debt payment and other obligations which could have an adverse effect on our financial condition.

Our use of leverage to finance our businesses exposes us to substantial risks.

As of December 31, 2023, we had $300 million in borrowings outstanding under our securitized financing facility and $78.4 million aggregate principal amount of convertible and exchangeable senior notes outstanding.

As of December 31, 2024, we had $300 million in borrowings outstanding under our securitized financing facility.

We may choose to finance our businesses operations through further borrowings under the securitized financing facility or by issuing additional debt.

Our existing and future indebtedness exposes us to the typical risks associated with the use of leverage, including the risks related to changes in debt financing markets and higher interest rates.

Our indebtedness may bear interest based on SOFR, but experience with SOFR based loans is limited.

Our securitization VFN require and future indebtedness may require the applicable interest rate or payment amount be determined by reference to Secured Overnight Financing Rate ("SOFR”).

The use of SOFR based rates may result in interest rates and/or payments that are higher or lower than the rates and payments that we previously experienced under USD-LIBOR.

In addition, the use of SOFR based rates is relatively new, and there could be unanticipated difficulties or disruptions with the calculation and publication of SOFR based rates that could hinder our ability to establish effective hedges and result in a different economic value over time for these instruments than they otherwise would have had under USD-LIBOR.

In particular, if the agent under our VFN purchase agreement determines that SOFR based rates cannot be determined, outstanding SOFR based VFN may become subject to an alternative benchmark rate.

Risks Related to Ownership of Our Securities

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However, we may issue and sell shares of our class A common stock in public offerings, and there generally are exceptions that allow companies to issue a limited number of equity securities in private offerings without stockholder approval, which could dilute your ownership.

In July 2020, the OP issued $300 million in aggregate principal balance of 5.75% exchangeable senior notes due 2025 (“5.75% exchangeable notes”), which are exchangeable by the noteholder at any time prior to maturity into shares of our class A common stock at an exchange rate of 108.6956 shares of class A common stock per $1,000 principal amount of notes, subject to adjustment upon the occurrence of certain events.

As of December 31, 2023, there were approximately $78.4 million in aggregate principal balance of the 5.75% exchangeable

notes outstanding.

The exchange of some or all of the remaining exchangeable notes will further dilute the ownership interests of existing stockholders, and any sales in the public market of shares of our class A common stock issuable upon such exchange of the notes could adversely affect the prevailing market price.

In addition, we have and may continue to issue OP Units in the OP to current employees or third parties without stockholder approval.

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Shares of class A common stock are securities of the Company only.

While our historical consolidated and combined financial information includes financial information, including assets and revenues of certain funds we manage on a consolidated basis, and our future financial information will continue to consolidate certain of these funds, such assets and revenues are available to the fund and not to us except through management fees, performance fees, distributions in respect of the Company’s investment in such funds and other proceeds arising from agreements with such funds.

revenues are available to the fund and not to us except through management fees, performance fees, distributions in respect of the Company’s investment in such funds and other proceeds arising from agreements with such funds.

Risks Related to Our Incorporation in Maryland

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Consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between us and any such person.

As a result, such person may be able to enter into business combinations

with us that may not be in the best interest of our stockholders, without compliance with the supermajority vote requirements and the other provisions of the statute.

As a result, such person may be able to enter into business combinations with us that may not be in the best interest of our stockholders, without compliance with the supermajority vote requirements and the other provisions of the statute.

Additionally, this resolution may be altered, revoked or repealed in whole or in part at any time and we may opt back into the business combination provisions of the MGCL.

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Our duties to the OP and its members, as the sole managing member, may come into conflict with the duties of our directors and officers to our Company and our stockholders.

As of the date of this report, Mr.

Ganzi and Mr.

Jenkins indirectly own approximatel y 1.6% and 1.4%, respectively, in the OP.

As of the date of this report, Messrs.

Ganzi and Jenkins indirectly own approximately 1.5% and 1.3%, respectively, in the OP.

These conflicts may be resolved in a manner that is not in the best interest of our stockholders.

