DigitalBridge Group Inc (DBRG) 2020 Q4 法說會逐字稿

Greetings, and welcome to Colony Capital, Inc. Fourth Quarter and Full Year 2020 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Severin White, Managing Director of Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to Colony Capital's Fourth Quarter 2020 Earnings Conference Call. Speaking on the call today from the company is Marc Ganzi, our President and Chief Executive Officer; and Jacky Wu, Our Chief Financial Officer.

Before I turn the call over to them, I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business and operations, financial performance include 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, February 25, 2021, and Colony Capital does not intend and undertakes no duty to update 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 in connection with the quarter ended December 31, 2020. With that, I'll turn it over to Marc Ganzi, our President and CEO. Marc?

Thanks, Severin. First of all, I'd like to start by thanking everyone for their interest and attention today. As many of you know, we're in-flight on a profound transformation from a diversified REIT, operating across many real estate verticals to a very focused digital infrastructure REIT.

Today, Jacky and I'd like to cover 4 main topics.

First, I'd like to walk you through some of the terrific progress we made in 2020 towards our digital transformation. Jacky will cover last year's financial results, and lay out our 2021 digital guidance. Then I'll finish up with an outlook around what we're looking forward to in 2021. And lastly, the investment case around Colony.

First off, one of my favorite and simple slides that really crystallizes what we're focused on here, along with the mantra that my investors have responded well to, which is simply promises made, promises kept. This is really seminal to the Colony 2.0 story. We're about setting goals and meeting and beating them consistently. We've made a lot of progress in this respect in 2020 across all 4 of these pillars. And I'll walk you through each of these briefly.

First and foremost, it was really important work what we did last summer. Building liquidity and stabilizing Colony in the midst of the pandemic was absolutely central to our investment thesis. We undertook 4 key initiatives that ultimately created almost $2 billion of liquidity to manage through this unprecedented period. All of them had a cost, but ultimately, they put us in a position to win into 2021 and beyond.

Let me describe some of those silver linings and achievements. First, we amended our revolver. We also built renewed credibility with our lenders. I bring deep relationships from the digital sector, and those were critical to shifting that dynamic. Our new exchangeable notes paid down our 2021 maturities, but this process also very importantly expanded our shareholder base. Many of these convert investors are here to stay and have initiated positions in our common stock.

As we expected, our strategic investment from Wafra is already expanding beyond its initial scope. As they have supported the growth of our investment offerings, we're already north of $500 million invested, up from $400 million at the start, and we only see this relationship growing in the coming years.

Finally, legacy monetizations were at the high end of our guide, almost $700 million, at prices in line with revised carrying values that we set up for you last summer. All in all, this was a tremendous year in terms of building our liquidity and setting up our foundation.

Before we jump to the next initiative, I want to briefly revisit a slide that we shared with you last summer. At that time, we suggested that the work we were doing to repair the top of the stack was necessary before we could build confidence in our common stock. Our converts and preferreds we're working at the time, but the stock was still well below $2. Fast forward to today, our debt has continued to strengthen, and notably, our stock has started to respond, trading north of $5 recently. Our thesis at that time was, if we fix the debt, the common in turn would respond, and we were correct.

The next pillar of our transformation centers around harvesting value from our legacy assets to fund the acquisition of digital businesses. The other important piece here is simplification. As we sell businesses, complexity diminishes from Colony. Our overhead steps down and our path becomes clear to the big steps forward we took last year with the sale of our hospitality business, which was significantly impacted by COVID and the progress we made selling assets from our other equity and debt or, as we like to call it, OE&D, portfolio.

In the case of hospitality, the big deal here is reduce complexity, of course, lowering our debt stack and our overall leverage for the organization, down 44% once we finalize the transfers later this quarter or early next quarter. In the case of OE&D, it's about unlocking almost $700 million to reinvest in digital. We now have less than 50 investments in our OE&D segment, with less than $1 billion left to harvest.

Turning page to the digital side of the business. This is where we really get excited. One of the reasons for that excitement is all of the progress we're making, buying and increasingly building great digital companies and logos. We raised and deployed $22 billion into digital assets last year between our Investment Management platform and our balance sheet. Zayo was a signature transaction for us. We closed it early in the year, and we've been busy executing our Digital Colony value-add playbook for almost a year now.

On the balance sheet, we added a terrific stabilized asset in Vantage SDC, a portfolio of the highest-quality hyperscale data centers in North America. We also transformed DataBank, supporting its acquisition of zColo, which tripled the number of data centers they manage, all supporting Edge compute workloads. These 2 investments took our Digital Balance Sheet to up to over $550 million, and we raised over $1.5 billion alongside of those investments, which generate fee and carry, which enhances, of course, our economics.

That's the fuel for the Digital Operating segment of our business, the ability to take our balance sheet and bring along third-party capital side-by-side with us that not only enhances returns but most importantly generates predictable earnings.

The last pillar of our digital transformation centers around growing our Digital Investment Management business. We made incredible progress in 2020. We promised 15% growth, and we delivered that by the middle of the year. And by Q3, we had doubled that to 30%. With the first close of Digital Colony Partners 2, we took FEEUM growth to around 90% for the year. This was incredible. I want to give a huge shout out to our private capital markets team, just an absolute amazing effort in raising this capital. Now we get to do it again.

I want to talk a little bit about DCP II in more detail. First and foremost, the Digital Colony Partners II funds first close was almost 2x the size of our first close in DCP I. In fact, the first close of DCP II was actually larger than all of DCP I. We have a target of $6 billion, and ideally, we can get that done this year. Capital formation continues to be a central part of our business thesis as we continue to pivot and transform Colony. And with that, I'll turn it over to my partner, Jacky Wu, who'll walk us through our 2020 financial performance and our 2021 outlook. Jacky?

Thank you, Marc, and good morning, everyone. As a reminder, in addition to the release of our fourth quarter earnings, we filed a supplemental financial report this morning, which is available within the Shareholders section of our website.

Starting with our fourth quarter results on Page 14, the company has continued to make progress in its digital transformation. Digital AUM increased to 58% of total AUM at the end of the fourth quarter, almost doubling since the end of 2019.

For the fourth quarter, reported total revenues were $339 million, which represents a 7% increase from third quarter revenues of $317 million. GAAP net loss attributable to common stockholders was $141 million or $0.30 per share. The full year GAAP net loss of $2.8 billion was primarily due to our recognition of an over $2 billion impairment charge on our legacy assets in the second quarter.

Total company core funds from operations, excluding gains and losses, was $18 million in the fourth quarter, reflecting the results of continuing operations. The continued core FFO improvement and rebound from the impact of COVID pandemic was driven by the execution of our corporate strategy, including strong performance from the digital segments and our continued focus on reducing corporate G&A expenses.

