What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-23 · 258 added, 372 removed, 302 unchanged (68% of the section changed)

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The following discussion should be read in conjunction with our consolidated financial statements and accompanying notes thereto, which are included in Item 8.

"Exhibits and Financial Statement Schedules" of this Annual Report.

"Financial Statements and Supplementary Data" of this Annual Report.

Significant Developments

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

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

Investment Management

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

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

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

The acquisition further scales our investment management business.

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

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

DataBank and Vantage SDC

Discontinuance of Operating segment

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

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

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

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

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

Recapitalization of DataBank

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

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

The recapitalization implied a pre-transaction net equity value of our ownership in DataBank of $905 million, reflecting a 2.0x multiple of invested capital since our initial investment in DataBank in December 2019.

The incremental third party capital raised through the recapitalization also translated into additional investment management fee revenue.

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

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

• Our investment in BrightSpire Capital, Inc.

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

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

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

The following summarizes significant developments that affected our business and results of operations in 2024 and through the date of this filing.

Capital Raise

• In 2024, we raised $9.0 billion of capital, primarily for various co-investment vehicles and the third series in our flagship value-add strategy.

• In 2024, we further reduced our leverage with the full exchange/redemption of our remaining $78 million of 5.75% senior notes, which resulted in annual interest savings of approximately $4.5 million.

$73 million of note principal was exchanged for 8.2 million shares of the Company's class A common stock and $5 million of note principal was redeemed for cash.

Return of Capital

• We completed the monetization of marketable equity securities that form non-core investments for total net proceeds of $43 million.

• In February 2025, we received proceeds of approximately $59 million in connection with our participation in a secondary sale of equity by our DataBank portfolio company and approximately $1 million of net carried interest.

Fund Performance Metrics

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GIF I Mar-2015 1,411 1,504 388 1,246 1,099 2,345 1.6x 1.4x 8.9% 6.5%

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

GIF II Jun-2018 3,382 3,151 28 2,238 262 2,500 0.8x 0.7x <0% <0%

Credit I Dec-2022 697 455 418 312 193 505 1.1x 1.1x 10.0% 6.5%

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

InfraBridge funds were acquired in Feb-2023.

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

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

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

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

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

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

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

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

(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, gross IRR 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 syndicated proceeds and capital not subject to fees and/or carried interest, including general partner and general partner affiliate capital.

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

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 third-party investor(s), the IRRs will include cash flows associated with such syndication.

This treatment with respect to syndications 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 inclusion of recycled capital generally causes invested and realized amounts to be higher and IRRs and MOICs to be lower than had recycled capital not been included.

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

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

Refer to Item 7.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2022 Annual Report on Form 10-K, which is incorporated by reference herein, for comparative discussion of our consolidated results of operations for the prior year periods of 2022 and 2021.

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

its investment in BRSP prior to disposition in March 2023;

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

For all prior periods presented:

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

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

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

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

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

Prior periods have been reclassified to conform to current presentation.

The discussion of our consolidated results of operations for the prior year periods of 2022 and 2021 in our 2022 Form 10-K should be read in conjunction with Item 15.

"Exhibits and Financial Statement Schedules" in this Annual Report, specifically the consolidated statement of operations, Note 2 Summary of Significant Accounting Policies—Discontinued Operations, Note 4 Investments and Note 18 Segment Reporting.

"Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Annual Report on Form 10-K for comparative discussion of our consolidated results of operations for the prior year periods of 2023 and 2022.

A comparative discussion of our consolidated results of operations for 2024 and 2023 is presented below.

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

Year Ended December 31,

(In thousands) 2024 2023 Change

Total revenues

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

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

$ 821,383 $ 694,771 126,612

Income (Loss) from continuing operations

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

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

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

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

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

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

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

Total revenues increased $126.6 million or 18%.

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

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

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

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

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

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

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

2022 also included income from warehoused investments.