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Many of these regulators, including U.S.

and foreign government agencies and self-regulatory organizations and state securities commissions in the United States, are empowered to grant, and in specific circumstances to cancel, permissions to carry on particular activities, and to conduct investigations and administrative proceedings that can result in fines, suspensions of personnel or other sanctions, including censure, the issuance of cease-and-desist orders or the suspension or expulsion of applicable licenses and memberships.

and foreign government agencies and self-regulatory organizations and state securities commissions in the United States,

are empowered to grant, and in specific circumstances to cancel, permissions to carry on particular activities, and to conduct investigations and administrative proceedings that can result in fines, suspensions of personnel or other sanctions, including censure, the issuance of cease-and-desist orders or the suspension or expulsion of applicable licenses and memberships.

In recent years, the SEC and its staff have focused on issues relevant to global investment firms and have formed specialized units devoted to examining such firms and, in certain cases, bringing enforcement actions against the firms, their principals and their employees.

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Recent SEC focus areas have also included, among other things, compliance with the SEC's marketing rule and custody rule, the misuse of material non-public information, material impacts on portfolio companies owned by private funds, and compliance with practices described in fund disclosures regarding the use of limited partner advisory committees, including whether advisory committee approvals were properly obtained in accordance with fund disclosures.

The SEC’s oversight, inspections and examinations of global investment firms, including our firm, have continued to focus on transparency, investor disclosure practices, fees and expenses, valuation and conflicts of interest and whether firms have adequate policies and procedures to ensure compliance with federal securities laws in connection with these and other areas of focus.

The SEC’s oversight, inspections and examinations of global investment firms, including our firm, have focused on transparency, investor disclosure practices, fees and expenses, valuation and conflicts of interest and whether firms have adequate policies and procedures to ensure compliance with federal securities laws in connection with these and other areas of focus.

While we believe we have procedures in place reasonably designed to monitor and make appropriate and timely disclosures regarding the engagement and compensation of our affiliated services providers and other matters of current regulatory focus, the SEC’s inspections of our firm have raised concerns about these and other areas of our operations.

In September 2022, Colony Capital Investment Advisors, LLC (“CCIA”), the investment adviser to certain legacy funds and vehicles holding legacy assets, received an information request from the SEC’s Division of Enforcement related principally to certain alleged deficiencies identified in an examination of CCIA relating to CCIA’s compliance with its fiduciary duty, duty of care and disclosure of affiliate transactions involving certain legacy businesses and operations.

We are cooperating and expect to continue to cooperate with the SEC staff in this investigation.

Although we believe that CCIA acted in accordance with applicable legal requirements and always conducted its business in the best interests of its clients, we have taken a number of steps to improve our investor disclosures and compliance processes in response to the CCIA examination.

In addition, almost all of the relevant CCIA-managed investment vehicles and related legal entities have been either sold or wound down, and CCIA has not sponsored a new client investment

vehicle in over three years and has no plans to do so.

Nevertheless, at this time, we cannot predict the outcome of the SEC investigation, which could have a material adverse effect on our business, results of operations or financial condition.

In September 2024, Colony Capital Investment Advisors, LLC (“CCIA”), the investment adviser to certain legacy funds and vehicles holding legacy assets, entered into a settlement agreement with the SEC that resolved the previously disclosed SEC examination into certain alleged deficiencies identified in the examination relating to CCIA’s compliance with its fiduciary duty, duty of care and disclosure of affiliate transactions involving certain legacy businesses and operations.

Although we believe that CCIA acted in accordance with applicable legal requirements and always conducted its business in the best interests of its clients, we took a number of steps to improve our investor disclosures and compliance processes in response to the CCIA examination.

In connection with the settlement agreement, the SEC issued a cease-and-desist order (the “Order”) against CCIA.

Under the terms of the Order, pursuant to which CCIA neither admitted nor denied any of the findings contained therein, CCIA agreed to cease and desist from committing or causing any violations and any future violations of Section 206(2) and 206(4) of the Investment Advisers Act and Rules 206(4)-7 and 206(4)-8 promulgated thereunder, (ii) be censured, and (iii) pay a civil monetary penalty in the amount of $350,000 to the SEC.

In addition, in recent years the SEC and several states have initiated investigations alleging that certain private equity firms and hedge funds, or agents acting on their behalf, have paid money to current or former government officials or their associates in exchange for improperly soliciting contracts with the state pension funds (i.e., “ pay to play” practices).

Such “pay to play” practices are subject to extensive federal and state regulation, and any failure on our part to comply with rules surrounding “pay to play” practices could expose us to significant penalties and reputational damage.

Further, we expect a greater level of SEC enforcement activity under the current administration, and it is possible this enforcement activity will target practices that we believe are compliant and that were not targeted by prior administrations.

We regularly are subject to requests for information and informal or formal investigations by the SEC and other regulatory authorities, with which we routinely cooperate and, in the current environment, even historical practices that have been previously examined are being revisited.

Further, we regularly are subject to requests for information and informal or formal investigations by the SEC and other regulatory authorities, with which we routinely cooperate, and even historical practices that have been previously examined may be revisited.

Even if an investigation or proceeding does not result in a sanction or the sanction imposed against us or our personnel by a regulator were small in monetary amount, the costs incurred in responding to such matters could be material and the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation and cause us to lose existing investors or fail to gain new investors or discourage others from doing business with us.

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Consequently, these regulations often serve to limit our activities and impose burdensome compliance requirements.

In August 2023, the SEC voted to adopt the previously proposed Private Funds Rules.

"Business–Regulatory and Compliance Matters–Investment Advisers Act of 1940.” While the full impact of the Private Funds Rules cannot yet be determined, it is generally anticipated that these rules will have a significant effect on private fund advisers and their operations, including by increasing regulatory and compliance costs and burdens and heightening the risk of regulatory inquiries and actions (including public regulatory sanctions) and limiting the sponsor’s ability or willingness to negotiate certain types of individualized terms with investors in a fund or similar pools of assets that invest alongside a fund, which may cause certain investors to not invest who otherwise might have.

In May 2022, the SEC proposed amendments to rules and reporting forms to promote consistent, comparable, and reliable information for investors concerning investment advisers’ incorporation of ESG factors (the “ESG Proposed Rule”).

The ESG Proposed Rule seeks to categorize certain types of ESG strategies broadly and require advisers to both provide census type data in Form ADV Part 1A and provide more specific disclosures in adviser brochures based on the ESG strategies they pursue.

The SEC has also recently proposed, and can be expected to propose, additional new rules and rule amendments under the Investment Advisers Act including in respect of additional Form PF reporting obligations (in addition to those recently adopted), predictive data analytics, custody requirements, cybersecurity risk governance, the outsourcing of certain functions to service providers and changes to Regulation S-P (together, the “Other Proposed Rules”).

The Private Funds Rules, the ESG Proposed Rule and Other Proposed Rules, to the extent adopted, are expected to result in material alterations to how we operate our business and to significantly increase compliance burdens and associated costs and complexity and to possibly restrict our ability to receive certain expense reimbursements or allocate certain expenses in certain circumstances.

This regulatory complexity, in turn, may increase the need for broader insurance coverage and increase such costs and expenses.

Certain of the proposed rules may also increase the cost of entering into and maintaining relationships with service providers to the Company and its managed funds.

In addition, these amendments could expose us to additional regulatory scrutiny, litigation, censure and penalties for noncompliance or perceived noncompliance, which in turn would be expected to adversely affect our reputation and business.

The SEC recently adopted amendments to Form PF that enhance reporting obligations for private fund advisors and to Regulation S-P, which requires, among other things, that private fund advisors adopt written policies and procedures for an incident response program to address unauthorized access to customer information.

The SEC has also proposed, and can be expected to propose, additional rules and rule amendments under the Investment Advisers Act including in respect of custody requirements, cybersecurity risk governance, disclosures regarding how ESG factors are taken into consideration in investment strategies, the use of predictive data analytics or similar technologies and the outsourcing of certain functions to service providers (the “Proposed Rules”).