During the fourth quarter, we returned net equity proceeds of $311 million from legacy asset monetization. This included $125 million from a repayment of Cortland multifamily preferred equity position, $85 million from our remaining bulk industrial assets and $50 million from an Origination DrillCo joint venture. These divestitures highlight our ability to not just monetize strong legacy asset portfolios but our ability to also address our more challenged assets, as demonstrated by our sale of Origination DrillCo, which was a distressed energy investment.

And notably, we received net proceeds that approximated our carrying values, while monetizing assets earlier than we had planned. For the full year 2020, we received net equity proceeds of nearly $700 million from legacy asset monetization, achieving the high end of our $600 million to $700 million guidance that we had outlined last quarter.

Moving to the next page. Consolidated revenues -- digital revenues increased to $152 million, a 28% increase from last quarter, driven by the company's acquisition of zColo in December 2020, the acquisition of Vantage Stabilized Data Centers in July of 2020 and new management fees from the successful first closing of DCP II.

Looking at the right side of the page, consolidated digital fee-related earnings and adjusted EBITDA increased to $71 million during the fourth quarter, which is a 30% increase from last quarter. Fourth quarter FRE was $10 million, excluding a $6 million onetime outperformance incentive for the successful DCP II capital raise. The DCP II first close of $4.2 billion has already exceeded the DCP I total fund size and is currently the largest dedicated digital infrastructure fund in the sector.

In addition, adjusting for a full quarter impact of fees generated from the first close, FRE would have been $16 million and the FRE margin would have been 52%. We will start to see the full impact of the DCP II first close next quarter.

Turning to Page 16. We made significant progress in 2020 towards our digital transformation. Digital AUM increased $16 billion during 2020, representing an approximate 115% increase, with digital AUM increasing from 33% of total AUM at the beginning of the year to 58% of total AUM.

Pro forma for our anticipated hospitality sale, digital AUM would have been over 60%. In fact, since the inception of Digital Colony, Colony Capital has rotated approximately $50 billion in AUM, increasing digital to $30 billion in AUM, while transitioning over $20 billion of legacy assets. Digital fee-earning equity under management, or FEEUM, has increased over $6 billion year-to-date, representing an approximately 90% increase, with digital FEEUM increasing from 43% to 64% of total FEEUM. As Marc outlined earlier, this increase was driven by a strong DCP II first closing and co-investment capital raised for Zayo, zColo and multiple Vantage Data Center platforms.

Turning to Page 17. As we previously discussed, the amendment of our revolver facility, elimination of our original 2021 convertible notes maturity and our partnership with Wafra has eliminated all liquidity risks and allowed us to accelerate our digital transformation and deploy dry powder towards digital acquisitions.

Our current financial position is very strong. And we have eliminated all near-term debt -- corporate debt maturities. In addition, we ended 2020 with liquidity of $735 million, which was at the high end of our $650 million to $750 million guidance disclosed last quarter. For 2021, we expect the continued monetization of our legacy assets in the range of $400 million to $600 million or greater. And as a result, we would anticipate accumulating $1.1 billion to $1.3 billion of gross liquidity.

This significant liquidity position would fuel further acquisitions towards our digital transformation and allow us to further delever our balance sheet or return capital to shareholders. We're very excited for 2021, as our fundraising and M&A pipeline continues to be robust. And this liquidity will help us execute on this pipeline and accelerate our digital growth.

On Page 18, we provide an update on the corporate cost savings plan announced in the first quarter. Since the initiation of the plan, the company has outperformed our original $40 million cost savings on a run rate basis through various initiatives, including the reduction of 20% of the company's non-digital workforce and a 21% reduction in the company's office footprint existing at the beginning of the year. We continue to decrease our office footprint as we expect the future of work and office in a post-COVID world to include a hybrid plan that allows employees the flexibility to work remotely.

As Marc will mention later, we are proud not just being a premier investor in digital infrastructure, but we embody it with being open and flexible with remote work and embracing ESG initiatives. The G&A savings related to the legacy non-digital business was partially offset by additional investments into our digital platform in order to support future and sustained growth for the near and long term. We continue to expect total company cash G&A of $100 million to $120 million after our digital transformation is complete.

Turning to Page 19. We have seen continued growth in Investment Management and Operating segment. Our annualized digital fee revenues increased from $76 million to $125 million, and digital FRE has increased from $40 million to $66 million, accounting for full year fees from the $4.2 billion first closing of DCP II. This increase was driven by the significant growth in digital FEEUM that I had previously outlined. The strong growth in Digital Operating segment revenues and earnings are the result of our continued rotation of the company's balance sheet with Vantage Stabilized Data Centers in July 2020 and zColo in December 2020.

Looking ahead, the company is providing 2021 guidance for the key drivers of our digital transformation. We are targeting digital management fees revenues of $140 million to $150 million in 2021 and digital fee-related earnings of $80 million to $85 million. These are driven by our anticipated $3.5 billion to $4.0 billion of additional capital raised throughout 2021, including additional fundraising to DCP II and its final closing as well as the expansion of other products and scope of Colony's investment offerings.

For Digital Operating, we are targeting $125 million to $135 million of revenue and $53 million to $58 million of EBITDA in 2021, driven by organic growth, bolt-on acquisitions and our existing investments. It is important to note that this guidance excludes new balance sheet investments that will be partially funded by an anticipated $400 million to $600 million of monetizations during 2021.

In addition to the 2021 guidance, we are reiterating our 2023 digital growth targets that we originally laid out with as part of our digital road map in the second quarter of 2020. We continue to target digital fee revenues of $150 million to $200 million by 2023 and digital fee-related earnings of $80 million to $110 million. This 2023 target is anticipated to be achieved through final closings of DCP II and expansion of other products and scope of Colony's investment offerings.

In addition, we continue to expect to achieve $175 million to $225 million of Digital Operating EBITDA. We have a strong pipeline of potential acquisitions to rotate proceeds received from our monetization. Our acquisition of Vantage Stabilized Data Centers as well as our recently completed acquisition of zColo are just 2 examples of our commitment to bring high-quality digital assets onto the company's balance sheet and to achieve our 2023 targets.

Turning to Page 21, we have summarized our 2021 guidance again just for ease of reference. And with that, I'd like to turn it back to Marc, where he will lay out further details of our 2021 outlook and initiatives. Marc?

Thanks, Jacky. Now I'd like to turn our attention to 2021 and some of the key themes that we're focused on in terms of our business plan execution. First off, legacy monetizations. Our digital transformation continues to accelerate. Legacy monetizations and growing digital FEEUM take Colony to almost 67% rotated. Our hotel sales will close at the end of this quarter or the beginning of the second quarter, our 2021 OE&D monetization schedule and our 2021 new digital FEEUM guidance, which Jacky just walked you through. This takes us up to 67% rotated from an AUM perspective. This, of course, is before we harvest our Wellness Infrastructure portfolio and our investment in CLNC, which represents potential another 20% of rotated AUM between now and the end of the year.

