Greetings and welcome to today's DigitalBridge Group, Incorporated Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Severin White, Managing Director and Head of Public Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to DigitalBridge's third quarter 2021 earnings conference call. Speaking on the call today from the company is Marc Ganzi, our President and CEO; and Jacky Wu, our CFO. I will quickly cover the Safe Harbor and then we can get started. Some of the statements that we make today regarding our business operations and financial performance, including the effect of the COVID-19 pandemic on those areas may be considered forward-looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed on this call is as of today, November 4, 2021 and DigitalBridge does not intend and undertakes no duty to update it for future events or circumstances. For more information, please refer to the Risk Factors discussed in our most recent Form 10-K filed with the SEC and in our Form 10-Q for the quarter ended September 30, 2021. Great. So we are going to cover our standard agenda today; Marc will start with our 3Q highlights, Jacky will provide an overview of our quarterly financial results and then Marc will do a quick deep dive on one of our innovative businesses executing the digital play section and will end with some key takeaways followed by Q&A. We’ve had a great quarter and we have been busy. So let’s get started. With that, I will turn the call over to Marc Ganzi, our President and CEO. Marc?

Thanks, Severin. I'd like to start by thanking everyone for their interest and attention today, especially new investors that are just learning about DigitalBridge for the first time. So where are we? On our finish the mission mantra for 2021. As many of you know, we announced the sale of our Wellness Business earlier this quarter, taking us effectively to 100% rotated on digital infrastructure on a pro forma basis. I want to put that into some perspective because the team will have really achieved something special this year when that deal closes in Q1 of 2022. As you can see on the Slide, that's the successful rotation of over 73 billion in assets under management. We've harvested 33 billion of legacy assets and building over 40 billion of AUM in digital infrastructure a sector, an asset class, where the DigitalBridge team has a long history of investing successfully over the last 25 years. Not only investing but building, managing and owning and operating digital infrastructure assets. We're now 100% aligned with the powerful secular tailwinds driving investment and connectivity on a global basis. The transition as we call it is not just about asset rotation. I'm here to tell you it's been a complete transformation of the company. Our corporate capitalization has gone from being over-levered with over 7 billion in debt to just over 1 billion in the last year alone. And just as important to this, our corporate governance has also been completely overhauled. With new senior leadership in place, and a more digital, more focused and more diverse board, helping us navigate the DigitalBridge roadmap and ecosystem. I want to take this opportunity to thank the entire team for really amazing execution, especially when you consider it's happened in less than three years. We're a new DigitalBridge and we're completely aligned with the future where real estate is going. Next slide please. Speaking of our strategic roadmap, the next slide gives you some context for where we are along that progression. As we contemplate the transition stage one ahead of schedule by over a year and with nearly 2 billion of digital purchasing power, we're in the position we promised investors we wanted to be. Finally being able to play offense off of our front foot and invest in the best asset classes that we see globally. This is really an exciting inflection point for us. We're set to enter the second stage of our business transformation, the acceleration, where our two high-growth business lines really achieve scale. There’s a number of exciting thematics begin to play out in our sector: 5G, IoT, AI, Edge Computing. These are the emerging demand drivers we are aligned with in our investment thesis. The place we believe investors want to be today. First, our Digital IM business is raising record amounts of capital. And we're set to broaden and deepen our investment offerings next year and beyond. That'll drive new opportunity, and of course in turn FEEUM, which in turn drives our revenues and earnings. Next, our digital operating division is set to lift off fueled by the deployment of our balance sheet capital into high-quality stabilized digital infrastructure assets. That means supporting our existing platforms, DataBank advantage, or building exposure to new mature developed market assets. This is going to be a significant growth driver for us, as you can see here, and it underpins earnings growth for the next two years. The bottom line in the acceleration stage that we're entering is where this opportunity becomes very compelling. I couldn't be more excited.

