DigitalBridge Group, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with our unaudited consolidated financial statements and accompanying notes thereto, which are included in Item 1 of this Quarterly Report, as well as information contained in our Annual Report on Form 10-K for the year ended December 31, 2024, which is accessible on the SEC's website at www.sec.gov. In this Quarterly Report, unless specifically stated otherwise or the context indicates otherwise, the terms " the "Company," "DBRG," "we," "our" and "us" refer to DigitalBridge Group, Inc. and its consolidated subsidiaries. References to the “Operating Partnership,” our “Operating Company” and the “OP” refer to DigitalBridge Operating Company, LLC, a Delaware limited liability company and the operating company of the Company, and its consolidated subsidiaries. Our Business We are a leading global investment manager in digital infrastructure, deploying and managing capital across the digital ecosystem, including data centers, cell towers, fiber networks, small cells, and edge infrastructure. Our diverse global investor base includes public and private pensions, sovereign wealth funds, asset managers, insurance companies, and endowments. At March 31, 2025, we had $37.3 billion of fee earning equity under management ("FEEUM"). We are headquartered in Boca Raton, Florida, with key offices in New York, London, Luxembourg and Singapore. At March 31, 2025, we had 324 employees. We operate as a taxable C Corporation and conduct substantially all of our activities and hold substantially all of our assets and liabilities through our Operating Company. At March 31, 2025, we owned 94% of the Operating Company as its sole managing member. Our Investment Management Platform Our investment management platform is anchored by our value-add funds within the DigitalBridge Partners ("DBP") infrastructure equity series. In providing institutional investors access to investments across different segments of the digital infrastructure ecosystem, our investment offerings have expanded to include core equity, credit and liquid securities. • Our DBP series of funds focus on value-add digital infrastructure, investing in and building businesses across the digital infrastructure sector. • Core Equity invests in digital infrastructure businesses and assets with long-duration cash flow profiles, primarily in more developed geographies, through our Strategic Assets Fund ("SAF"). • DigitalBridge Credit is our private credit strategy that delivers credit solutions to corporate borrowers in the digital infrastructure sector globally through credit financing products such as first and second lien term loans, mezzanine debt, preferred equity and construction/delay-draw loans, among other products. 33 Table of Contents • Our Liquid Strategies are fundamental long-only, long-short and market-neutral public equities strategies with well-defined mandates, leveraging the network and intellectual capital of our platform to build liquid portfolios of high quality, undervalued businesses across digital infrastructure, real estate, and technology, media, and telecom. • InfraBridge is focused on mid-market investments in the digital infrastructure, energy and digital adjacent areas of traditional infrastructure (predominantly transportation and logistics via the Global Infrastructure Fund ("GIF") series of funds. Significant Developments The following summarizes significant developments that affected our business and results of operations in 2024 and through the date of this filing. Capital Raise • In 2025, through April 2025, we raised $1.15 billion of capital, primarily for the third series in our flagship value-add strategy and the second series of our credit strategy. Realization of Investment • In connection with our participation in a secondary sale of equity by our DataBank portfolio company in February 2025, we received proceeds of approximately $59.7 million, representing $34.0 million realized principal investment income, $24.8 million return of capital and our share of carried interest of $0.9 million. Fund Performance Metrics Certain performance metrics for our key investment funds from inception through March 31, 2025 are presented in the table below. Excluded are funds with less than one year of performance history as of March 31, 2025, funds and separately managed accounts in the liquid strategy, co-investment vehicles and separately capitalized portfolio companies. The historical performance of our funds is not indicative of their future performance nor indicative of the performance of our other existing funds or of any of our future funds. An investment in DBRG is not an investment in any of our funds and these fund performance metrics are not indicative of the performance of DBRG. ($ in millions) Inception Date (2) Total Commitments Invested Capital (3) Available Capital (4) Investment Value MOIC (8) (10) IRR (9) (10) Fund (1) Unrealized (5) Realized (6) Total (7) Gross Net Gross Net Value-Add DBP I Mar-2018 $ 4,059 $ 4,825 $ 206 $ 6,245 $ 1,417 $ 7,662 1.6x 1.4x 13.1% 9.5% DBP II Nov-2020 8,286 7,732 920 9,662 825 10,487 1.4x 1.2x 11.5% 8.1% Core SAF Nov-2022 1,110 951 148 1,027 23 1,050 1.1x 1.1x 5.8% 3.5% InfraBridge GIF I Mar-2015 1,411 1,504 388 1,241 1,130 2,371 1.6x 1.4x 8.3% 6.4% GIF II Jun-2018 3,382 3,154 28 2,239 301 2,540 0.8x 0.7x <0% <0% Credit Credit I Dec-2022 697 543 338 396 208 604 1.1x 1.1x 10.6% 6.9% __________ (1) Performance metrics are presented in aggregate for main fund vehicle, its parallel vehicles and alternative investment vehicles. (2) Inception date represents first close date of the fund, except for Credit I which is the first capital call date. 