Moving on to Page 24. I want to highlight really 4 key areas of opportunity that we see across the digital ecosystem in 2021. These are really the themes that our investment team is pursuing and where you're going to see us put capital to work in the coming year. First and foremost, it's hard to not pick up a paper or to read something on the Internet about 5G. We think 5G is a profound and transformative moment for mobile networks across the globe.

To that end, $1.1 trillion in new CapEx will be spent between now and 2025 deploying these next-generation networks. There's a lot to be excited in 5G. Many of our portfolio companies are already having exciting discussions. Some of them have already signed new master lease agreements. And we're beginning to deploy 5G technology around the globe.

Second is IoT. Internet of Things and Internet of Things networks and connections are growing by leaps and bounds. Last year, the planet ended with 20 billion IoT connections. Over the next 4 years, this goes to 80 billion total connections. And by 9 years from now in 2030, we see this number growing to 500 billion connections. This is really important. We need to begin to think about this planet no longer as consumer-to-consumer connections or B2C connection, you need to really start thinking in the parameters of D2D, which is really device-to-device. And this is a massive opportunity for us, and it's obviously impacting all of our existing portfolio companies, and it will certainly impact our new investments as we go forward.

The third opportunity we see is a theme that carries over from last year, which is investing in cloud. The cloud players are our key customers and our web scale players are core to our growth going forward. Cloud CapEx spending will move to $88 billion globally in 2021. This is a 14% increase in spend with some of our best partners and best customers on a global basis. We're really excited to keep growing our hyperscale businesses around the globe and supporting our key customers.

Last but not least, and probably the one topic that's most invoked today is Edge and Edge computing. As I joke around here, probably the most overused term in the analyst community today, we're working hard on the Edge, and it impacts a lot of our businesses. 1.6 million servers will be placed on the Edge by 2028. This will represent 10% of all cloud workloads. There's a lot of growth happening on the Edge. As applications need to move closer to consumers, closer to devices and closer to enterprises, so must the infrastructure follow. This will be a consistent theme that we will talk about with you throughout 2021. We're really excited about the activities that we're engaged right now in Edge computing.

Moving on to Page 25. So to that end, we're incredibly active. And we continue to be well positioned to invest in high-quality digital businesses not only this year but beyond. As I mentioned before, secular trends like cloud computing, 5G, Edge computing, artificial intelligence, all of these secular trends are being accelerated by the COVID-19 pandemic and are driving growth higher, and our business has never been busier.

We closed 3 new deals in Q4 2020. We have 3 new deals in exclusivity right now that we anticipate entering into definitive documentation over the next 90 days. And we have a forward pipeline of over 40 new opportunities that we're pursuing. And look, this is not new for us. We deployed $22 billion of capital in 2020, putting over $5 billion of FEEUM to work. In 2021, we expect to grow FEEUM by at least another $3.5 billion to $4 billion. 40 pipeline opportunities in growing, backing great companies, great management teams, and investors want to partner with the leading company in digital infrastructure. The setup for us has never been better at Colony Capital.

Moving on to Page 26. This is really the key to our franchise in terms of our Investment Management platform. And the key here is we have long-term contract fee streams that drive stable and predictable earnings that compound over time. Starting back in 2019 with our base of our Digital Bridge Holdings portfolio, 6 separately capitalized companies formed the original base for our growth. Then closing the first fund in 2019, Digital Colony Partners I, which was our flagship equity fund, now almost fully committed.

Co-investment. Co-investment is such an important part of our process and it really helps our investors dig deeper into opportunities that they like. And most importantly, it boosts our firepower to chase larger transactions and also, it's an opportunity to grow fee and our promoted capital base.

The fourth stack here is DCP 2. DCP 2 is out deploying capital as we speak, 3 investments closed already in the fund, 3 investments already under exclusivity, and we're targeting $6 billion of capital formation, and we've already closed on 4.2. DCP 2 is off to a fantastic start.

And then last but not least, our last category is emerging. Our liquid securities platform today manages over $400 million of FEEUM, generating alpha across 2 strategies. And last but not least, our credit platform. We now have in-house one of the great credit teams pursuing digital investments that candidly our equity funds cannot pursue. The ability to look at debt in terms of second lien, first lien, mezzanine loans, subordinated debt, preferred securities, all of these are part of our credit strategy, and we're looking forward to sharing with you more information about our credit strategy as the year progresses.

This is the leading digital investment management franchise in the planet today. And we're going to continue to grow it as it's seminal to our growth, and most importantly, allows us to continue to invest in this asset class.

So how do we bring this all together? The way it comes together for Colony 2.0 is really about, first and foremost, creating shareholder value. Our new management team has been building the great next digital infrastructure platform. We're creating value for you, our shareholders, as we've transformed a complicated and diversified REIT across many real estate verticals to a new focused digital REIT.

And most importantly, we're creating now predictable earnings. As a complex organization is streamlined, a high-growth digital business has emerged with predictable earnings and attractive returns on invested capital. And last but not least, our differentiated strategy. Our transition, most importantly, is aligned with the key secular tailwinds that I talked about earlier, supported by the broadest and deepest management team in the sector and based on a differentiated strategy around next-generation networks, built-to-serve rapid growth in the themes that we just discussed, 5G, cloud, IoT and Edge computing demand.

I'm really excited to be hosting our first Investor Day. It will be virtual, unfortunately, in May, but it will happen this year. And the key here is we plan to share our vision with you and continue this dialogue. How do we leverage these key themes around Edge, 5G and most importantly, convergence? And how do we implement that convergence strategy to work with our customers? Our customers are the most important thing in our business model today, and it's where we truly differentiate ourselves.

27 years of operational experience, we have a team that has the breadth and the depth to deliver for customers. And that's really the key at the end of the day is a 3-decade track record of being able to deliver for customers.

And last but not least, sharing our Digital Colony value-add playbook, the way that we create value in all of our investments and the details on how we do that. We're looking forward to sharing that with all of you. So we hope you'll participate in that. It's an open invitation, and we're very much looking forward to it.

So I'd like to conclude today with a topic that I've often challenged investors to, which is why would you want to own Colony today. Moving on to Page 29. What I'd offer to you is, first of all, we're the fastest-growing digital REIT in the sector today. Our revenue growth in 2020 and our revenue growth in 2021 from an organic perspective is industry leading. Second, our vision for converged networks and converged infrastructure really allows you, the investor, to participate in the entire ecosystem. You don't have to choose.

And look, there's a lot of great logos that are publicly traded and are my peers, and I have deep respect for them, and they're very well-run companies. The world is changing. And as networks converge, having a converged solutions provider, we believe, is a better mousetrap. Third, leadership and experience matter. And we believe we have the deepest bench in the industry. And this does give us an advantage. It gives us an advantage to invest. It gives us an advantage to find proprietary deals. It gives us the edge to finance the asset a little bit tighter, and it gives us the edge to operate our businesses just a little bit better. And at the end of the day, this creates returns, returns for you and a track record, a track record that's been going for 27 years.