Thank you, Marc, and good morning, everyone. This quarter, we expanded our supplemental financial package to provide two years of trailing quarterly details about the company, enhancing disclosure and transparency regarding our operations. We filed the new report this morning, available in the shareholder section of our website. Starting with our third quarter results on Page 13, the company experienced rapid growth in its core digital segments, driven by strong capital formation momentum in digital investment management and by new acquisitions and organic growth in digital operations. For the third quarter, total consolidated revenues were $252 million, more than double the same period last year. Total company adjusted EBITDA was $18 million on a pro forma basis. Core FFO was $2 million, and GAAP net income attributable to common stockholders was $41 million, or $0.08 per share. Each of these earnings metrics has shown continued improvement from prior periods, driven by accelerated growth in digital segments and lower legacy corporate expenses following the divestiture of legacy non-digital assets. Nearly all remaining legacy non-digital assets are now classified as discontinued operations and no longer contributing to adjusted EBITDA and core FFO. Our existing liquidity and anticipated legacy monetization represent over $1.5 billion of untapped near-term earnings power that will enhance adjusted EBITDA and core FFO as capital is redeployed soon. Starting in the third quarter, we introduced adjusted funds from operations, core AFFO, as a key metric, which reflects necessary recurring capital expenditures to maintain the performance of our operating properties in line with other digital peers. The third-quarter AFFO was $1 million, net of $1 million of recurring CapEx, which was temporarily elevated from our long-term stabilized expectations of 3% of recurring revenues due to DataBank's focus on integrating assets into its footprint. We will continue to report AFFO as a key metric in future quarters.

Yes, that's right, Jacky. And, hey, Colby, good morning. On the stabilize side, yes, we are evaluating other stabilized data centers as we speak, not just inside the Vantage family and the DataBank family, but we do see other opportunities. And we are unconstrained in our ability to look at those opportunities, price them effectively. And then when we bring them onto the balance sheet, we have two fantastic management companies DataBank on the edge side, and then on the hyperscale side, we've got obviously Vantage. So two platforms that can handle third-party management and scale. And we're seeing a lot of opportunity in this quarter. Thanks. Yes, good morning, Jade. We'll start with supply chain. Depending on the vertical it's had an impact. I would say, remember Jade, we invested in sort of four critical swim lanes. I would say in the fiber space, we have not been constrained. We had purchased quite a bit of capacity pre-pandemic. And so our supply chain related to our fiber businesses has not been materially impacted. On the tower space, we've had some components related to new tower construction get delayed, particularly in places like Latin America, but in the U.S. and in Asia, we haven't seen any choke points related to our new builds, in fact, our budgets for new builds in the U.S. and Asia, we will hit those goals. And probably it's hard to say how the fourth quarter will fall in Brazil, Mexico, Colombia, Peru, and Chile, each of those countries has different issues. But we do see a little more supply chain choking in that part of the world, Small Cells, which we’re a dominant player in the U.K. and the US. No material delays, I think permitting has been more of the delays. What we've heard in the third quarter, particularly in cities like London, places like Boston, New York City, San Francisco, where building permit offices are just inundated. Canada with all kinds of construction, home construction, commercial construction. So we've had to work through some of those permitting issues, which are, to your point, really labor intensive. But as it relates to the delivery of the poles and the nodes, we haven't seen any material constraints. In the data center side, we have seen anecdotal evidence of supply chain issues, Vantage, Europe had some supply chain issues over the summer, a lot of that stuff has been worked out and we're delivering. I think here in the U.S. in DataBank and Vantage North America, similar issues, it's always Jade, just small components that you don't see coming, that literally can slow down the actual delivery of a data haul. So from a construction perspective, we're not seeing any choke points in the physical construction. But when you get into the actual data center and people are lining up servers and connecting, that's where we're seeing some of the supply chain issues materializing today. Labor, look, I think, all of our businesses have been busy through the pandemic. We continue to keep a rolls, fully paid. We didn't lay anybody off. In fact, we actually hired during the pandemic. We've been great to our vendors for 27 years, having good relationships with vendors, where you pay them on time and early, allows you to get to the front of line. So for example, in the case of Vertical Bridge, Alex and his team have an outstanding group of vendors that have been building towers for us, some of them Jade over 20 years. And having those relationships and making sure that you've always been a habitual early payer puts you to the frontline. So we've actually had no issues related to labor, into delivery of our infrastructure here in this hemisphere. I think in parts of Latin America and Asia and Europe, there are anecdotal evidences of trying to get people back to work, which in some instances has been hard from an administrative perspective. But during the pandemic, our field operations never shut down in all parts of the world, because everybody understood their job, and really understood the importance of what we were doing. So happy to say payrolls have remained in the right place and we continue to add people to those payrolls. So we feel like we've done a good job through the pandemic.

Sure, Jade. So definitely, we can trade out our preferred equity over time, into much lower cost of capital, specifically around our whole business securitization structure that we closed on in July of this year. And that will meaningfully bring down our cost of capital. So that's our expectation. And our view is that by 2023, upon realization of the numbers and targets that we expect to hit for both our digital investment management and our digital operating segments, we would get to more of a run-rate leverage ratio of 7x or lower.