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

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

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

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

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

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

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

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

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

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

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

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

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

Year Ended December 31,

(In thousands) 2023 2022 Change

Fee revenue $ 329,693 $ 264,117 $ 65,576

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Total revenues 607,028 821,383 (214,355)

Compensation expense—cash and equity-based 181,821 206,892 (25,071)

Compensation expense—incentive fee and carried interest allocation 144,650 186,030 (41,380)

Administrative and other expenses 114,985 86,937 28,048

Interest expense 16,438 24,540 (8,102)

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

Transaction-related costs 5,265 10,823 (5,558)

Depreciation and amortization 33,706 36,651 (2,945)

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

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

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

Total expenses 496,865 551,873 (55,008)

Other income (loss)

Other gain (loss), net 58,652 96,119 (37,467)

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Net income (loss) attributable to common stockholders $ 11,881 $ 127,551 (115,670)

Total revenues were $607.0 million in 2024 and $821.4 million in 2023.

The decrease of $214.4 million was driven by significant variability in unrealized carried interest and principal investment income, notwithstanding a $65.6 million increase in fee revenue.

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

Year Ended December 31,

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$ 329,693 $ 264,117 65,576

Fee revenue increased $91.4 million or 53%.

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

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

Fee revenue increased $65.6 million or 25% as our FEEUM increased $2.7 billion or 8% year-over-year to $35.5 billion at December 31, 2024.

Management fees were $52.9 million higher in 2024.

This was driven by capital raised for our third flagship fund that held its first close in November 2023, contributing $60.3 million of additional fees in 2024 (including $19.5 million of catch-up fees), and capital deployments in other funds.

These increases were partially offset by lower fees from DBP II following a change in fee basis to invested capital and syndication of an investment in 2024, as well as recapitalization of a portfolio company in a co-invest vehicle (aggregate decrease of $21.8 million).

2024 also included higher incentive fee income from our liquid securities strategy, along with incentive fee compensation (as discussed below), which netted to a $3.3 million increase.

Carried Interest Allocation

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$ 218,250 $ 363,075 (144,825)

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

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

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

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

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

Distributed carried interest in 2023 arose from a recapitalization of DataBank.

The decrease in unrealized carried interest in 2024 was driven by a reversal of carried interest in DataBank funds and lower carried interest in DBP I, partially offset by an increase in carried interest in DBP II.

The carried interest reversal for DataBank funds is a function of continuing accrual of preferred returns over time at a higher rate than the fair value increase on DataBank for certain limited partners.

Principal Investment Income

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

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

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

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

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

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

The decrease was partially offset by:

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

Interest Expense

Year Ended December 31,

(In thousands) 2024 2023 Change

Interest expense

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

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

Principal investment income

Realized $ 18,364 $ — $ 18,364

Unrealized 11,659 145,448 (133,789)

$ 30,023 $ 145,448 (115,425)

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

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

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

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

Investment-Related Expense

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

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

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

Transaction-Related Costs

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

Depreciation and Amortization

Depreciation and amortization expense decreased $7.6 million in 2023.

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

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

Realized principal investment income in 2024 arose largely from gains related to syndication of investments in DBP funds and distribution of interest income from our credit fund.

Additionally, 2024 included $4.2 million of previously escrowed proceeds received from a partial sale of our interest i n DataBank in prior years.

In comparison, the large unrealized principal investment income in 2023 was driven by significant fair value increase in our DataBank investment and to a lesser extent, DBP I.

Other income was $29.1 million in 2024 compared to $48.7 million in 2023.

2023 had included higher interest income from money market deposits and our subordinated notes in a collateralized loan obligation ("CLO"), as well as dividend income from our credit fund that was deconsolidated in the fourth quarter of 2023.

Total expenses were $496.9 million in 2024 and $551.9 million in 2023, with the decrease attributable to lower compensation expense, primarily unrealized carried interest compensation, partially offset by higher administrative costs.

Changes in the various expense items are discussed below.