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. Invested capital includes financing costs and investment related expenses which are capitalized. With respect to InfraBridge funds, such costs are expensed during the period and excluded from their determination of invested capital. (4) Available capital represents unfunded commitments, including recallable capital. (5) Unrealized value represents total fair value of investments, net of outstanding balance under the fund’s credit facility, if any. (6) Realized value represents proceeds from dispositions that have closed and all earnings from both realized and unrealized investments, including interest, dividend and ticking fees. (7) Total value is the sum of unrealized fair value and realized value of investments. (8) Total gross multiple of invested capital ("MOIC") is calculated as the limited partners' portion of the fair value of unrealized investments, net of outstanding balance funded through the fund's credit facility, if any, plus any accrued but unpaid interest and coupon payments received, and limited partner realized distributions gross of general partner carried interest, divided by total limited partner contributions, without giving effect to the allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized). 34 Table of Contents Total net MOIC is calculated as the limited partners' portion of the fund's NAV plus limited partner realized distributions net of carried interest, divided by total limited partner contributions, after giving effect to the allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized). MOIC calculations exclude capital not subject to fees and/or carried interest, including general partner and general partner affiliate capital. MOICs are calculated at the fund level and do not reflect MOICs at the individual investor level. (9) Gross internal rate of return ("IRR") represents annualized money-weighted return on invested capital based upon total value of limited partner contributions, that is limited partner realized distributions and limited partner unrealized NAV (based upon fair value of unrealized investments), without giving effect to the 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 the first capital call from limited partners (and therefore taking into account the use of any credit facility at the fund level) through the date of limited partner distributions for realized investments. For funds with unrealized investments, gross IRR uses a liquidating distribution equal to the limited partners' portion of the fair value of unrealized investments, net of outstanding 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 the allocation of management fee expense, other fund expenses and general partner carried interest (both distributed and unrealized). Net IRR is calculated at the total fee-paying limited partner level and based upon the timing and amount of fee-paying third party limited partner inflows and outflows, and excludes capital not subject to fees and/or carried interest, including the portion of capital attributable to the general partner and general partner affiliate. As fees may vary by individual investor, net IRR does not represent the return of any individual investor. With respect to funds that have utilized borrowings from a credit facility to fund portfolio investments, organization expenses, partnership expenses, management fees, or other amounts in lieu of calling capital from limited partners for such purposes, gross and net IRR of the fund differs from what the IRR would have been if such borrowings or financings had not been utilized. Because IRR is calculated based on the actual dates of capital contributions from, and distributions to, limited partners (rather than based on the timing of when investments were made, for example), the use of such borrowings and financings in lieu or in advance of calling capital delays capital contributions from limited partners, generally resulting in higher IRRs than if such borrowings or financings had not been utilized and capital was called earlier from limited partners.. (10) Our funds generally permit us to recycle certain capital distributed to limited partners during certain time periods. The exclusion of recycled capital generally causes invested and realized amounts to be lower and MOICs to be higher than had recycled capital been included. 35 Table of Contents Results of Operations Three Months Ended March 31, (In thousands) 2025 2024 Change Revenues Fee revenue $ 90,139 $ 72,955 $ 17,184 Carried interest allocation (55,464) (8,478) (46,986) Principal investment income 5,307 2,845 2,462 Other income 5,465 7,071 (1,606) Total revenues 45,447 74,393 (28,946) Expenses Compensation expense—cash and equity-based 46,110 51,184 (5,074) Compensation expense—incentive fee and carried interest allocation (22,304) (6,714) (15,590) Administrative and other expenses 15,946 24,310 (8,364) Interest expense 3,898 5,192 (1,294) Transaction-related costs 4,421 760 3,661 Depreciation and amortization 7,226 9,167 (1,941) Total expenses 55,297 83,899 (28,602) Other income (loss) Other gain (loss), net (519) (5,894) 5,375 Income (Loss) before income taxes (10,369) (15,400) 5,031 Income tax benefit (expense) (301) (1,246) 945 Income (Loss) from continuing operations (10,670) (16,646) 5,976 Income (Loss) from discontinued operations (4,185) (14,120) 9,935 Net income (loss) (14,855) (30,766) 15,911 Net income (loss) attributable to noncontrolling interests: Redeemable noncontrolling interests (748) 733 (1,481) Investment entities (27,882) 1,467 (29,349) Operating Company (7) (3,338) 3,331 Net income (loss) attributable to DigitalBridge Group, Inc. 13,782 (29,628) 43,410 Preferred stock dividends 14,660 14,660 — Net income (loss) attributable to common stockholders $ (878) $ (44,288) 43,410 36 Table of Contents Revenues Total revenues were $45.4 million in 2025 and $74.4 million in 2024. The decrease of $28.9 million was driven by a significantly higher reversal of unrealized carried interest in 2025, partially offset by a $17.2 million increase in fee revenue. The key components of revenue are discussed in more detail below. Fee Revenue Three Months Ended March 31, (In thousands) 2025 2024 Change Management fees $ 89,860 $ 71,844 $ 18,016 Incentive fees 6 881 (875) Other fee revenue 273 230 43 $ 90,139 $ 72,955 17,184 Fee revenue increased $17.2 million or 24% to $90.1 million. The increase is attributable to higher capital raised for our third flagship fund, which contributed an additional $20.6 million of management fees, including $10.7 million of catch-up fees. This was partially offset by $4.0 million of lower fees from an InfraBridge fund following a change in fee basis from committed to invested capital effective December 2024. Year over year, FEEUM increased $4.8 billion or 15% to $37.3 billion at March 31, 2025 from $32.5 billion at March 31, 2024. Carried Interest Allocation Three Months Ended March 31, (In thousands) 2025 2024 Change Carried interest allocation Distributed $ 2,470 $ — $ 2,470 Unrealized (57,934) (8,478) (49,456) $ (55,464) $ (8,478) (46,986) 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 participation interest. 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 a secondary equity offering by our DataBank portfolio company in February 2025, of which our share net of management allocation was $0.9 million. There was a higher net reversal of unrealized carried interest in 2025 compared to 2024. The carried interest reversals are generally a function of continuing accrual of preferred returns over time at a higher rate than the fair value increase for certain limited partners. Principal Investment Income Three Months Ended March 31, (In thousands) 2025 2024 Change Principal investment income Realized $ 35,038 $ 2,377 $ 32,661 Unrealized (29,731) 468 (30,199) $ 5,307 $ 2,845 2,462 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. In February 2025, we received $34.0 million of income distribution in connection with our participation in a secondary sale of equity by our DataBank portfolio company. This is reflected as reclassification from unrealized to realized principal investment income. 37 Table of Contents Additionally, realized principal investment income in both periods included distributions of interest income from our credit fund, while u nrealized principal investment income in 2025 also reflects fair value increases in DBP II and InfraBridge funds (combined $5.5 million). Other Income Other income was $1.6 million lower at $5.5 million, driven by lower dividend income from equity securities of consolidated funds and lower interest income from money market deposits and our subordinated notes in a collateralized loan obligation ("CLO"). Expenses Total expenses were $55.3 million in 2025 and $83.9 million in 2024, with the decrease attributable to higher reversal of unrealized carried interest compensation, and lower administrative costs. Changes in the various expense items are discussed below. Compensation Expense Three Months Ended March 31, (In thousands) 2025 2024 Change Cash and equity-based compensation Cash compensation $ 38,490 $ 41,970 $ (3,480) Equity-based compensation 7,620 9,214 (1,594) $ 46,110 $ 51,184 (5,074) Incentive fee and carried interest compensation allocation (reversal) $ (22,304) $ (6,714) (15,590) Cash and equity-based compensation— Cash compensation was $3.5 million lower in 2025 as a result of an acquisition-related bonus in 2024 ($2.0 million) and lower severance costs in 2025 ($1.7 million), partially offset by the effect of increased headcount. Equity-based compensation was $1.6 million lower in 2025 due to awards that fully vested in 2024. Incentive fee and carried interest compensation allocation— The reversal in compensation expense for both periods is consistent with the reversal in carried interest, as discussed above. In 2024, management allocation of carried interest for DBP II is reflected mostly as compensation expense. In comparison, DBP I's management allocation in 2025 is split between compensation expense and net income attributable to noncontrolling interests. Administrative and Other Expenses Administrative and other expenses decreased $8.4 million to $15.9 million, driven primarily by insurance recoveries in 2025 related to litigation costs incurred in prior periods ($10.6 million) and lower placement fees ($3.0 million), partially offset by loss accrual in 2025 related to an employment arbitration ($5.3 million), as well as fund formation and offering costs in 2025 ($2.1 million). Interest Expense Interest expense decreased $1.3 million to $3.9 million as a result of the full exchange/redemption of the remaining 5.75% exchangeable senior notes in April 2024. Transaction-Related Costs Transaction-related costs increased $3.7 million to $4.4 million due to higher deal activity. Depreciation and Amortization Depreciation and amortization expense decreased $1.9 million 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 Other loss was $0.5 million in 2025 and $5.9 million in 2024. 