Last but not least, and this is really important to me on a personal basis. Some of you have heard this from me when you've met with me one-on-one, myself and the entire management team remain very focused on ESG. And we want to walk you through our best-in-class approach and how we're delivering that value for not only our employees, our customers, but you, our investors, and how this impacts the way we operate our businesses.

So moving on to Page 30. Today, where are we? We are a global digital REIT, and we are focused on converged networks. We believe the differentiation that Colony offers today is a series of solutions that are focused on next-generation mobile and internet connectivity solutions through this experience with customers. Our customers don't just buy one thing from us today. What we're finding increasingly is that our customers want to buy fiber from us, they want to buy Edge compute, they want to buy infrastructure on our towers, they want to purchase a small cell, and some of these customers are doing it in multiple chances or what I would say, multiple at bats.

And so this is really important, just being able sell one of those asset classes certainly is interesting, and investors will make money in it. But as we think about this notion of where 5G networks are going, and ultimately, where they need to perform from a speed and a latency perspective and most importantly, from a reliability perspective, understanding convergence of these networks and understanding how to deliver for customers across multiple swim lanes in digital infrastructure is going to be a critical success factor. And one, again, this is not a knock on the traditional digital infrastructure ecosystem. We're the great companies that we call our peers and that we compete against. What we offer to you today is the world is changing. The landscape is changing.

So on Page 31, just a little taste of what we've built so far. Between the balance sheet and investment management, we've assembled a diverse digital ecosystem where we've invested over $30 billion of AUM today across 19 distinct portfolio companies. This represents over 360,000 cell sites, 130,000 fiber route miles, well over 38,000 small cells and over 100 data centers globally.

And as you can see, we've laid this out for you. We've laid out the time of the investment, the vertical that we compete in and ultimately where the capital was sourced from. This is truly the Digital Colony ecosystem.

Next up on Page 32, as I mentioned earlier, people do matter. And people that have been around me for the 3 decades that we've been working together know a simple phrase that I say around here, which is people create the alpha, not the assets. We absolutely have the best team in the industry. Our Digital Colony investment team is 93 professionals globally, operating between Boca Raton, Los Angeles, New York, London and most recently, Singapore. And then down below, we have a team of leaders that are second to none. This is really our operating CEOs and our in-house, what we call, entrepreneurs and residents or our management partners. And this is the operating team that helps us form our views and our ideas and gives us really unique perspective and insights into our customers. So it's a unique model for us.

Our team is a combination of, obviously, very experienced and skilled investment managers and investment professionals, but also our bench is very deep in terms of operating CEOs that have had multiple decades of experience in negotiating leases, attending zoning hearings, building new infrastructure, leasing new infrastructure, managing that infrastructure and most importantly, managing it to Five9 standards and to an acceptable reliability standard that our customers most importantly rely on, on a global basis. We would be nowhere without our team. And we do believe we have the deepest digital bench in the industry.

So lastly, I want to share a little bit with you my view of the future. And that future involves ESG. And today, we're implementing ESG not only here at Colony on a corporate basis, but we're implementing this down below at our portfolio companies as well. So the key initiative from my perspective, and you've heard it from me here as the CEO is what we call Colony Net Zero 2030. This is a bold initiative that we're setting into action that over the next 9 years, we plan to get all of our portfolio companies net zero greenhouse gas emissions within that 9 years.

And look, we're already well down the road. Last year, we announced that Vertical Bridge became the world's first carbon-neutral tower company. DataBank, hosting a Climate Corp.'s fellow from the Environmental Defense Fund in 2021, and in addition to that, today, DataBank has about 58% of their energy that is acquired from green sources. Beanfield, our fiber company in Toronto, which serves Eastern Canada, both Montreal and Toronto, has agreed to go net zero carbon footprint by December '21 -- 2021. And we just announced in 2020 in November, that Scala, which is our hyperscale data center business in Brazil, now uses 100% of its energy consumption from renewal power. And this is just the start.

We're going to bring you more details, more KPIs and more dashboards. This is important. This matters. We have to do it and it starts here. It starts with the leaders here at Colony Capital and will continue down to our portfolio companies, and we're leading from the front on this initiative.

Secondly, DEI. I've long believed in a diverse and talent workforce through mentorship, internships, recruiting and most importantly, providing a quality for careers and compensation and promotions. This is something that started a long time ago for us. It's not something that just started about a year ago. We did form a DEI Committee, and this is a committee of professionals inside of our company that is initiating programs that have a focus and are scalable. There are 4 pillars to our DEI policies and our implementation. First and foremost, we've got to provide mentorship. This starts at the high school level where we're working with high school students to let them believe they have a future and that they can go to college. And the best way to prove to people that the world is an equal place is through education and giving young students a chance to believe they can get to college in neighborhoods where they've been told they can't get to college is absolutely central to the dialogue.

Second, internships. We've recently partnered with 5 Black universities, and we're implementing an internship program, where 50% of our interns in the 2021 class come from those universities, 4 out of 5 have already been hired. Third, not only do we have to provide those internships, but we have to recruit from those universities, attracting the best diverse talent from around the globe to work at Colony Capital. And most importantly, work in our digital business, where we're connecting communities and really building those digital bridges.

Last but not least, we got to create a level playing field. We've got to make it clear that at Colony Capital, everyone has a chance to advance and that there's an equal opportunity for everyone to be promoted and that compensation is also equal for all of our employees, irrespective of race, irrespective of gender. This is so important. These 4 pillars are the central part of our strategy to ensure that we create the level playing field, not only at Colony Capital, but hopefully, we create a level playing field in this country.

Last but not least is results and execution. We've begun defining ESG metrics for all of our portfolio companies. We're collecting, we're analyzing, and most importantly, we're reporting that data. Digital Colony integrates our ESG analysis into our due diligence. We've been doing that since 2013 on potential investments. And then we report key company level and macro ESG risks and opportunities, and then we implement that in our asset management framework and ultimately reporting back out in KPIs and metrics.

Partnerships are critical to this implementation. We partnered with, and we've become a member of several organizations that ensure that the company has a best-in-class industry ESG framework. And down below, you'll see some of these organizations that we have partnered with, the BSR, PREA, the PRI, which stands for Responsible Investment Principles. And then last, our global charity, Télécoms Sans Frontières, which actually goes into communities that have been ravaged by acts of God and disasters or simply just does not have the wherewithal from an economic framework to have digital infrastructure in their community. We go into these communities, we invest our time, we invest our capital. And once again, the common theme is building those digital bridges.

So with that, I think we've shared for you the invitation to partner with us, to invest with us. It's an incredibly exciting year for us. We feel like we've made a lot of progress in this journey with you over the last year. We now get to finish the mission. 2021 is about that. We had all in front of us. We have a great opportunity. We have a great team. We have an incredible investment framework, and we're really excited to continue down this digital road with you.