Compensation Expense

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Cash and equity-based compensation

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

Cash compensation $ 146,145 $ 151,295 $ (5,150)

Equity-based compensation 35,676 55,597 (19,921)

$ 181,821 $ 206,892 (25,071)

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

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

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

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

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

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

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

Administrative Expenses

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

Incentive fee and carried interest compensation allocation (reversal) $ 144,650 $ 186,030 (41,380)

Cash and equity-based compensation— Cash compensation was $5.2 million lower in 2024 as a result of lower bonus, severance and retention costs (decreased $13.6 million), partially offset by the effects of a higher headcount in 2024.

Equity-based compensation was $19.9 million lower in 2024 as 2023 included a higher expense associated with performance-based awards that met their targets.

Incentive fee and carried interest compensation allocation— The change in compensation expense for both periods is consistent with the change in carried interest, partially offset by an increase in incentive fees, as discussed above.

Administrative and Other Expenses

Administrative and other expenses increased $28.0 million to $115.0 million, driven by higher legal fees and loss accrual related to an employment arbitration, professional service costs and placement fees.

Interest Expense

Interest expense decreased $8.1 million to $16.4 million as a result of a full exchange/redemption of the remaining 5.75% exchangeable senior notes in 2024 ($4.6 million decrease), and full repayment of the $200 million 5.00% convertible notes upon maturity in April 2023 ($3.1 million decrease).

Transaction-Related Costs

Transaction-related costs were $5.3 million in 2024 compared to $10.8 million in 2023.

The decrease is attributed to InfraBridge acquisition costs in 2023 ($7.9 million), partially offset by higher expense associated with unconsummated deals in 2024 ($2.0 million).

Depreciation and Amortization

Depreciation and amortization expense decreased $2.9 million in 2024, primarily due to management contract intangible assets which have a declining amortization rate over time based upon projected cash flows to be generated from these contracts.

Other Gain (Loss), Net

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

Both periods under comparison had the following significant items:

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

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

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

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

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

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

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

Other gain was $58.7 million in 2024 and $96.1 million in 2023.

The net gain in 2024 was driven by (i) net fair value increase in investments held by consolidated funds ($46.6 million), (ii) net fair value gain on our non-core marketable equity securities that were sold during the year ($11.0 million), (iii) fair value decrease of InfraBridge contingent consideration liability ($5.2 million), and (iv) fair value decrease of warrant liability ($5.5 million), all of which were partially offset by impairment of warehoused investments ($13.2 million).

The net gain in 2023 is mainly attributed to a $278.7 million gain recognized in connection with the deconsolidation of DataBank in September 2023 (of which $3.7 million was realized and $275.0 million unrealized), largely offset by a $133.3 million write-off of an unsecured promissory note from the 2022 sale of our Wellness Infrastructure business.

2023 also included losses related to net decreases in investment values, including those held by our consolidated funds ($25.4 million) and fair value increase of warrant liability ($21.5 million).

Income Tax Benefit (Expense)

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

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

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

entities, resulting in no net U.S.

income tax effect for these entities in 2023.

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

Income tax expense was $2.9 million in 2024 and immaterial in 2023.

This principally reflects the income tax expense of foreign subsidiaries.

The Company otherwise has operating losses and capital loss carryforwards that can be applied against current income tax expense for its domestic entities, and has established a full valuation allowance on the deferred tax assets of these entities, resulting in immaterial income tax effect for its domestic entities.

Income (Loss) from Discontinued Operations

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(In thousands) 2024 2023 Change

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

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

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

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

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

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

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

Impairment loss — 35,985 (35,985)

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

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

Revenues $ 7,649 $ 783,121 $ (775,472)

Expenses (10,669) (1,089,481) 1,078,812

Other gain (loss) (16,035) (12,517) (3,518)

Income (Loss) from discontinued operations before income taxes (19,055) (318,877) 299,822

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$ (18,692) $ (55,999) 37,307

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

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

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

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

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

Loss from discontinued operations in 2024 primarily included loss on a guarantee and tax liability associated with previously disposed real estate investments.