38 Table of Contents The net loss in 2025 was driven by net fair value loss in equity investments, primarily marketable equity securities of our consolidated funds ($4.5 million), largely offset by fair value decrease in the InfraBridge contingent consideration liability ($3.9 million). The net loss in 2024 was driven by fair value increase in the DBRG stock warrant liability ($5.4 million) and write-down in value of an equity investment ($3.3 million), partially offset by net fair value gain on marketable equity securities of our consolidated liquid funds( $2.0 million). Income Tax Benefit (Expense) Income tax expense was $0.3 million in 2025 and $1.2 million in 2024. The Company 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 Loss from discontinued operations of $4.2 million in 2025 and $14.1 million in 2024 were driven by a merger related real estate transfer tax liability, and loss on a guarantee related to the previous bulk sale of the Company's real estate investments, respectively. Operating Metrics Assets Under Management and Fee Earning Equity Under Management We present below our AUM and FEEUM, which are key operating metrics in the alternative investment management industry. Our calculation of AUM and FEEUM may differ from other investment managers, and as a result, may not be directly comparable to similar measures presented by other investment managers. Assets Under Management AUM represents the total capital for which we provide investment management services and our general partner capital. AUM is generally composed of third party capital managed by the Company and its affiliates, including capital that is not yet fee earning, or not subject to fees and/or carried interest; and our general partner and general partner affiliate capital committed to our funds. AUM is largely determined based upon invested capital as of the reporting date, including capital funded through third party financing at the underlying portfolio companies; and committed capital for funds in their commitment stage. Our AUM is not based upon any definitions that may be set forth in the governing documents of our managed funds or other investment vehicles, and not calculated pursuant to any regulatory definitions. Fee Earning Equity Under Management FEEUM represents the total capital managed by the Company and its affiliates which earns management fees and/or incentive fees or carried interest. FEEUM is generally based upon committed capital, invested capital, NAV or gross asset value ("GAV"), pursuant to the terms of each underlying investment management agreement. 39 Table of Contents Presented below are total AUM and FEEUM by product: (In billions) March 31, 2025 December 31, 2024 Assets Under Management $ 99.6 $ 95.6 Fee Earning Equity Under Management DBP Series $ 16.7 $ 15.9 Co-Investment Vehicles 12.3 11.5 InfraBridge 3.7 3.7 Core, Credit and Liquid Strategies 3.4 3.2 Separately Capitalized Portfolio Companies 1.2 1.2 $ 37.3 $ 35.5 The following table summarizes changes in FEEUM: Three Months Ended March 31, 2025 (In billions) Fee Earning Equity Under Management Balance at January 1 $ 35.5 Inflows (1) 2.0 Outflows (2) (0.3) Market activity and other (3) 0.1 Balance at March 31 $ 37.3 ________ (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. (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, permanent write-down in investment values, 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 $1.8 billion or 5% to $37.3 billion at March 31, 2025, driven by capital raise for our third flagship fund, and capital deployments. Non-GAAP Supplemental Financial Measures We report the following non-GAAP financial measures attributable to the Operating Company: 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 allocation and equity interests held by current and former employees in general partner entities of the Company's sponsored funds; (ii) participation rights held by a third party investor to a share of carried interest and economics in a sponsored fund; and (iii) limited partners of consolidated funds. 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. 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. 40 Table of Contents 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). 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. 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 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 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. 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; non-core items; other gain (loss); unrealized principal investment income (loss); non-cash depreciation and amortization expense, non-cash impairment charges (if any); amortization of deferred financing costs, debt premiums and discounts; our share of unrealized carried interest allocation, net of associated expense; non-cash equity-based compensation costs; 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. 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. 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. 