I want to thank you for your faith and trust in our management team, and we look forward to continuing the dialogue. And most importantly, we look forward to working hard for your capital. Thank you very much. Have a great day.

Operator, that concludes our prepared remarks. Please open the call for questions.

(Operator Instructions) Our first question comes from the line of Randy Binner with B. Riley Securities.

This is Cullen Johnson at B. Riley. I'm on for Randy. I just had a question on the guidance around monetizations for the year. Does that $400 million to $600 million figure encompass potential dispositions and Wellness Infrastructure? Or is that just meant to reflect OE&D?

That does only reflect OE&D. This is Jacky.

Okay. So potentially, that could be even more capital freed up if you were to perhaps monetize something Wellness?

That is correct.

Okay. Great. That's helpful. And then on the guide for digital FRE. I think those numbers are a little higher than the values that we had coming into the quarter. Was that primarily fully reflecting the impact of DCP II? Or are there any major assumption changes driving that?

I would say that principally, it includes only DCP II to the degree that we're successful with new products, which we're continuously innovating on, which -- and Marc will talk -- has talked about, there could be outside there.

Yes. And also some of our legacy companies, for example, like Vantage, continue to actually raise capital. So as these platforms scale and they get bigger, sometimes we go back to the well, and we'll put more capital to work across the 19 portfolio companies. Vantage and Vantage Europe are great examples of that last year, Jacky, in the fourth quarter, we raised a significant amount of new capital supporting those 2 platforms. And of course, that comes in the form of co-investment, which, of course, drives FEEUM.

Okay. Great. And then just my last one. I see digital AUM is up 58% with 4Q results. I think back in the past, you had talked about 90% digital as kind of a target year-end '21. Is that still a reasonable way to think of it?

I think it is. I think it's very much a reasonable way to think about it. I think we're -- with the monetizations in OE&D, the guidance that we've just given you between $400 million to $600 million and some of the paths that we see forward for Wellness Infrastructure, and then, of course, the path forward for CLNC where we think there's a lot of strategic alternatives ahead of us there, obviously, we see a path into the high 80s.

The question is, can we get into the 90s? And that will be a function of whether or not we're successful in deploying new capital in 2021. I think we've telegraphed pretty clearly today, 3 deals have closed in DCP II. We have 3 that are on the runway getting ready to close. So that's great. We're going to deploy a lot of capital out of that second fund.

And keep in mind, that's -- we're just in the first quarter of the year. And by the end of the first quarter, maybe beginning of second quarter, we will have already closed 6 transactions for the year. And at that point, we're talking about being 90 to 120 days into a long year. So remember, this is a push and a pull, correct? The push is, obviously, as we push and put more capital to work, that grows our digital AUM. The pull is, of course, when we sell assets and pull that out of AUM.

So we're showing you a clear road to 65%. We have a potential road that gets us to 85% if we find the correct outcomes for CLNC and for Wellness. And then, of course, if we deploy capital, certainly, I'm not predicting at the same velocity as last year, it was a pretty heroic year last year. But if we can deploy more capital, that 90% threshold that I telegraphed almost 2 years ago at NAREIT in New York City is something that we can get to.

Our next question comes from the line of Colby Synesael with Cowen.

A few, if I may. First off, as it relates to on balance sheet opportunities, I'm curious if you have some thoughts around asset type. You obviously have 2 data centers on the balance sheet now and then also some timing potentially around that. And then secondly, as it relates to CLNC, there's been comments in the past about potentially selling below book value. Any color on how you're thinking about that today and potential timing?

And then lastly, on the health care business, what is the update since last quarter? Are you more confident in the ability to sell that? What do valuations look like, which have they been trending, et cetera?

So 3 questions there that I have to unpack. I always love working with you, Colby. You always give me a lot to think about. Maybe I can start first with Wellness Infrastructure. And I just want to start by saying I really applaud the effort of Rich Welch and his team. This was an incredibly difficult year for that business. And if you take a look at the core FFO that was driven out of that business, particularly in the fourth quarter against the fourth quarter of 2019, Rich actually outperformed.

And I think this is a function of a lot of things, a lot of hard work happened there, which was opportunistic refinancings, selling some noncore assets, building occupancy and skilled nursing in our medical office portfolio. And this is really an interesting business. And now as the elections are behind us, and we begin to vaccinate our seniors, we see recovery in senior care. And of course, our triple-net lease hospitals performed incredibly well in the pandemic.

I continue to be optimistic about Wellness Infrastructure. I continue to also be optimistic about the range of strategic alternatives we have for that business, Colby. We think that this is indeed life sciences infrastructure. We receive a lot of inquiries about this business. It's really difficult, Colby, to assemble a portfolio the size of this scale, almost 400 properties, generating significant cash flow and significant EBITDA.

So like I said, we feel like this business has strengthened. We think we have a great management team, led by Rich and his team. They've done a fantastic job, and we think scarcity in platforms is really hard to find. And as infrastructure investors look for ways to play life sciences, we do think this is a very unique portfolio.

Now we've been very clear to the Street. We don't intend to stay in the Wellness Infrastructure business forever. But I do -- what I would say is the performance has been strong. We have a really unique set of assets. We're going to continue to evaluate the strategic alternatives, particularly here in this quarter and in the next quarter, and we'll continue to give you the Street guidance around them.

Second, CLNC. Once again, another really tough business that had a very tough year, but leadership matters. Mike Mazzei has done an incredible job and the entire team there. I got to also signal out Andy Witt who's done a fantastic job helping Mike, first of all, rebuild credibility in that business. Similar to my strategy here at Colony, when I brought Mike on board, the first thing we both said is we've got to restore liquidity. And we've got to be transparent. And now CLNC has done both of those things, provided transparency, we built liquidity. We've originated a bunch of new loans. They had a great earnings call yesterday, and the outlook for CLNC Looks good.

I think one great thing about Mike Mazzei is he has an enormous track record, and you want to have CEOs that are battle tested, Colby, guys that have been to the war before. Mike was a great CEO at Ladder, navigated through the financial crisis of '08. Like me, we both have been through many financial crisises. So I really like what he's done.

Now mortgage REITs typically, as you know, Colby, don't trade at book value. That's just something that just doesn't really happen. What I would say is since I've become the CEO and I put Mike in charge of the business, we've had a tremendous recovery in the share price. And along that road to recovery, others have noticed. Similar to our life sciences and Wellness Infrastructure business, we think the platform is really unique. We think a platform obviously has scale, and we continue to receive a lot of interest in that platform.

Much like our wellness business, we are evaluating the strategic alternatives of that business inside this quarter. Those alternatives will manifest itself probably in the second quarter, and we'll continue to keep an open mind. And look, we have a lot of options for CLNC. And what I would say is this management team, as you've come to appreciate, is incredibly thoughtful. And we're thinking through all of the alternatives that are available to us.