The loss in 2023 primarily represents the operations of two data center portfolio companies in the former Operating segment and $9.7 million impairment of BrightSpire Capital, Inc.

BRSP) shares prior to disposition in March 2023, as discussed in Note 2 to the consolidated financial statements included in Item 8.

Operating Metrics

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Assets Under Management

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

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

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

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

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

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

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Fee Earning Equity Under Management

DBP infrastructure equity $ 13.0 $ 11.2

InfraBridge Global Infrastructure 5.1 —

Core Equity, Credit and Liquid Strategies 2.8 2.0

Co-invest vehicles 9.5 6.5

DBP Series $ 15.9 $ 13.0

Co-Investment Vehicles 11.5 9.5

InfraBridge 3.7 5.1

Core, Credit and Liquid Strategies 3.2 2.8

Separately Capitalized Portfolio Companies 1.2 2.4

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The following table summarizes changes in FEEUM:

December 31, 2023

Year Ended December 31, 2024

(In billions)

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Balance at December 31

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

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

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

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

FEEUM increased $2.7 billion or 8% to $35.5 billion at December 31, 2024, driven by capital raise for our third flagship fund and co-investment vehicles, and capital deployments.

The increase was partially offset by a change in fee basis from committed to invested capital on an InfraBridge fund in December 2024, including the effect of an investment write-down, and the resulting impact from recapitalization and syndication of investments.

Non-GAAP Supplemental Financial Measures

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

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

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

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

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

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

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, that is, net of amounts attributed to noncontrolling interests, which include (i) carried interest allocations to certain senior executives of the Company and a third-party investor;

(ii) equity interests held by current and former employees and a third-party investor in general partner entities of the Company's sponsored funds;

and (iii) limited partners of consolidated 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 17 to the consolidated financial statements).

Prior to 2024, 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 segment.

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.

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

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

DE presented for the 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:

Year Ended December 31,

(In thousands) 2023 2022

Attributable to Operating Company:

Distributable Earnings $ 48,622 $ (14,000)

Adjusted EBITDA 103,560 53,596

Investment Management FRE 137,915 83,474

Distributable Earnings .

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

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

deferred tax assets.

Adjusted EBITDA .

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

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

Refer to the reconciliation from DE to Adjusted EBITDA below.

Investment Management FRE .

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

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

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 our 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 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 expenses).

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

Fee revenues earned from consolidated funds are eliminated in consolidation.

However, because the fees are funded by and earned from third party investors in these consolidated funds who represent noncontrolling interests, our allocated share of net income from the consolidated funds 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 fee service business.

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

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 regularly evaluates new investment strategies and exclude Start-Up FRE until such time 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 fee 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

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

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

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

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

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 earnings.

The following items are excluded from DE:

transaction-related costs;

restructuring charges;

non-core items;

other gain (loss);

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amortization of deferred financing costs, debt premiums and discounts;

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

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

non-cash equity-based compensation costs;

preferred stock redemption gain (loss);

and straight-line adjustment to lease income and expense.

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

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

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

and preferred stock redemption gain (loss).

Transaction-related costs are incurred in connection with acquisitions and costs of unconsummated transactions.

Non-core items primarily include acquisition-related compensation and certain severance costs, as well as litigation and settlement-related matters, which are presented within compensation expense—cash and equity-based, administrative and other expenses, and other gain (loss), net on the GAAP income statement.

These costs, along with certain 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.

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.