Well, I think look consistent with what Jacky said about our AFFO guidance for 2022. We'll give that guidance in our fourth quarter earnings, which will be early in Q1 of next year. I'll restate what I've consistently said all year, which is we are turning the dividend back on next year. And the level at which we will do that gates on a couple of different things that happened in the fourth quarter. But we plan to turn on a de minimis dividend. We've always been very clear with everyone that we see enormous opportunity to redeploy that capital and things that we believe are accretive and speak to long-term shareholder growth. And ultimately delivering the kind of earnings, EBITDA and revenue growth that we're delivering right now requires, as much capital as we can keep on the balance sheet. So there's a balance here, as you'd expect. We believe that we have the potential to be one of the fastest-growing digital REITs in the world, in terms of revenue growth, EBITDA growth, and AFFO growth. And to do that we want to maintain maximum flexibility. But we are committed to turning the dividend back on.

Marc maybe you could provide a little more color on the credit strategy you talked about you expect to expand next year, perhaps, parts of the credit capital structure, you'd look at anything on kind of targeted returns? And then over time, how ballpark and where do you think that could realistically scale?

Thank you, Eric. Digital infrastructure is currently valued at around $13 trillion. Assuming a conservative 50% loan-to-value ratio, this suggests there is approximately $6.5 trillion in digital infrastructure credit available, which represents a substantial market. However, not all of this market aligns with our focus. Historically, banks have performed strongly in the first lien space, where pricing typically ranges from base rates plus 200 to 400. This is not where our product operates, as ours is more of an opportunistic credit offering. We see opportunities primarily in a couple of areas. First, in second lien loans, we have already originated several with promising structures, yielding between 7% and 8%. Second, we are identifying moments when we can purchase mispriced credits in the secondary market, which we believe can deliver returns in the 9% to 12% range. We have successfully completed some secondary trades already. Lastly, we see potential in providing flexible capital options, such as convertible preferred equity, especially when companies struggle to raise funds. We are a dependable source of capital with a strong understanding of the sector, having developed relationships with many CEOs, allowing us to act swiftly. Speed is crucial at this time, and overall, we do observe a tightening of credit. Sami, thank you, you should travel with us. I need a varsity cheerleading squad. But seriously, we've done a lot of really big transactions. I mean, Zayo was a fantastic case study in our ability to move quickly, discreetly, and most importantly, to get it financed and get it closed on time. And that deal was done in 32 days, we did the Vertical Bridge transaction, multiples of billions of dollars there, that transaction was done quickly and discreetly, largest private tower transaction in U.S. history in terms of its valuation. So we're no stranger to big deals. Now, when you reference, doing big deals where there's a potential opportunity to take a public story and bring it back to the private market side. Certainly, that's something we're adept at doing. And it's certainly something we've contemplated doing across a variety of different logos, not just limited to perhaps one different logo, I think just seven in the last two weeks, we've been referenced in two public stories where our name has been around it. Yes, thanks, Marc and totally agree that it's definitely a champagne problem to have. So appreciate your comments there. I'll turn it over. Thank you. Thank you all for your attention. Thanks for your time. Thanks for your support. This has really been a tremendous quarter. And I really want to thank my partners Jacky and Severin, who've worked tirelessly to get us to this place. We've had a lot of chances to reflect this week, on our partnership with you, our shareholders. And I want to end by saying, when I took the job with Jacky, when we entered this last year, the first thing we said we would do is be transparent with you. And we would re-earn your trust. And we know that some of the trust had been fractured with the previous story and the previous leadership team. And I'd like to say that I believe we've earned that trust now, everything that we've told you we would do, we've done. And that's really important in this day and age being really impeccable with your word is something that Jacky and Severin and I really believe in a lot. And as we chart the path going forward and move into this acceleration phase, you can expect the same thing with us. Walking down the road with you hand in hand as partners will continue to transform the business. We're going to continue to deliver on our performance. And we're going to work incredibly hard for you. It's been a tremendous, tremendous year. And we still actually have, as Jacky reminds me, there's still almost another 60 days left in the year for us to continue to do great things. And that's what we're doing every day here. So thank you for your trust. We really appreciate the dialogue with all of our shareholders. And we look forward to getting together with you in the coming months and continue to share our accelerated version of what the future of digital infrastructure looks like. Thanks, everybody. Have a great weekend. And we'll see you soon.

Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. Have a great day.