In the meantime, Mike and his team and Andy and the rest of the team there are executing, and that's what we ask them to do. So we're going to continue to build confidence in the share price. We're going to continue to put good loans out. And I like where we stand today in the mortgage REIT. You got me so excited about 2 legacy businesses. Colby, your first question again, one more time, please, if you don't mind, just about the Digital Balance Sheet, I think.

Yes.

So yes. On the balance sheet, when we -- what we always think about, Colby, on the balance sheet is I like to have assets on our balance sheet that are yield driven that are requalifying and that most important offer the best downside protection. And so as you think about our investment management platform and you think about DCP I and DCP II, those investments are typically very growthy, and in that respect, don't have current cash yield. And most of those are platforms. You know a lot of those platform companies' CEOs really well.

And in our Digital Colony franchise on the Investment Management side, those businesses are built to grow. We're putting capital behind them. We're building new data centers, new fiber routes, new towers. And so they traditionally don't throw off the current cash yield that one would like to see on a balance sheet of a digital REIT. So that really creates the opening. That creates the opportunity. So we took that opportunity.

First, investing in DataBank, which had an absolute stellar year last year. And then we invested in Vantage YieldCo, moving 12 of the best data centers in the U.S. into that YieldCo. And look, as Vantage continues to build great data centers and they become stabilized and they become more into that yield vehicle, we will continue to add great hyperscale data centers to our balance sheet. That is the right type of asset to own on balance sheet.

We continue to believe towers, particularly mature towers that have greater than 1.5 to 2 tenants could exist on our balance sheet. We continue to believe that wholesale fiber, where you have those long contracted cash flows could reside on our balance sheet, and so we continue to look. What I would tell you is we took quite a few at-bats in the fourth quarter and the first quarter, adding some high-quality assets to our digital balance sheet.

But candidly, we got priced out of those opportunities. By example, we really like U.S. domestic hours. We chased a transaction well through Christmas and into January. But ultimately, what we're seeing the other public tower companies pay just doesn't make sense. So we stayed. We could have chased, we could have topped the bid, we could have won the bid. But ultimately, the decision rests with me and you've known me for a long time, Colby, I'm not going to overpay for assets.

And so the good news is we've got a deep pipeline of balance sheet ideas. We're pursuing one of them right now. And we'll just keep coming up with good ideas. I would say on the balance sheet side, we probably are going to have a little more patience, Colby, because that balance sheet capital is so precious. So I think this year, the idea is to add a new asset to the balance sheet. That's what we've promised you. We'll continue to add more hyperscale data centers to the balance sheet this year.

So I'm pretty confident in our ability to deploy capital off the balance sheet to build more of those predictable balance sheet earnings.

Our next question comes from the line of Jade Rahmani with KBW.

Based on the 2021 outlook you gave, I was wondering if there's anything you could say about maybe your core FFO expectations, perhaps on a digital stand-alone basis or excluding losses and gains since you spelled out some of those other targets?

Yes. Well, I would say, Jade, that we're focused more on EBITDA for the digital business, and that's why we've given the guidance associated with that. And if you kind of look at where we're headed towards in terms of our digital-only business, that's more the right metric. Core FFO for digital, really, if you kind of look at the digital infrastructure REITs is very much starting with adjusted EBITDA. And then if you kind of back out maintenance CapEx, which for our businesses on the 2 data center businesses, it's very low. So it's sub-5% to 8% of EBITDA. So that's kind of how you should look at it.

Just in terms of the overall capital structure, are there further rationalizations you're contemplating, perhaps redemption of any of the preferreds or some other refinancing? Did see the securitization that was completed at a very attractive yield, and I know that's something Marc has spoken about. So any comments on the capital structure overall?

Yes. Jade, thank you. It's Marc. So look, I think we feel like the work we did last year was the heavy lift on the balance sheet. And I think now we're in a position to be perhaps more forward-leaning and play offense. So I think we'll take a look at our revolver, and we're seeing a lot of attractive terms to recast that revolver. We honestly haven't needed it because we've done a great job rotating to cash.

I would say the second part of our analysis continues to be around the other portions of our debt stack, particularly the preferreds. We look at that as obviously long-term perpetual capital, but it's expensive. And so as we think about our ability to access the securitization market, we think that's an interesting opportunity for us. And in fact, yesterday, we did access the securitization marketplace.

DataBank had an incredible financing that got done yesterday, a $658 million securitization, Jade, which really puts a permanent capital structure in place for DataBank on a 30-year tenor with a 5-year ARD date. What's great about that is, and it's a great lesson, and perhaps a case study for us thinking about the broader Colony balance sheet is that deal was 9 to 7x oversubscribed in every class. We ultimately were able to refine and tighten pricing for DataBank. And that deal was led by Tom Yanagi who runs our Global Credit Team.

And ultimately, the coupon blended out at about 2.3%.

Now what's great about that is, obviously, we've reduced our borrowing cost by $17 million per year. And so from our perspective, that puts another $87 million of free cash flow back into DataBank, which obviously enhances its earnings, but allows us to reinvest. And we also closed $100 million VFR on top of that -- VFN, variable funding note, that allows us to continue to finance new construction at these incredibly attractive rates.

So we do have a great relationship with the rating agencies. It's been a 20-year -- almost a 20-year relationship that I've had. My partner, Tom Yanagi, and I worked very hard to spend time with the rating agencies. This is the first Edge data center securitization that's been done, and it follows a long track record of many firsts for us. We're the first to do a small cell securitization. We're the first to finance cell towers on a securitization structure in Latin America with our MTP securitization, first to do a hyperscale data center securitization. We've gone on to do 4. We've done multiple cell tower securitization.

So this is a marketplace, Jade, we feel really comfortable with. And we do feel like, Jacky and I feel like we can ultimately transform the Colony balance sheet over the next 24 months. That's kind of our goal. This is something that's on the to-do list for this year, and we'll continue to give you more guidance and more specificity. But obviously, getting DataBank's capital structure in place for the next 30 years was really important, and most importantly, generating that incremental savings and free cash flow for our investors was really important as well. I don't know, Jacky, if you want to add any color to that. Thank you.

That was great, Marc. And with your question on preferred equity, look, we've got over $1.3 billion of other equity and debt values that we're going to continue to monetize over the course of the next year to 2 years. We have over $600 million of carrying value on health care, right, that we previously disclosed and continue to have. So there's significant over $2 billion worth of value in our assets and our legacy assets that we'll monetize over the course of the next couple of years. And we will first look to deploy good digital operating infrastructure, good lead assets onto our balance sheet, as Marc discussed, and we've got a good pipeline on it.

And to the degree that we've got excess cash, which we should anticipate to have significant amounts of, we will address that $1 billion of preferred equity, and we would look to save on that cost of debt. So we'll be opportunistic about it. And I think there is plenty of room to do both.

Our next question comes from the line of Jon Atkin with RBC.

A question about the kind of the deal pipeline for inorganic growth, a lot of opportunities. And just conceptually, how do you think about bringing in minority JV partners or co-investment partners? Is it dependent on geography, type of assets, size of deal or any other kind of things that you could share? And then secondly, on the mobile 5G front, with the C-band auction having concluded now in the U.S., I'm just interested if you have any views on the cadence of which we might start to see a ramp of activity from some of the auction winners?

Jonathan, thank you for spending time on the call today. First of all, let me start with 5G. I mean, I think you and I were both sort of surprised at the total quantum of dollars spent on C-band. And look, my broad view is this is a good thing. And it's a good thing because, ultimately, C-band spectrum, as you know, performs incredibly well in indoor situations and enterprise situations. And I think all the carriers have bought the spectrum because they know that the opportunity set for them is to head towards enterprise. And so providing those enterprise 5G solutions really is something we've already been doing, particularly at ExteNet. We'd already been deploying C-band technology inside of some commercial users, large corporations, large factories, one of the largest shipping port in the United States, we have a trial going with.

So we're pretty excited about C-band. It has multiple parts of opportunity for the carriers. And most importantly, Jonathan, for us as infrastructure owners, as we've seen in our 2 trials, one is a factory -- an auto factory in Detroit and the other is a shipping port and Long Beach, we're seeing multiple use case scenarios develop. And this is really interesting.

So when you think about what 5G -- when you think about what C-band can do and what CBRS ultimately means, I think you've got to think bigger beyond just simple data communications. You've got to be thinking about how can you manage SKU codes and barcodes, how do you manage inventory, how do you ultimately have that feed your sales force tool to ultimately provide real-time data and analytics and dashboards and KPIs to make the factory experience a little bit easier, to make the shipping experience more easier, then we can obviously run the 3 major mobile U.S. carriers on that infrastructure.

We can then use it for IoT sensors, like we talked about with the SKU codes, barcodes. And we're seeing a lot of different use cases being deployed, Jonathan, in these initial trial test networks that ExteNet has developed. So there's a lot of applications that can be run off this. It's a great opportunity for enterprises. And we candidly see this technology as being, on one part, disruptive, but in a second part, it really opens up an entirely new series of use cases for the carriers. I understand now why they paid for the spectrum.

Now with the dinner bill comes a series of challenges, which is the cost to build out 5G infrastructure. As I said earlier, $1.1 trillion will be spent. Jonathan, you know this pretty well, you track this, over the next 4 to 5 years in terms of 5G CapEx. And once again, we're well positioned to take advantage of that, whether it's bringing dark fiber to the infrastructure using Zayo, whether it's building out towers with Alex Gellman of Vertical Bridge or whether it's building another 30,000 to 40,000 small cells with Jim Hyde at ExteNet. We have all of the arrows in our quiver to execute across 5G, and then having this understanding of ultimately how to deploy indoor and outdoor CBRS spectrum and how to build those use cases in partnership with customers, it's so important.

So I'm pretty excited about that. I'm actually really fired up about it. And then you add this metaphysical layer around Edge and even that gets more interesting. So there's a lot happening right now. You and I've known each other for almost 25 years, Jonathan. I actually think this is one of the most exciting environments that I've ever seen in terms of the setup for new technology, new infrastructure, and we've been waiting a long time for new use cases for the carriers, I think we have found them. And I said it earlier in my comments around IoT and just this notion of no longer B2C or C2C, really, we've got to start thinking bigger around D2D, device-to-device.

I think your first question was, Jonathan, was around just the different types of investments we're making and partnerships. First of all, I'd be remiss if I didn't thank our friends at EQT and at Fidelity, who were both our partners in Zayo, we need partners, and we've always had great partners. For example, our Mexican business, we partnered with Macquarie. Our domestic U.S. tower business, Vertical Bridge and ExteNet. We partnered with Goldman Sachs, Stonepeak, The Jordan Companies. We have a long heritage of being great partners. And that will continue, Jonathan. No matter how big our funds get and how big we can raise co-invest, it's always good to phone a friend.

And the good news is we have a lot of friendships around the globe with other infrastructure funds and we're going to continue to seek out and partner with other folks because these checks do tend to get bigger and bigger, and it's always good to have another set of hands that understands the sector. Now saying all that in one breath, I would tell you that our co-invest program has never been bigger. And one of the benefits of having a slightly bigger second fund and having more LPs in that fund is we do have the ability to dial-up capital on a co-invest basis to support these opportunities.

We talked about the incredible growth at Vantage U.S.A. and Vantage Europe as Vantage starts looking at other places in the globe, whether it's Asia, whether it's the Middle East, we're going to continue to bring strategic co-invest capital side-by-side that understands those regions. So we're excited about that, and there's going to be a tremendous amount of co-invest capital raise this year at Colony in 2021.

I would also point out one more thing, Jonathan. I think you were starting to intimate about it a little bit just around our partnerships and JVs. I really find that our relationships with customers have never been better. And that's opening up an entirely new avenue of dialogue for us, Jonathan, around partnerships. And so as I think, whether it's a webscaler, whether it's a cable company, whether it's a wireless carrier, all of these guys have infrastructure, they all want to figure out more efficient ways to own that infrastructure. We want to help them build new infrastructure. And so we're thinking a bit out of the box in Fund II about how do we get closer to customers, how do we help them relieve stranded capital which is infrastructure, and then how do we help them grow their vision around Edge computing around 5G, around cloud, around IoT?

So I think we're telegraphing to you is some of the things that we're working on right now are in concert with customers, and we're really excited about that, and that's where we're finding our best ideas because, look, when tower deals trade for north of 30x, for us, that's just a little -- that's a little steep. And so we've got to be more creative, Jonathan, and that's what we've done. Our pipeline has never been bigger. I'm excited about the 3 deals that are currently moving towards definitive documentation. They're all super unique and platform investments for us. And some of them involve deeper partnerships with customers. So we're incredibly active at the moment, and this is going to be a great year in terms of deploying capital.

Our next question comes from the line of Greg Miller with Truist Securities.

Just a few quick questions. One on the Investment Management side. DCP II, obviously, off to a strong start, and it looks like you're going to be on the trajectory to blow through your 2023 targets pretty quickly. Is there a limit on the asset management side of the business that it becomes a little bit more difficult to run as an operator? Or are we talking about the sky is the limit here?

Two, how should we be thinking about organic growth in the digital operating side of the house? I mean you have zColo that needs some 10 to 11 care. My guess is accelerates in the second half of the year, but I'll leave that to you. And then just a follow-up on Colby's question about CLNC. At a discounted book, you've outlined OE&D, what you expect asset monetizations to be. Would you ever consider doing it the whole shooting match for a slight discount and just being on accelerated path to being digital?

So I think that was a 3 pack, Greg. So let me -- 3 questions embedded in there. Let's start at the front. So just thinking about Investment Management for a second. When you compare us to the monsters of IM, which would be Macquarie, Brookfield, Blackstone, KKR, we're relatively small actually. And so -- and we live and breathe every day in the fastest-growing segment of infrastructure, which is digital. And so what we think is there are sort of 3 dimensions to that business.

One is our core equity business, which is the legacy businesses, DCP I, DCP II, and we think that, that franchise and that business model has a lot of sustainability and has a lot of legs. So we would anticipate growing that business over the long haul.

The second area of opportunity is new products. And so we call that emerging, which is liquid securities and, of course, our credit platform. And those are pretty exciting opportunities for us as well because if you think about the growth in liquid securities and you think about our unique insights into the industry and our ability to invest in those asset classes, inform views for public investing. We really sit in the front row of where all of this happens, and it gives us unique domain expertise, and we've got 2 really great portfolio managers right now, managing 2 different strategies for us, Bill Hughes, Alan Bezoza, both running 2 funds, doing a great job for us, and we think this is a great year for both of those products, and they're going to grow.

On the credit side, Dean Criares and Mike Zupon have done a great job building our credit platform. We're in the process of originating new loans. Obviously, the market is really frothy, but we do see an environment where spreads begin to wide. And we have seen a little bit of a backup in the traditional senior lending marketplace in pockets of digital infrastructure. We see inflation creeping into Europe. And so we think this is the right time to form capital. And we think this is the right time to be in the digital infrastructure credit solutions business.

So our pipeline there is growing. We're up to almost 19 different transactions that we're looking at from a credit perspective. We're looking forward to deploying capital and credit, and that's candidly, it's some of the lineage in the history of Colony. So we're steeped in understanding how to deploy capital there, how to administer those loans and how to play across the capital structure.

So that's going to be a big narrative for us. And I think we're excited about the things we're doing there. And as you know, the credit business could be in terms of investable capital that goes into first lien, second lien, securitizations, mezzanine, subordinated debt, buying secondary positions in the bond market, having a wide open credit platform could lead to a significant amount of growth in terms of AUM there.

Then I would say the last thing is really around permanent capital. And I think what's interesting for us is our legacy companies are not in a fund structure. And it taught us a lot about raising permanent capital vehicles. And so as we think around the road and we think into the future, and as I've been on the road for the last 6 months, raising DCP II, one of the battle cries that I hear from investors is they would love to play in digital infrastructure in a permanent way. Our balance sheet obviously offers that permanency. And the ability to invest long-term capital off the balance sheet and pair that with LP long-term pension fund capital and sovereign wealth fund capital was on display at Vantage YieldCo.

So as we think about how to create more investment management opportunities, you're going to see this notion of permanent capital or perhaps maybe even core capital related to digital infrastructure, and we're really excited about that.

So 3 really strong themes. I think we've demonstrated to the Street that we can raise capital. And I think we've demonstrated we can deploy it. We're now deploying -- and we're now raising and forming capital and new strategies. We have places to put that capital. And so I really don't see a limitation per se on our Investment Management platform today. That was your first question.

And organic growth on operating?

Yes. That one's easy. On operating, we're forecasting about 5% organic growth, which is in line with our industry peers, maybe perhaps even a little higher than some of the domestic U.S. cell tower REITs from what I've been reading in the last few days. So we're happy with that domestic growth. And hopefully, there's a beat in there, but 5% generally feels correct.

All right. And would you ever consider OE&D as a single package in the monetization program?

Yes, absolutely. And we've gotten some of those phone calls. And so I think it's a really unique assembly of assets. Jonathan Grunzweig has done such an incredible job, our CIO of OE&D. The monetizations that his team delivered last year was well beyond my expectations. He's got some stuff lined up already for the first and second quarter for monetizations. But that portfolio in a recovering market is valuable.

And I think for people that are looking to build real estate AUM and invest in strong assets, we have that. And so we'll continue to take those phone calls from opportunistic real estate investment managers around the globe. A lot of them are our friends for many decades. And the phone will ring, we'll answer it, and we'll continue to have those discussions. Look, it would be an elegant out, right, Greg, if you think about it, if you could make a block trade on OE&D, that really puts to bed one of the big sort of value unlocks for Colony going forward. So as you can imagine, we're paying attention to that.

Our next question is a follow-up question from the line of Jade Rahmani with KBW.

Just on the DCP II. The $4.2 billion, I assume that, that's the first close of committed capital. Do you guys get paid on capital once it's called? Or are there any fees on committed capital?

So it's paid on committed, Jade.

Okay. So we should be modeling fees on the $4.2 billion then?

That's correct, Jade. And in our supplementals, we've offered disclosures on what our run rate digital fee-related earnings could be as you look at the 4.2% on a 4-quarter basis. So I'd start with that, and then there should be growth on top of that as we continue to fundraise.

Do you have a target size in mind for digital credit fund?

No size yet. This creature doesn't exist. So we don't talk about things that don't exist yet. But suffice to say, we do think there's a significant multibillion-dollar opportunity in digital credit, Jade.

Okay. The current G&A of the company, could you give a range for what you expect in 2021 and maybe break out how much of that is cash versus annual stock? And just looking beyond 2021, since I think that's more important given the transformation, where do you expect the run rate G&A to be to support the stand-alone digital business?

Yes. Sure, Jade. This is Jacky. So what we've previously guided, and we're sticking to, by 2023, once we're fully -- or almost fully digital infrastructure based is going to be a range of $100 million to $120 million on a cash G&A basis. We did not guide the Street on 2021 G&A, principally because there will be, and we expect there to be stepwise functions in the G&A bucket as we continue to divest legacy assets.

So depending on timing of that, which we're not guiding yet because they're pretty all or nothing in terms of stepwise functions, there will be material reduction in G&A. So right now, where we're at is about $200 million, a little under $200 million of cash G&A. But over the course of the next couple of years, as we divest, we'll get down to that $100 million to $120 million bucket. And that is on a steady-state basis for Digital Colony going forward.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Thank you, and thank you all of you for your thoughtful questions. We appreciate the analyst coverage. I want to thank Greg and Colby for picking up coverage on the company. This is an important moment to cover Colony Capital. And we think the work that we're doing this year is going to be obviously not only transformational but exciting. I think you've heard the excitement in our voices in terms of the conversation we're having with customers, the opportunities that we're seeing in digital IM, and most importantly, finishing the mission.

It's going to be a fluid year, a somewhat dynamic year. But as I said in my comments earlier today, it sits now all in front of us. And I want to thank everyone for their faith and trust in us. We're looking forward to this year. And of course, we are looking forward to our Investor Day in May.

And should you have an interest in attending, please reach out to our public IR team led by Severin White, and we're looking forward to hosting you, albeit virtually. Once again, thank you very much for your time and support. And have a great day.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.