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

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

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

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

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

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

Distributable Earnings and Adjusted EBITDA Reconciliation

Non-GAAP Results

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

Year Ended December 31,

(In thousands) 2024 2023 Change

Fee revenue (1)

$ 329,784 $ 267,148 $ 62,636

Cash compensation (1)

(151,265) (125,954) (25,311)

Administrative and other expenses (1)

(71,410) (63,159) (8,251)

Start-Up FRE — 3,751 (3,751)

Fee-Related Earnings—attributable to Operating Company

107,109 81,786 25,323

Realized principal investment income (2)

15,884 8,497 7,387

Distributed carried interest and incentive fees subject to realization events, net of associated expense allocation 285 27,927 (27,642)

Interest, dividend and other income 14,424 22,868 (8,444)

Interest expense and preferred dividends (72,672) (79,985) 7,313

Placement fees and other expenses (9,590) (8,714) (876)

Income tax benefit (expense) (2,944) (6) (2,938)

Start-up FRE — (3,751) 3,751

Distributable Earnings, after tax—attributable to Operating Company

$ 52,496 $ 48,622 3,874

(1) These amounts are determined based upon the definition of FRE as described above and therefore, differ from those presented on the consolidated statements of operations.

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

Fee-Related Earnings

FRE was $25.3 million or 31% higher at $107.1 million in 2024 as fee revenue increased $62.6 million or 23%, partially offset by higher compensation and administrative costs.

Fee revenue in 2024 benefited from the capital raised for our third flagship fund, which also contributed $19.5 million of catch-up fees.

Additionally, 2024 included higher incentive fee revenue from our liquid securities strategy, along with incentive fee compensation, which netted to a $3.0 million increase.

However, this was partially offset by lower fees from DBP II following a change in fee basis to invested capital and syndication of an investment in 2024.

FRE margin was marginally higher at 32% in 2024 compared to 31% in 2023.

Distributable Earnings

DE was $52.5 million in 2024 and $48.6 million in 2023.

DE in 2024 reflected a $25.3 million increase in FRE and higher realized principal investment income.

In comparison, DE in 2023 had benefited from $27.9 million of realized carried interest from the recapitalization of DataBank.

This resulted in a year-over-year increase in DE of $3.9 million.

Distributable Earnings and Fee-Related Earnings Reconciliation

Year Ended December 31,

(In thousands) 2024 2023

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Net income (loss) attributable to Operating Company 12,564 136,689

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

Transaction-related costs and non-core items (1)

31,906 44,851

Other (gain) loss, net (2)

(61,988) (91,187)

Unrealized principal investment income (11,659) (145,448)

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

Equity-based compensation cost 55,596 32,581

Unrealized carried interest, net of associated expense (allocation) reversal (3)

(46,556) (66,580)

Equity-based compensation 35,676 55,597

Depreciation and amortization expense 33,706 36,651

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

Amortization of deferred financing costs, debt premiums and discounts 2,296 2,784

Preferred stock redemption (gain) loss — (927)

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

Adjustments attributable to noncontrolling interests in investment entities (4)

(169,559) (248,033)

DE of discontinued operations (2)

OP share of (income) loss from discontinued operations (5)

20,064 68,563

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52,496 48,622

Adjustments attributable to Operating Company :

Interest expense included in DE 21,328 35,619

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

Preferred stock dividends 58,656 61,566

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

Placement fees 3,698 —

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

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

Adjusted EBITDA—attributable to Operating Company

Realized principal investment income (6)

(15,884) (8,497)

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

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

Investment Management FRE and Investment Management Adjusted EBITDA

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

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

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

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

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

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

unrealized principal investment income (loss);

other gain (loss);

transaction-related and restructuring charges;

non-cash equity-based compensation costs;

straight-line adjustment to lease expense;

placement fee expense;

investment expense;

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

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

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

Start-Up FRE is FRE associated with new investment strategies that have 1) not yet held a first close raising FEEUM;

or 2) not yet achieved break-even Adjusted EBITDA only for investment products that may be terminated solely at the Company’s discretion.