41 Table of Contents Income taxes applied in the determination of DE generally represents GAAP income tax related to continued operations, and includes the benefit of deductions available to the Company on certain expense items excluded from DE (for example, equity-based compensation). As the income tax benefit arising from these excluded expense items do affect actual income tax paid or payable by the Company in any one period, the Company believes their inclusion in DE is appropriate to more accurately reflect amounts available for distribution. Non-GAAP Results Results of our non-GAAP measures attributable to the Operating Company were determined as follows: Three Months Ended March 31, (In thousands) 2025 2024 Change Fee revenue (1) $ 90,229 $ 72,791 $ 17,438 Cash compensation (1) (38,096) (36,893) (1,203) Administrative and other expenses (1) (17,183) (16,335) (848) Fee-Related Earnings—attributable to Operating Company 34,950 19,563 15,387 Realized principal investment income 34,907 2,301 32,606 Distributed carried interest and incentive fees subject to realization events, net of associated expense allocation 864 99 765 Interest, dividend and other income 2,941 4,375 (1,434) Interest expense and preferred dividends (18,010) (19,162) 1,152 Placement fees and other expenses (647) (3,698) 3,051 Income tax benefit (expense) (301) (1,246) 945 Distributable Earnings, after tax—attributable to Operating Company $ 54,704 $ 2,232 52,472 ________ (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. Fee-Related Earnings FRE was $15.4 million or 79% higher at $35.0 million in the first quarter of 2025 compared to $19.6 million in the same period in 2024. FRE margin in the first quarter of 2025 improved to 39% from 27% a year ago. Fee revenue increased $17.4 million or 24%, partially offset by higher operating cost. The increase in fee revenue is attributable to capital raised for our third flagship fund, which contributed an additional $20.6 million of fees, including $10.7 million of catch-up fees. This was partially offset by a fee decrease for an InfraBridge fund following a change in fee basis from committed to invested capital effective December 2024. Operating cost was $2.1 million higher, driven largely by fund formation and offering costs as well as the effects of higher headcount. Distributable Earnings DE was $54.7 million in the first quarter of 2025 compared to $2.2 million in the same period in 2024. The significant increase can be attributed to $15.4 million of additional FRE and $35 million of realized principal investment income and our share of carried interest received from our participation in a secondary sale of equity by our DataBank portfolio company. DE also benefited from $3.1 million of lower placement fees. 42 Table of Contents Distributable Earnings and Fee-Related Earnings Reconciliation Three Months Ended March 31, (In thousands) 2025 2024 Net income (loss) attributable to common stockholders $ (878) $ (44,288) Net income (loss) attributable to noncontrolling interests in Operating Company (7) (3,338) Net income (loss) attributable to Operating Company (885) (47,626) Transaction-related costs and non-core items (1) 435 7,556 Other (gain) loss, net (2) 667 6,463 Unrealized principal investment income (3) 29,847 (569) Unrealized carried interest, net of associated expense (allocation) reversal (4) 5,816 2,686 Equity-based compensation 7,711 9,214 Depreciation and amortization expense 7,226 9,167 Amortization of deferred financing costs, debt premiums and discounts 524 664 Adjustments attributable to noncontrolling interests in investment entities (5) (822) 557 OP share of (income) loss from discontinued operations (6) 4,185 14,120 Distributable Earnings, after tax—attributable to Operating Company 54,704 2,232 Realized principal investment income (34,907) (2,301) Distributed carried interest and incentive fees subject to realization events, net of associated expense allocation (4) (864) (99) Interest, dividend and other income (2,941) (4,375) Interest expense and preferred dividends 18,010 19,162 Placement fee and other expenses 647 3,698 Income tax (benefit) expense 301 1,246 Fee-Related Earnings—attributable to Operating Company $ 34,950 $ 19,563 __________ (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) Unrealized principal investment income is presented net of a third party participation interest. (4) 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. (5) Adjustments attributable to noncontrolling interests in investment entities pertain to other gain (loss) attributed to limited partners of consolidated funds. Allocation of: (i) unrealized carried interest to management and a third party participation interest; and (ii) unrealized principal investment income to a third party participation interest, are netted against "unrealized carried interest, net of expense (allocation) reversal" and "unrealized principal investment income", respectively, for all periods presented (previously presented gross in "adjustments attributable to noncontrolling interests in investment entities" and recasted for periods prior to the second quarter of 2024 and first quarter of 2025, respectively). (6) OP share of discontinued operations represents residual activities from the Company's former real estate business that had been disposed. Liquidity and Capital Resources 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, 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; • principal and interest payments on our debt; • dividends to our preferred and common stockholders; • our liability for corporate and other taxes; • acquisitions of target investment management businesses; and • obligation for lease payments on our corporate offices. 