The Proposed Rules, to the extent adopted, are expected to significantly increase compliance burdens and associated costs and complexity.

This regulatory complexity, in turn, may increase the need for broader insurance coverage by fund managers and increase such costs and expenses.

The amendments and Proposed Rules may also increase the cost of entering into and maintaining relationships with service providers to the Company and its managed funds and could expose us to additional regulatory scrutiny, litigation, censure and penalties for noncompliance or perceived noncompliance, which could adversely affect our reputation and business.

In addition to the U.S.

legislation described above, other jurisdictions, including many European jurisdictions, have proposed modernizing financial regulations that have called for, among other things, increased regulation of and disclosure with respect to, and possibly registration of, hedge funds and private investment funds such as through the AIFM Directive discussed below.

Regulatory agencies in the United States, Europe, Asia or elsewhere may adopt burdensome laws (including tax laws) or regulations, or changes in law or regulation, or in the interpretation or

enforcement thereof, which are specifically targeted at the private investment fund industry, or other changes that could adversely affect private investment firms and the funds they sponsor.

The European Union Alternative Investment Fund Managers Directive was transposed into national law within the member states of the European Economic Area ("EEA") pursuant to national laws and regulations implemented in the member states of the EEA (the “EEA AIFMD”), and in the UK primarily pursuant to the Alternative Investment Fund Managers Regulations 2013 (including by the Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019) and the Financial Conduct Authority (“FCA”) Handbook of Rules and Guidance, each as amended (the “UK AIFMD”, and together with the EEA AIFMD, the “AIFM Directive”, as applicable).

The interpretation and application of the AIFM Directive is subject to change as a result of, e.g., the issuance of binding guidelines by the European Securities and Markets Authority or further EU legislation amending the AIFM Directive.

The scope and requirements of the AIFM Directive remain uncertain and may change as a result of the issuance of any further national and/or ESMA guidance with respect to the AIFM Directive, the enactment of further secondary legislation and/or the introduction of further national implementing legislation in relevant EEA member states.

legislation described above, other jurisdictions, including many European jurisdictions, have proposed modernizing financial regulations that have called for, among other things, increased regulation of and disclosure with respect to, and possibly registration of, hedge funds, private investment funds and their managers such as through the AIFM Directive discussed below.

Regulatory agencies in the United States, Europe, Asia or elsewhere may adopt burdensome laws (including tax laws) or regulations, or changes in law or regulation, or in the interpretation or enforcement thereof, which are specifically targeted at the private investment fund industry, or other changes that could adversely affect private investment firms and the funds they sponsor.

The European Union Alternative Investment Fund Managers Directive (“AIFMD”) was transposed into national law within the member states of the European Economic Area ("EEA") pursuant to national laws and regulations adopted by those states.

In the UK, a retained version of AIFMD was implemented primarily through the Alternative Investment Fund Managers Regulations 2013, as amended by the Alternative Investment Fund Managers (Amendment etc.) (EU Exit) Regulations 2019, and the Financial Conduct Authority (“FCA”) Handbook of Rules and Guidance (together, the “UK AIFMD”).

The interpretation and application of AIFMD and UK AIFMD may evolve due to, for example, guidance issued by the European Securities and Markets Authority (“ESMA”) or further amendments to applicable legislation.

On February 26, 2024, the European Council unanimously adopted the text of a directive amending AIFMD and Directive 2009/65/EC (the “AIFMD II”).

AIFMD II entered into force on April 15, 2024, and EU member states must implement it into national law by April 16, 2026, subject to certain transition provisions.

AIFMD II introduces new requirements relating to concentration limits, restrictions on lending to connected entities, leverage and risk retention obligations for loan-originating funds, and mandatory liquidity management mechanisms.

While the directive establishes a general framework, aspects of its implementation may be subject to further clarification through ESMA guidelines, secondary EU legislation, and national implementing measures in relevant EEA member states.

It is difficult to determine the full extent of the impact on us of any new laws, regulations or initiatives that may be proposed or whether any of the proposals will become law.

Any changes in the regulatory framework applicable to our business, including the changes as a result of, among others, the Dodd-Frank Wall Street Reform and Consumer Protection Act, may impose additional costs on us, require the attention of our senior management or result in limitations on the manner in which we conduct our business.

It is expected that the current administration will continue to increase the number of financial regulations and regulators.

Furthermore, we may become subject to additional regulatory and compliance burdens as we expand our product offerings and investment platform, including raising additional funds.

We may become subject to additional regulatory and compliance burdens as we expand our product offerings and investment platform, including raising additional funds.

Moreover, as calls for additional regulation have increased as a result of heightened regulatory focus in the financial industry, there may be a related increase in regulatory investigations of the trading and other investment activities of alternative asset management funds, including our managed companies.

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Compliance with the 40% limitation on holding investment securities under the 1940 Act and maintenance of applicable exceptions or exemptions, including Rule 3a-1 which provides an exemption for a company primarily engaged in a non-investment company business based on the nature of its assets and the sources of income, impose certain requirements on how we structure our balance sheet investments and manage our sponsored funds.

Continuing satisfaction of the 40% limitation or qualification for Rule 3a-1 or another exception or exemption from registration under the 1940 Act will limit our ability to make certain investments or change the relevant mix of our investments.

Continuing satisfaction of the 40% limitation or qualification for Rule 3a-1 or another exception or exemption from

registration under the 1940 Act will limit our ability to make certain investments or change the relevant mix of our investments.

If we fail to satisfy the 40% limitation or to maintain any applicable exception or exemption from registration as an investment company under the 1940 Act, either because of changes in SEC guidance or otherwise, we could be required to, among other things:

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federal government, U.S.

states, and foreign governments have enacted (or are considering) laws and regulations that may restrict our ability to

collect, use, and disclose personal information and may increase or change our obligations with respect to storing or managing our own data, including our employees’ personal information, as well as our clients’ data, which may include individuals’ personal information.

states, and foreign governments have enacted (or are considering) laws and regulations that may restrict our ability to collect, use, and disclose personal information and may increase or change our obligations with respect to storing or managing our own data, including our employees’ personal information, as well as our clients’ data, which may include individuals’ personal information.

For example, the EU GDPR imposes detailed requirements related to the collection, storage, and use of personal information related to people located in the EU (or which is processed in the context of EU operations) and places data protection obligations and restrictions on organizations, and may require us to make further changes to our policies and procedures in the future beyond what we have already done.

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As a REIT, we generally were permitted to deduct any dividends paid on our stock from our REIT taxable income.

We reinstated the dividend on our common stock in September of 2022 and we also currently pay dividends on our approximately $821.9 million of outstanding preferred stock.

We reinstated the dividend on our common stock in September of 2022 and we also currently pay dividends on our approxi mately $821.9 million of o utstanding preferred stock.

As a result of no longer qualifying for REIT status, we are no longer allowed a deduction for dividends paid to our stockholders (including the preferred dividends we currently pay) in computing our taxable income and are subject to U.S.

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In addition, our ability to utilize capital loss and NOL carryforwards may be limited by various tax rules, including Sections 382 and 383 of the Code which generally apply if we undergo an “ownership change.” Our use of capital losses or NOLs arising after the date of an ownership change generally would not be affected by the limitations under Sections 382 and 383 (unless there were another ownership change after those new losses arose).

In general, an “ownership

change” occurs if there is a greater than 50 percentage point change (by value) in a corporation’s equity ownership by certain stockholders over a rolling three-year period.

In general, an “ownership change” occurs if there is a greater than 50 percentage point change (by value) in a corporation’s equity ownership by certain stockholders over a rolling three-year period.

Similar provisions of state tax law may also apply to limit our use of existing state tax attributes such as NOLs.

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

What changed 10-K

Item 1A. Risk Factors