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

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

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

Investment Management FRE Reconciliation

Year Ended December 31,

(In thousands) 2023 2022

Net income (loss)—Investment Management

Distributed carried interest and incentive fees subject to realization events, net of associated expense allocation (3)

(285) (27,927)

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

Investment-related expense, net of reimbursement 116 324

Depreciation and amortization expense 35,260 22,155

Equity-based compensation cost 33,862 15,845

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

Straight-line rent expense 1,049 1,844

Placement fees 3,698 —

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

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

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

Interest, dividend and other income (14,424) (22,868)

Interest expense and preferred dividends 72,672 79,985

Placement fee and other expenses 9,590 8,714

Income tax (benefit) expense 2,944 6

Investment Management Adjusted EBITDA

134,164 86,050

Start-up FRE — 3,751

Investment Management FRE

137,915 95,789

Attributable to redeemable noncontrolling interests (1)

Investment Management FRE—attributable to Operating Company

Fee-Related Earnings—attributable to Operating Company

$ 107,109 $ 81,786

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

(1) Non-core items primarily include acquisition-related compensation and certain severance costs, as well as litigation and settlement-related matters, which are presented within compensation expense—cash and equity-based, administrative and other expenses, and other gain (loss), net on the GAAP income statement.

(2) Comprises (i) all unrealized gains and losses;

and (ii) realized gains and losses recorded by consolidated funds or associated with non-core investments.

(3) Carried interest and incentive fees are presented net of expense allocation or reversal.

The expense component is included within compensation expense — incentive fees and carried interest allocation (reversal), other gain (loss), and net income (loss) attributable to noncontrolling interests in investment entities on the GAAP income statement.

(4) Adjustments attributable to noncontrolling interests in investment entities pertain to other gain/loss attributed to limited partners of consolidated funds, and a third party investor's share of unrealized principal investment income attributed to our general partner interest in certain sponsored funds.

Allocation of unrealized carried interest to management and a third party investor is netted against "unrealized carried interest, net of expense (allocation) reversal" for all periods presented (recasted for periods prior to the second quarter of 2024 when it was previously presented gross in "adjustments attributable to noncontrolling interests in investment entities").

(5) OP share of discontinued operations represents primarily operating results of portfolio companies consolidated in the former Operating segment prior to 2024, net of associated noncontrolling interests in investment entities, and residual activities from the Company's former real estate business that had been disposed.

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

Liquidity and Capital Resources

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

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

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

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

Liquidity Needs and Sources of Liquidity

Our primary liquidity needs are to fund:

Our primary liquidity needs, both short term and long term, are to fund:

• our operations, including compensation and administrative costs;

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

• acquisitions of target investment management businesses;

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

• principal and interest payments on our debt;

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

• dividends to our preferred and common stockholders;

• our liability for corporate and other taxes;

• acquisitions of target investment management businesses;

• obligation for lease payments on our corporate offices.

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

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

• cash flow generated from our investments, both from operations and return of capital, including proceeds from full or partial realization of investments;

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

• 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;

• proceeds from public or private equity and debt offerings.

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

We believe we have sufficient cash on hand, and anticipated cash generated from operating activities and external financing sources, to meet our short term and long term capital requirements.

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

Significant Liquidity and Capital Activities in 2023

Sources of Funds

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

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

Uses of Funds

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

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

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

At December 31, 2024, our liquidity position was approximately $440 million, composed of available corporate cash and including the full $300 million under our VFN.

Available corporate cash generally represents cash at our OP entity after allocating cash for certain compensatory liabilities, and excludes cash held at subsidiaries of the OP, including cash maintained to satisfy regulatory capital requirements in applicable foreign jurisdictions.

We believe we have sufficient cash on hand, and anticipated cash generated from operating activities and availability of external financing sources, to meet our short term and long term liquidity and capital requirements.

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

Significant Liquidity and Capital Activities in 2024 and through the Date of Filing

• We continued to reduce higher cost corporate indebtedness through the full exchange/redemption of the remaining $78 million of our 5.75% senior notes, which resulted in annual interest savings of approximately $4.5 million.