43 Table of Contents Our primary sources of liquidity are: • cash on hand; • 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, 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; and • proceeds from public or private equity and debt offerings. Overview At March 31, 2025, we have $201 million of available corporate cash. This 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 also have the full $300 million available under our VFN facility. 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 2025 • In connection with our participation in a secondary sale of equity by our DataBank portfolio company in February 2025, we received proceeds of approximately $59.7 million, representing $34.0 million realized principal investment income, $24.8 million return of capital and our share of carried interest of $0.9 million. Liquidity Needs and Capital Activities Dividends Common Stock —The payment of common stock dividends and determination of the amount thereof is at the discretion of our Board of Directors. In April 2025, our Board of Directors declared a dividend of $0.01 per share of common stock to be paid in July 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 $14.7 million per quarter. Contractual Obligations, Commitments and Contingencies Debt Obligations As of the date of this filing, our corporate debt is composed of our Class A-2 Notes, as summarized below, with our VFN undrawn. ($ in thousands) Outstanding Principal Interest Rate (Per Annum) Anticipated Repayment Date Years Remaining to Maturity Class A-2 Notes $ 300,000 3.93 % September 2026 1.5 Investment Commitments 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 March 31, 2025, we have unfunded equity commitments to our unconsolidated funds as general partner and general partner affiliate of $231 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. 44 Table of Contents Warehoused Investments We temporarily warehouse investments on behalf of prospective sponsored investment vehicles that are actively fundraising. The warehoused investments are transferred to the investment vehicle if and when sufficient third party capital, including debt, is raised. Generally, the timing of future warehousing activities is not known. Nevertheless, investment warehousing is undertaken only if it is determined that we will have sufficient liquidity through the anticipated warehousing period. 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 prescribed fundraising targets for follow-on InfraBridge flagship funds and co-investments. The current estimated fair value of the contingent consideration is $2 million. Carried Interest Clawback 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 the reporting date. The actual determination and required payment of any clawback obligation would generally occur after final disposition of the investments of the fund or otherwise as set forth in the governing documents of the fund. If the related carried interest distributions received by the Company are subject to clawback, the previously distributed carried interest would be similarly subject to clawback. The Company withholds a portion of the distribution of carried interest to employees to satisfy their potential clawback obligation. Generally, the Company, through the OP, has guaranteed the clawback obligation of its subsidiaries that act as general partner or special limited partner of its respective sponsored funds, for the benefit of these funds and their limited partners. At March 31, 2025, the Company had no liability for clawback obligations on distributed carried interest. Lease Obligations At March 31, 2025, we had operating lease obligations of $43 million for in-place leases on currently occupied corporate offices and commitments on a future office lease of $52 million that is expected to commence in 2026 with a 10 year lease term. 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 Debt Funding As of the date of this filing, we have $300 million of outstanding principal on our corporate debt, as discussed above under " —Debt Obligation. " 45 Table of Contents Our securitized financing facility is subject to various covenants, including financial covenants that require the maintenance of minimum thresholds for debt service coverage ratio and maximum loan-to-value ratio, as defined. As of the date of this filing, we are in compliance with all of the financial covenants, and the full $300 million is available to be drawn on our VFN. Our securitized financing facility allows for the issuance of additional term notes in the future to supplement our liquidity. The decision to enter into a particular financing arrangement is made after consideration of various factors including future cash needs, current sources of liquidity, demand for the Company’s debt or equity, and prevailing interest rates. Cash From Operations Fee-Related Earnings— We generate FRE from our investment management business, generally encompassing recurring fee revenue net of associated compensation and administrative expenses. Management fee revenue is generally a predictable and stable revenue stream. Our ability to generate new management fee streams through establishing new investment vehicles and raising investor capital depends on general market conditions and availability of attractive investment opportunities as well as availability of debt capital. Incentive Fees— Incentive fees, net of employee allocations, are earned based upon the financial performance of a vehicle above a specified return threshold, which is largely driven by appreciation in value of underlying investments. Incentive fees are recognized as fee revenue when they are no longer probable of significant reversal. As investment fair values and changes thereof could be affected by various factors, including market and economic conditions, incentive fees are by nature less predictable in amount and timing. Carried Interest Distributions— Carried interest is distributed generally upon profitable disposition of an investment if at the time of distribution, cumulative returns of the fund exceed minimum return hurdles. Carried interest distributions are recognized in earnings net of clawback obligations, if any. The amount and timing of carried interest distributions received may vary substantially from period to period depending upon the occurrence and size of investments realized by our sponsored funds. 