$73 million of note principal was exchanged for 8.2 million shares of the Company's class A common stock and $5 million of note principal was redeemed for cash.

• 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, through payment of $17.5 million in cash and $17.5 million in shares of the Company's class A common stock.

• We completed monetization of marketable equity securities that form non-core investments, receiving total net proceeds of $43 million.

• We received $10 million in return of capital from a refinancing of a third party managed CLO for which we are the subordinated note holder.

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.

In February 2025, our Board of Directors declared a dividend of $0.01 per share of common stock to be paid in April 2025.

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 7 to the consolidated financial statements.

As of the date of this filing, our corporate debt is composed of our Class A-2 Notes, as summarized below, with our VFN undrawn.

($ 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 1.7

Exchangeable senior notes—fixed rate

78,422 5.75 % July 2025 1.5

Investment Commitments

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

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

Fund Commitments —As general partner, we typically have minimum capital commitments to our sponsored funds ranging from 0.02% to 0.72% of the total capital commitments of a fund at final closing, although we may elect to invest additional amounts in new products.

With respect to our flagship value-add DBP fund series, and InfraBridge funds, we have made additional capital commitments as a general partner affiliate, generally ranging from 1.43% to 4.29%, alongside our investors.

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

As of December 31, 2023, we have unfunded commitments totaling $260 million to our sponsored funds.

As of December 31, 2024, we have unfunded equity commitments to our unconsolidated funds as general partner and general partner affiliate of $237 million (including commitments attributed to the ownership by employees and former employees in our general partner entities).

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.

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

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

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

Warehoused Investments

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

Contingent Consideration

InfraBridge Acquisition —In connection with the InfraBridge acquisition in February 2023, contingent consideration of up to AUD 180 million may become payable based upon achievement of future fundraising targets for the third and fourth flagship InfraBridge funds.

The current estimated fair value of the contingent consideration is $6 million.

Carried Interest Clawback

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

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

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

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

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

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

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

At December 31, 2024, the Company had no liability for clawback obligations on distributed carried interest.

Lease Obligations

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

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

At December 31, 2024, we had operating lease obligations of $52 million for in-place leases on currently occupied corporate offices and commitments on future leases of $53 million related to two office spaces, one of which commenced in January 2025 and the other is expected to commence in 2026.

We sub-leased a portion of certain existing office space over the remaining term of the respective leases and expect to receive fixed sub-lease payments totaling $3 million over the remaining life of the sub-lease contracts.

With respect to the new lease commencing in 2026, the Company will be provided with a credit to cover fixed lease payments of $71,000 per month on an existing lease that expires in September 2026 during the period the two leases overlap, and also expects to sub-lease a portion of this new office space in 2026, which will reduce its future lease obligation.

The Company's lease obligations will be funded through corporate operating cash.

Lease obligation amounts represent undiscounted fixed lease payments over contractual lease terms of up to 10 years, excluding any contingent or other variable lease payments, and factor in lease renewal or termination options only if it is reasonably certain that such options would be exercised.

Sources of Liquidity

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Cash From Operations

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

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.

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

Asset Monetization

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

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

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

Investments— Our investments in our sponsored funds as general partner and general partner affiliate generate cash largely through capital appreciation of our underlying fund investments that are realized upon a recapitalization, syndication or liquidation event, distributions from portfolio companies of our funds and interest income from our credit fund.

Public Offerings

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$ 350,250 $ 1,036,739

Net cash provided by (used in):

Net cash generated by (used in):

Operating activities 60,122 233,637

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Operating Activities

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

Cash inflows from operating activities are generated primarily through fee-related earnings, 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 in 2023, net operating income from investment properties.

Our operating activities generated net cash inflows of $60.1 million in 2024 and $233.6 million in 2023.

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

Investing Activities

Investing activities relate to business combinations;

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

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

Investing activities relate to general partner and general partner affiliate investments in sponsored funds, including drawdown of commitments and return of capital from realized fund 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 $979.0 million in 2023 and $1.9 billion in 2022.