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 We may offer and sell various types of securities from time to time at our discretion based upon our needs and depending upon market conditions and available pricing. Consolidated Cash Flows The following table summarizes the activities from our consolidated statements of cash flows, including discontinued operations. Three Months Ended March 31, (In thousands) 2025 2024 Cash, cash equivalents and restricted cash—beginning of period $ 306,298 $ 350,250 Net cash generated by (used in): Operating activities 50,298 (27,009) Investing activities 17,474 (21,968) Financing activities (21,875) (48,471) Effect of exchange rates on cash, cash equivalents and restricted cash 1,911 (661) Cash, cash equivalents and restricted cash—end of period $ 354,106 $ 252,141 Operating Activities Cash inflows from operating activities are generated primarily through fee-related earnings, distributions of our share of net carried interest, and distribution of earnings from our general partner affiliate interests in our sponsored funds. Our operating activities generated net cash inflows of $50.3 million in 2025 and outflows of $27.0 million in 2024. Cash inflows in 2025 included $34.0 million in distribution of earnings from the secondary sale of equity in our DataBank portfolio company, 46 Table of Contents Investing Activities 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. Our investing activities generated net cash inflows of $17.5 million in 2025 and outflows of $22.0 million in 2024. • In 2025, we had received return of capital of $24.8 million from the secondary sale of equity in our DataBank portfolio company. Otherwise we funded $7.0 million, net of distributions, for our general partner and general partner affiliate commitments in our sponsored funds, while the investing activities of our consolidated liquid funds which hold marketable equity securities resulted in a net cash outflow of $0.7 million. • Net cash outflows in 2024 were driven by $26.5 million of fundings, net of distributions, for our general partner and general partner affiliate commitments in our sponsored funds, partially offset by $5.7 million of net proceeds from investing activities of our consolidated liquid funds which hold marketable equity securities. Financing Activities We incur cash outlays primarily for payments on our corporate debt, and dividends to our preferred stockholders and common stockholders. Financing activities generated net cash outflows in 2025 and 2024. • In 2025, net cash outflows of $21.9 million were driven by common and preferred dividend payments of $16.4 million, and a third party participation interest in net distributions from DBP I. • Net cash outflows of $48.5 million in 2024 represent cash settlement of contingent consideration to Wafra of 17.5 million, $14.0 million of investor capital redeemed in our consolidated liquid funds, net of contributions, and $16.3 million of common and preferred dividend payments. This was partially offset by a $6.1 million syndication of our interest in a consolidated fund, and a share of our commitments in DBP I funded by a third party participation interest. Guarantees and Off-Balance Sheet Arrangements We have no guarantees or off-balance sheet arrangements that we believe are reasonable likely to have a material effect on our financial condition. Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of judgment and that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our critical accounting policies and estimates are integral to understanding and evaluating our reported financial results as they require subjective or complex management judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain and unpredictable. There have been no changes to our critical accounting policies since the filing of our Annual Report on Form 10-K for the year ended December 31, 2024. With respect to all critical estimates, we have established policies and control procedures which seek to ensure that estimates and assumptions are appropriately governed and applied consistently from period to period. We believe that all of the decisions and assessments applied were reasonable at the time made, based upon information available to us at that time. Due to the inherently judgmental nature of the various projections and assumptions used, and unpredictability of economic and market conditions, actual results may differ from estimates, and changes in estimates and assumptions could have a material effect on our financial statements in the future. Recent Accounting Updates The effects of accounting standards adopted in 2025 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 1 of this Quarterly Report.