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

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

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

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

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

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

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

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

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

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

Disbursements for additional fundings and acquisitions of warehoused loans during the year were more than offset by proceeds received from the subsequent transfer of the entire portfolio of warehoused loans to our sponsored credit fund and to a third party sponsored collateralized loan obligation.

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

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

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

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

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

Our investing activities generated net cash outflows of $11.2 million in 2024 and $979.0 million in 2023.

• Net cash outflows in 2024 were driven by $65.2 million of fundings, net of distributions, for our general partner and general partner affiliate commitments in our sponsored funds, largely offset by $42.9 million of net proceeds from sale of our non-core investments and return of capital on our CLO subordinated note.

• The large net cash outflows in 2023 can be attributed to (i) real estate investing activities which generated net cash outflows of $653.5 million, attributable to capital expenditures in the data center portfolio of our former Operating segment;

(ii) derecognition of $229.2 million of cash and restricted cash following the deconsolidation of the portfolio companies in our former Operating segment and our credit fund, and (iii) $314.3 million paid, net of cash assumed, for the acquisition of InfraBridge.

These outflows were partially offset by net cash inflows of $211.8 million from equity investments, largely representing $201.6 million proceeds from the sale of BRSP shares, proceeds from DataBank recapitalization, 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.

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

Financing activities generated net cash inflows in both years.

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

• The financing net cash inflows of $923.8 million in 2022 were driven by financing for the acquisition of TowerCo and the DataBank data center acquisition through term loans and capital contributions from noncontrolling interests totaling $1.1 billion.

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

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

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

Financing cash outflows also included repayment of our warehouse credit facility of $172.5 million with proceeds from a transfer of the warehoused loans to a third party CLO, and paydowns on amortizing debt in our Operating segment.

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

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

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

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

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

• In 2024, net cash outflows of $90.8 million were driven by common and preferred dividend payments of $65.4 million, cash settlement of contingent consideration to Wafra of $17.5 million, and redemption of $5.0 million exchangeable senior notes for cash.

These outflows were partially offset by limited partner contributions, net of redemptions of $14.6 million in our consolidated liquid funds, and also funding by Wafra for its share of our general partner commitment in DBP I.

• Net cash inflows of $58.2 million in 2023 represent primarily $484.5 million of additional investment-level debt in the former Operating segment, largely offset by the full repayment of our $200 million 5.00% convertible senior notes, $90 million contingent consideration payment to Wafra, $89.5 million redemption by a limited partner in a consolidated liquid fund, and income distribution to noncontrolling interests in our former Operating segment.

Guarantees and Off-Balance Sheet Arrangements

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

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

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

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

Carried Interest Allocation

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

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

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

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

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

A discussion of valuation allowances established in 2022 is included in Note 14 to the consolidated financial statements in Item 15 of this Annual Report.

In 2022, significant deferred tax assets were recognized with an offsetting valuation allowance.

As of December 31, 2024 , a full valuation allowance of $559.6 million has been maintained as the more-likely-than-not threshold continues to not be met in assessing realizability of deferred tax assets.

Refer to Note 14 to the consolidated financial statements in Item 8 of this Annual Report.

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

At December 31, 2023, the Company's goodwill is associated with its Investment Management and Operating segments.

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

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Given the level of sensitivity in the inputs, a change in the value of any one input, in isolation or in combination, could significantly affect the overall estimation of fair value of the reporting unit.

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

The Company has a goodwill balance of $465.6 million at December 31, 2024 and has determined that there were no indicators of impairment to goodwill in 2024.

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

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

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

Consolidation

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The effects of accounting standards adopted in 2024 and the potential effects of accounting standards to be adopted in the future are described in Note 2 to our consolidated financial statements in Item 8.

"Exhibits, Financial Statement Schedules" of this Annual Report.

"Financial Statements and Supplementary Data" of this Annual Report.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis