DigitalBridge Group Inc (DBRG) 2021 Q4 法說會逐字稿

Greetings. Welcome to the DigitalBridge Group Inc. Fourth Quarter and Full Year 2021 Earnings Call. (Operator Instructions) And please note that this conference is being recorded.

I will now turn the conference over to Severin White. Thank you, you may begin.

Good morning, everyone. And welcome to DigitalBridge's Fourth Quarter and Year End 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'll 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 effects 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 today is as of February 24, 2022, 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 Form 10-K to be filed with the SEC for the year ending December 31, 2021.

Great, so we're going to cover our standard annual agenda. Marc will start with our 2021 year in review. Jacky will cover our quarterly and annual financial results, as well as update our forward guidance. And then Marc will look forward to the year ahead in 2022. Before wrapping up with some key takeaways, followed by Q&A.

We finished the quarter with some of our strongest results to date. And we're incredibly excited about what lays ahead in 2022. So let's get started. With that, I'll turn the call over to Marc Ganzi, our President and CEO. Marc?

Thanks, everyone. I'd like to start by thanking everyone for their continued interest and attention today, especially new investors that are just learning about DigitalBridge for the first time.

I'll get into more detail later on the 3 key areas. How we finished the mission in our rotation to Digital, how DigitalBridge's emerged as the partner choice to institutional capital, and how we've continued to invest in high quality digital assets in 2021. The key on the right hand of the slide is how we've successfully checked all the boxes, on our key goals for 2021.

Just like in 2020, we've delivered on our commitments to you, our investors. And that's the key continuing to deliver on promises for you. This is essential and critical as we continue to build trust. And most importantly, as we accelerate into the next phase of our business plan.

Next slide, please. As we look back at 2021, I think the biggest takeaway for us is we really did finish the mission, rotating over $78 billion in assets under management and under 3 years. We call this our diversified to digital rotation. And we did it ahead of schedule by over a year and on budget, once again delivering for you, our investors.

Not only did we rotate assets, we recast our corporate balance sheet substantially reducing our corporate liabilities as well as rotating our governance with a new Board that's diverse and steeped in digital expertise. We relaunched mid-year as DigitalBridge, returning back to our heritage as the leading global digital infrastructure firm.

And as we enter 2022, we're now able to focus 100% of our energy on digital, where we have long had a history of operating and investing successfully for over 25 years, building great digital infrastructure assets and platforms. It's a really exciting place for us to be now.

I want to thank my entire global team again for their incredible execution. I'm humbled at their efforts. And most importantly, I'm pretty sure no one has pulled off such a complete and wholesale transformation in such little time. These efforts have set us up for success in 2022 and beyond. And I'm excited to share our business plan for you for the coming years.

Next slide please. So before we get to the business plan going forward, let's quickly summarize where we are in legacy assets. The key focus here has been to harvest capital to fuel the next phase of our strategic roadmap. Here we summarize the 4 major legacy businesses we've divested over the past year. Our OE&D sale to Fortress generating over $650 million.

We close the previously announced hospitality portfolio early in 2021. We sold our management contract back to Brightstar. And wellness infrastructure will generate consideration of over $300 million when it closed later this quarter. Once again, we've successfully executed this monetization program faster than we forecasted, generating the capital we originally forecasted, and it's all been completed during an unprecedented pandemic.

In 2021, we generated over $1.2 billion in net proceeds from Legacy monetization against a budget of $900 million. This brings total legacy sales to over $1.9 billion in net proceeds a major accomplishment.

Next slide, please. Next, I want to talk about fundraising at DigitalBridge partners to our second flagship fund. We closed out fundraising at $8.3 billion in the fourth quarter, after having blown through our original target of $6 billion by over 38%. We raised the hard cap along the way to accommodate strong investor interests as we brought the fundraising to a close.

Let me put this in context. We were the third largest infrastructure fund in the world, raised globally in 2021 and that includes all of the generalist infrastructure funds. In digital infrastructure, it wasn't even close. We were multiples ahead of anybody else that's investing in digital infrastructure. It's also worth noting that we completed this fundraising under 18 months from start to finish. That's an incredibly fast timeframe. And it's testament to DigitalBridge position as being the partner of choice to institutional capital looking to build exposure to this resilient and growing asset class.

Next slide, please. Not only were we busy raising capital in 2021, we were just as active deploying it. Last year, we increased our asset base to $45 billion in AUM. The key factor here is our investor operator model that allows us to quickly transform and scale our portfolio companies. If you look at what we did in Vantage Asia, AtlasEdge and EdgePoint in particular, all of these platforms are benefiting from DigitalBridge's value add that accrues to our limited partners into your shareholders.

Our acquisition of PCCW in Hong Kong, alongside of the hyperscale assets that we've created at Agile were combined to form the base for Vantage to expand into the Asia market, leveraging our global hyperscale relationships in a new territory for us.

Second, AtlasEdge completed its first strategic acquisition less than 6 months after launching, extending our reach into 11 European markets through a key digital relationship with Colt. Lastly, EdgePoint has already hit its 5-year business plan in the second year of full operations. As we support its growing Southeast Asia tower strategy, eclipsing over 14,000 towers, making it the largest private tower code in Southeast Asia, once again, demonstrating our ability to scale quickly.

At digital operating, we continue to invest and grow both of our balance sheet platforms, adding another valuable hyperscale data center campus at Vantage SDC in the very, very difficult to build market of Santa Clara, and then anchoring databanks acquisition of the Houston-Area Data Centers from CyrusOne, which brings its edge data center platform to its 27th market with a total of 70 edge data centers on that platform.

Next slide, please. The last thing I want to touch on, as I look back on 2021 is our team. Investing in our organization is probably the most important thing we do have long said people create Alpha. So this is completely seminal to our success. In 2021, we made investments in our team. And you'll hear about that later as we position ourselves to take advantage of the big opportunities we see ahead in '22 and beyond.

New digital board members, new senior executives with industry leading experience new operating partners and advisors that lead new investments for us. This is our operational CapEx. It's our investment in the future. We continue to expand our presence in Europe and Asia.

All told, we added 22 new digital infrastructure professionals to the firm, bringing our team to over 100 people strongly dedicated solely to this asset class, digital infrastructure. This in-house expertise is what truly sets us apart. It gives us our edge as we invest in the future of digital infrastructure.

With that, I'll hand it over to one of our key team members and my partner, Jacky Wu, to walk you through our financial performance in Q4 and update our near and medium term guidance. Thank you, Jacky.

Thank you, Marc. And Good morning, everyone. As a reminder, in addition to the release of our fourth quarter and full year 2021 earnings, we filed a supplemental financial report this morning, which is available within the shareholder section of our website.

Starting with our fourth quarter results on page 12, the company finished the year with a strong quarter and has seen rapid growth in its digital segments driven by successful fundraising and digital investment management and by talking to acquisitions and organic growth in digital operating.

With the digital transformation complete, our financial reporting will be streamlined in 2022. Following the sale of the legacy wellness infrastructure business, which is expected to close this quarter. AFFO per share has reached an inflection point this year and we expect even more positive momentum as we march through 2022.

As I will later discuss, we successfully rotated over $78 billion of AUM, and are now at $45 billion of all digital AUM today, and we are excited to be entirely focused on our high growth digital business this year. The company is strong and healthy, driven by our asset light investment management business that generates high quality long-term fee earnings, as well as a transformed corporate capital structure after reducing corporate debt by 80%, and significantly reducing borrowing costs.

For the fourth quarter, reported total consolidated revenues were $256 million, which represents a 65% increase from the same period last year. Total company adjusted EBITDA was $21 million on a pro rata basis, which improved from $18 million last quarter and from a $2 million loss, the same period last year. The continued adjusted EBITDA improvement was primarily driven by successful fundraising in our high margin digital IM business including DBP II, which officially closed at $8.3 billion in December, and AFFO was a $5 million loss and GAAP net loss attributable to common stockholders was $21 million or $0.04 per share.

Moving on to our full year 2021 results on Page 13, 2021 total consolidated revenues were $966 million. GAAP net loss attributable to common stockholders was $386 million or $0.78 per share. Strong growth in revenue and earnings in our digital business drove significant improvement in our financial results in 2021. In addition to more than doubling revenue, EBITDA turned positive as the business continued to scale and we rotated our legacy asset to our digital platform. Digital AUM increased by over 50% during 2021, ending the year at $45 billion.

Moving to Page 14, consolidated core digital revenues were $250 million, a 64% increase from the same period last year, driven by new DBP II fees. Looking at the right side of the page consolidated digital FRE and adjusted EBITDA increased to $117 million during the fourth quarter, which is an 82% increase from the same period last year, also driven by new DBP II fees.

Turning to Page 15, we've seen continued growth in our digital business, particularly at our IM segment. Since the beginning of 2021. Our annualized digital fee revenues increased from $100 million to $175 million, and digital FRE has increased from $41 million to $97 million. Investment Management capital formation has been phenomenal over the last year led by DBP II which closed at $8.3 billion in total commitments, exceeding the $6 billion fund target by 38%.

We also exceeded our year and $17 billion fee earning equity under management targets that we had outlined in the beginning of 2021, ending the year at $18.3 billion. And we expect another strong year in 2022 with a target of over $22 billion. This asset light high margin investment management business was the key driver of our consistent growth over the last year, which we see continuing in the future, which I will discuss in more detail later.

The growth in our digital operating segment revenues and earnings are the result of tuck-in M&A at Vantage and Databank. We will continue to grow digital revenues and earnings through our rotation of the company's balance sheet, and the high quality digital assets and investments that support our investment management business.

Moving to slide 16, when Marc and I started in our current roles almost 2 years ago, we outlined our commitment to deliver and lower our borrowing costs. I am proud to say that we have completely transformed our corporate debt profile decreasing debt from $6.7 billion to $1.4 billion, which represents an 80% reduction.

Our borrowing costs have been reduced by entering into longer duration financing agreements as well as introducing a first of its kind investment grade fund fee securitization with a BBB rating. These new lower cost financings result in over 300 basis points in savings compared to the legacy preferred stock that was redeemed with those proceeds.

Moving to slide 17, we are expecting another strong year in 2022 with normalize FRE growth of over 50% and a midpoint of $120 million of FRE and 2022.

Looking at the right side of the page, we are expecting 26% adjusted EBITDA growth this year and digital operating segments, which resulting from new tuck-in capital deployments and organic lease up in our existing platforms, but that excludes any contemplated M&A and new platforms.

Moving to slide 18, I will now outline our corporate guidance forecast. Starting with the digital Investment Management. Our recent fundraising success has demonstrated that Digital Bridge is a leading global digital infrastructure investment platform, and the partner choice to investors deploying capital into this resilient growing asset class.

As Marc will walk through in more detail, we have expanded into key digital infrastructure adjacent verticals, including credit, core and ventures to position our platform for growth. We have a unique investor operator model with a talented and experienced team that has been the key to our growth. We've continued to build our team to capitalize on the many opportunities, we seek to support the growth of our customers and generate strong investment returns for our limited partners.

As a result of the success, we are increasing our 2022 guidance and our 2023 and 2025 investment management framework. Our 2022 digital management fee revenues guidance target range is $190 million to $200 million. And our digital fee related earnings target range is $115 million to $125 million, excluding one-time catch-up fees, this represents an over 23% increase in fee revenue and over a 52% increase year-over-year in FRE. We are increasing our 2023 and 2025 digital management fee revenues, and FRE target ranges as a result of our tremendous success in fundraising, underwriting and acquiring best-in-class digital companies and launching new product steps.

We look forward to continuing to leverage the strong growth in our digital platform for further improvements to our capital structure, where we see meaningful improvements to corporate cash flows, including reducing our effective cost of capital.

And with that, I'd like to turn it back to Marc where he will lay out further details on our 2022 plan. Thank you.

Thanks, Jacky. So as we look forward to 2022 in the year ahead, I wanted to set the table by addressing some of the key variables affecting a pretty dynamic macro business environment today.

It's important to note, by the way that we're always monitoring these factors and planning ahead. This management team has been through many cycles. And that experience informs our preparation, how we invest in our management of our digital businesses.

Inflation is the first variable that everyone is talking about. There was bound to be an impact from all the excess capital into the global financial system. That's shown up for us primarily in 2 areas. One higher raw material construction cost, and 2 higher labor costs to build or install fiber towers and data centers.

Unbalanced we've maintained our development yields by passing through these increased costs via our contracts with customers. So it has not materially impacted our expected returns. The silver lining on this is as owners of digital real estate we benefit to some degree from higher inflation as the value of our underlying assets increases nominally.

Secondly, supply chain, where it's quite common to hear about bottlenecks in the system for certain specialty parts that are disrupting entire supply chains. We've seen that backup, for example, in power generators. We've weathered this headwind by leveraging our scale, committing to for purchasing contracts that have kept us largely on schedule. And we're also expecting this to dissipate as an issue as the worst of COVID begins to subside. We all hope.

Next is geopolitics. Look with Eastern European in the news. In terms of our impact our businesses, our power and utility costs in Europe are 100% pastors to our customers. So any flare ups and prices do not materially impact our businesses. More broadly though, it's important to note it's not an accident, we don't have exposure to either those geographies. Analyzing and factoring in geopolitical risk is a key part of our investment process. And why we've generally steered clear and investing in not investing in non-OECD economies.

Finally, interest rates, which have been trending higher, back towards normalize levels where they were before COVID. This is another area we have a lot of experience and we're planning ahead to pays dividends.

For the last year, we've been locking in low rates at the corporate level, where 100% of our debt is fixed rate. Down at the portfolio companies, which are 73% fixed rate at our digital operating businesses. We expect rates to settle in to more normalized levels, but not trend substantially higher. If they create disruption and values for digital infrastructure assets. We certainly believe that'll create a window for us to take advantage.

Now, before I wrap up, it's worth noting how shielding digital infrastructure is from the broader macro-economic and setup, the demand for connectivity is always trending higher. And we find ourselves in one of the strongest CapEx cycles in a generation protected from cyclical forces and position to succeed as we support the growth of our customers.

Next slide. Okay, well, let's have some fun. Let's get into DigitalBridge. And what we're most excited about as we look ahead to 2022. And the opportunity finally to focus 100% on digital. With the transition complete and as we accelerate, the key thematic for this year is time to build working with our 4 key DigitalBridge constituents. This is going to drive new proprietary deals, and continued strong capital formation as we extend our global reach.

First, the Organization. We've been incredibly effective with work from home for the last couple of years. But as we get back in-person, it's clear there are tangible benefits to in-person collaboration from front end new idea generation to sharing best practices and asset management. This is an apprenticeship business in many ways. And as we develop the next generation of talent, we're benefiting from connecting live again.

Next up is Capital. We've already proven we're the partner of choice to institutional investors that want to focus on digital infrastructure. But when people are committing hundreds of millions of dollars for long term vehicles, they want to connect in-person. We've done some of that during the pandemic, but we are poised to get much more active. And we're excited about how we can drive fundraising in 2022, especially with our new strategies in credit, core and ventures.

Third, Customers. Following the logos has long been my guiding principle. And we believe that getting back out there is going to drive more proprietary deals, and more opportunities to help our customers unlock value for their existing infrastructure. And for us to deliver more converged solutions. This is really exciting.

And finally, down in our Portfolio companies supporting their growth is ultimately how we generate value for investors. So manifesting their strategic plans gets easier live, we're planning on deploying over $7 billion in growth CapEx on a global basis in 2022. We'll talk more about that later. Bottom line '22 is about accelerating and scaling our high performance platform. It's time to build and I couldn't be more enthusiastic about the year ahead.

Next slide. So to accomplish our goals in 2022, the first place we're building is our digital investment platform. We've already had a lot of success scaling this business, raising $5 billion to $6 billion a year in the past few years. We think we can continue to deliver and our targeting to reach at least $22 billion in FEEUM in 2022. We achieve these objectives by forming capital around 3 new strategies. We've developed a DigitalBridge in credit, core and ventures.

Before I get into each of those, I want to give you some perspective for how we've assessed those opportunities and how we're following the DigitalBridge playbook as we execute. On the right side, you can see, we look for what we look for in the new strategy. There are 4 core requirements that I need to develop a new product in our investment management platform.

First, I've got to be able to leverage our existing relationships, and have the right people driving the product and deploying the capital. Second, we need to see strong investor interest from our LP base. Third, it's got to be a big market, a big TAM that can move the needle for us over time.

And lastly, we need to be able to leverage our proprietary deal flow that comes from our position at the center of a converging digital infrastructure landscape. All of the strategies meet those criteria as we assess those opportunities in each vertical. Once we assess the opportunity, we move to the next stage in our playbook, we build the team. We've done that for all 3 of these strategies, finding talented executives, help us develop and craft the strategies that positioned us to form capital and ultimately deploy it. This is where we are today.

Next slide. The goal is to establish DigitalBridge as a full stack digital infrastructure investment manager with the ability to invest, and most importantly operate and capitalize on a $400 billion annual global CapEx spend across our industry. We believe this positions us uniquely at the intersection of supply and demand with the capability to pair capital with the right opportunity to generate attractive, risk adjusted returns for you, our investors.

Our ability to go anywhere globally, to show up for customers and corporates is truly unique in our sector. There isn't an opportunity in digital infrastructure that we can execute and deploy capital against. The chart here lays this out graphically, giving you some perspective on what we are building and where each of these opportunities fits in the risk return spectrum.

Next slide, please. So let's start with credit where we believe institutional investors are underexposed to growth in the new economy. As you can see on the left, while the S&P 500 is about 2/3 levered to growth sectors, credit markets are only at about 40%. How do they change that? Building exposure to digital infrastructure, the backbone of our growth economy, it embeds several levels of downside protection, while generating attractive risk adjusted returns.

More broadly, if you look at the history of alternative asset managers, it's interesting to note that many of these firms built originally around their flagship equity strategies have gone to build credit businesses that rival or in some cases actually exceed the size of their equity franchise.

Look, our goals here are much more modest today. But we do believe there's a huge credit opportunity over time, and we're going to continue to talk to you about it. We've assembled an incubator to credit team for last few years, led by Dean Criares and it's a team that's worked together for a long time, we're excited to see how they scale this opportunity.

We've developed a broad strategy with a focus on identifying and providing skill capital, to value added opportunities, where we can bring the same business building expertise that we leverage in our flagship funds to support growing businesses that have credit needs. This is a very unique and differentiated approach. We're already incredibly active as you would suspect we would be.

We've closed 6 loans and shortly we're about to close our 7th loan. We have a deep pipeline of 28 new opportunities, totaling some $1.6 billion across all the verticals of digital infrastructure. We warehouse the first 6 loans on our balance sheet totaling around $120 million. We've already fully realized 2 of those loans, demonstrating a strong proof of concept as we look to form and close more capital around the strategy in 2022.

Next slide, please. Next, the Core Opportunity. This is one of the most exciting strategies we're launching. Why do I say that? One of the things I hear when I talk to investors around the globe today is their strong and growing interest in longer duration, predictable return strategies. They simply can't hit the return targets with generic fixed income strategies anymore.

So we believe that we're uniquely positioned with global strategic customer relationships and deal sourcing capabilities to identify and prosecute opportunities that fit this profile. Combining supportive secular trends with high quality, long-term contracted cash flow like credit, we think this is a very big opportunity.

In fact, if you look at fundraising across the broader infrastructure asset class, over the last 5 years, more capital has been raised for Core and Core Plus strategies in total than the type of value-added strategies that our flagship funds address.

On the people side in 2021, we brought Matt Evans over from AMP, where he headed up their global head of digital infrastructure and then brought in Peter Hopper from Abry. And before that, Peter of course grew DH Capital, which is one of the premier and investment banks in the data center space today.

These 2 gentlemen are solely focused on capitalizing in this opportunity. And we couldn't have 2 more qualified executives to execute the strategy. It's a strategy that's focused on high quality defensible businesses and assets with criteria including cash yields, low development exposure, and conservative capitalizations. We believe there's a significant opportunity for assets with this Plug & Play profile.

Next slide, please. So last but not least, Ventures. This is a space where we believe our deep domain expertise, our market intelligence, and broader portfolio give DigitalBridge a unique edge to source. That's an invest in late growth stage companies across the emerging digital infrastructure technology vertical. Over the last 2 years, many of you heard me talk about the software defined layer of networks. This is directly adjacent to the physical layer of digital infrastructure that we manage on a daily basis around the globe. It should come as no surprise that we should be investing in technology that supports this software defined layer. This is the infrastructure, the future and we'll be talking about this for a very long time, as we transform and change our previously narrow definition of network architecture.

Here, I've called on Alex Villela to help us develop the strategy. Alex came out of Qualcomm ventures where he led their $200 million 5G fund. And before that, he was working in Intel Capital. We've launched a pilot fund internally and have already made 2 successful investments from this emerging vertical. The strategy is designed to deliver on the industry's key success factors out of the box, deep specialization, a tangible value proposition for founders and an ability to de-risk the transactions by leveraging our broader DigitalBridge ecosystem of 23 companies and customers. Our focus is to support late-stage companies with strong de-risk business models in partnership with other top-tier VC investors. This will start smaller than the other 2 strategies I've outlined. But we believe it's a great performance fee profile. And there's a lot of opportunity to grow in the broader ventures vertical. So stay tuned.

Next slide. Now that we've given you some insight into our 2022 plans for capital formation in the digital investment management platform, now let's go into how we plan to deploy the capital across the globe. And to be clear, it's a global footprint. The opportunity for DigitalBridge and our customers, their needs and their demands, in this reach is how we deliver on a daily basis.

Continuing on an old theme, we've been discussing with you over the last year. Here's our latest thinking on the buy versus build matrix, which I'm happy to go through in more detail with you in our Q&A session. That being said, I want to highlight one obvious takeaway. For us building is clearly in favor around the globe today. In fact, since we've just finished budgeting, the budgeting cycle for our 23 global portfolio companies. Let's turn to the next slide. So I can give you some perspective on how important this is to us.

Next slide please. DigitalBridge portfolio companies have committed $7.8 billion in growth CapEx in 2022 alone. This is primarily Greenfield construction to support the growth of our customers in our portfolio companies. We have shovels in the ground in 5 continents across all 4 core verticals of digital infrastructure. We're busiest in North America with $4.7 billion focused on supporting hyperscale workloads and the fiber that binds it all together.

And Latin America, it's almost a $0.5 billion to help introduce 5G networks and cloud applications that are going to run on those networks. In Europe, we have plans to spend $2.2 billion on bringing low latency compute to the edge of next generation networks, which will help our mobile carrier partners lower their total costs of network infrastructure.

And finally, in Asia, our newest geography, we're spending $0.5 billion on greenfield data centers at Vantage Asia and new (inaudible) developments at EdgePoint Southeast Asia tower platform. Look, this is a really exciting for everyone at DigitalBridge in our broader umbrella portfolio companies. This is what we love doing the most building and it's where we create the most value for customers, where we generate the best returns and have the greatest impact as we help build a highly converged network to the future.

With that, I'll conclude our 2022 year ahead review and turn to a quick wrap up.

Next page please. I want to finish today's presentation on the 3 key drivers underlying this next phase of the DigitalBridge investment case, our acceleration. First, powerful secular tailwinds. We're at the intersection of supply and demand, benefiting from both the growing secular need for more better, faster connectivity and strong institutional investor interest in digital infrastructure and our investment management platform.

Next, how have we established ourselves as the partner choice to investors? Well, simple. It's rooted in our expertise and experience as the digital infrastructure experts. We've been investing in and operating digital assets for over 25 years. And as a group, we have hundreds of years of cumulative experience that drives proprietary deals, proprietary ideas that ultimately drive returns for your investors. It also informs a forward-looking vision of a converging digital ecosystem that we position DigitalBridge to benefit from.

Finally, our transition to a simple high growth business model. Over the past year, you've seen us successfully divest for legacy business segments. Our profile is now 100% digital and we're not done yet. We're continuing to find ways to simplify, and most importantly, accelerate our business to a high return, earnings driven secular growth company. Earnings and returns are what matter and we will continue to deliver that for you. This is my pledge to you as investors in DigitalBridge.

Next slide, please. When we're focused on latest quarterly results, it's easy sometimes to lose sight of the forest for the trees. So wanted to share some perspective on the bigger picture opportunity. Before we conclude today, Preqin, the data analytics provider to the alternative asset industry recently published their forecasts for growth in the global private infrastructure market over the next 5 years. They're estimating an $864 billion market today that will more than double the $1.9 trillion by 2026. This will overtake real estate as the largest real asset class allocation. That's a really significant tailwind for us.

And if there's one thing I know for sure, from my meetings with investors, they are under allocated to digital within the broader infrastructure asset class. When you combine that fact with our market leadership position as the digital infrastructure experts, it's a very powerful combination in a strong setup for you, our investors. It positioned DigitalBridge hit $100 billion in AUM inside the next 5 years. I believe we can and should grow faster. In fact, if we hit the mark within the next 4 years, that's over a 20% annual organic growth rate.

Next page, please. In conclusion for today, let's bring it back to where we're going to take you and our investors in 2022. What does our scorecard look like for the year ahead? Well, it's pretty simple. There are 4 big areas of focus by which you, our investors will grade us. Number one, we need to successfully extend our investment management platform into the verticals I described earlier, credit, core and ventures finish raising the capital required to execute on those really exciting opportunities.

2, we're going to meet and exceed both our fundraising targets and our financial operating targets. As many of you know, this is always my favorite one to check off the list. We have given you new guidance for this year in 2023 that exceeds our previous projections.

Number 2, we're going to continue to invest in high quality digital businesses, leveraging our proprietary deal flow. And look, we already have a fantastic head start. We are committed to deploy $7.8 billion in CapEx into our existing 23 platform companies. We will deploy capital into new platforms as well. And we anticipate growing and exceeding AUM by over 20% this year.

Number 4, this is important. I want to continue to advance our ESG and DEI initiatives, where the progress you made in 2021 highlighted the importance of integrating renewables, particularly into our operating businesses. The decarbonization of our portfolio and creating new sources of renewable power remains one of my highest priorities in 2022. So there you have it, those are my key priorities for 2022.

And look, it's time to get back out there, it's time to build a full stack digital infrastructure manager. It's time to build billions of dollars of new digital infrastructure. And it's time to continue to build our business.

So with that, I want to thank you all for listening to our earnings presentation this morning. And I'd like to turn the call back over to the operator to initiate our Q&A session. Thank you.

(Operator Instructions) Our first question comes from the line of Ric Prentiss with Raymond James.

Busy day. So appreciate all your comments and prepared remarks. Marc, one of your comments, you're planning ahead pays dividends. And one of the questions we get a lot is, are you guys going to reinstitute a dividend?

Yes. So it absolutely is our intention to turn back on a de minimis dividend. I think I was pretty clear about that last year, we continue to see opportunities, Ric, for the incremental cash that we have on our balance sheet to redeploy that we think in higher returning objectives and opportunities. So you know, we will turn back on the dividend this year, and we will absolutely look to harvest as much cash as possible.

I think one of the things, Ric that I see is, you know, I see the world, perhaps a little bit differently than others, I think we've been very cautious about how we use, you know, capital off our balance sheet and how we put it to work. I've been long saying that, you know, asset values are quite high, but we see things changing a bit, and we see opportunity.

So I believe there will be tremendous opportunity this year to deploy cash into high return opportunities. And we're already seeing some of that we can't sort of front run what we're doing right now. But I will tell you that everything that we sort of predicted in being conservative, and you know, not overpaying for assets is, I think going to be the right call at the end of the day.

So we will turn it back on. It'll be incredibly small. Because I think that sitting on our cash right now will prove and will prove to be the right decision.

You tells me you're not going to sit on it, you're just not going to deploy it in dividends. You're going to put it to work on growth aspects.

That is correct. Yes.

What other questions we get a lot, and I don't think it affects your shareholder base as much is as you press the gas on the successful raising of funds on the digital investment side that calls into question, the ability to keep REITs status updates a little bit about how you think about REITs status. And what that means to your shareholder base and kind of, how you think about it?

Well, look, since Jacky and I got in the chair here about 18 months ago, nothing has changed. We've taken an incredibly pragmatic approach to the REIT. And at the same time, we've also measured that against the fact that we have told you and our investor base that we're going to grow. The great thing about having 2 powerful business models, one digital operating and one digital IM is that you know, we can grow both of those business segments as fast as we wish.

Now what I say is and I think Jacky would agree with me, the investment management business is wildly exceeded our expectations. Our ability to A, Ric deploy capital. B, our ability to raise capital, and then C, you know, create new ideas around IM and grow our leadership position as what we believe is the best provider of capital to digital infrastructure businesses globally has really taken flight.

And so as we measure all of that, that vertical is growing very fast, way faster than I think you'd anticipated. And that candidly, our management team and anticipate as well. It doesn't preclude us from not staying a REIT. But it also has a stark reminder that if you continue to grow your TRS, your tax rate subsidiary, and you move to a point where that business just gets to a place where it's hard to maintain the REIT. Once again, we'll sit down, we'll have a conversation with our investors with you guys and tell you where we're going.

At the end of the day, there's not a material impact to our tax if we decide to de-REIT. And I don't think it diminishes or disturbs what we're building. And so I've gotten pretty comfortable with those 2 roads. Both are good roads for us, staying a REIT is a good road for us. And if we're continuing to blow out earnings in terms of where we're going and I am and the balance sheet assets can't keep up with that, then we'll cross that bridge when we get there. But I'm very confident that we're doing what is right for investors, which is delivering growth, delivering revenue, delivering earnings that are all digital based, and that's what investors have signed up for.

And more operational question, last one for me. The buy versus build, clearly skewing more towards the bill versus the buy. Can you elaborate a little bit on how fast the pacing can occur in building given the supply chain and other items you mentioned?

Yes. We've been monitoring that carefully. I think you and I talked about it over the summer at your conference, Ric. We haven't seen a significant disruption to our supply chain. Now whether that's luck or good planning, we could debate that intensively. Maybe we'll do that at your conference when I see you in a couple of weeks. But look, what I would say is we believe we have some of the best CEOs in the sector.

It's not accidental when you've got Steve Smith, Alex Gellman, Raul Martynek, Sureel Choksi and some of the other great leaders we have, they plan for this. They purchased years in advance. So whether it's steel or generators or whether it's connectors or whether it's optical light switching gear, we've been ahead of that curve. When you manage $50 billion of assets globally and you've got massive purchasing power, we can stand with vendors and say, look, we need to get to the front of the line and we've been able to do that.

So what surprised me in looking back, Ric in 2021 is our supply chain was not impacted. If you look across all of our business units, very few companies missed their new construction budgets. And most importantly, we also -- what was very interesting is we came in under CapEx. So our budgeted CapEx spend for '21 against what we actually spend looking across all of our portfolio companies, we actually came in under budget. I did not expect that. I expected us to have to spend more money to execute our greenfield business plan in 2021.

So the setup is good for '22. We've just like -- as Jacky said, we came out of our budgeting cycles, we know what's happening. We're touching these portfolio companies every week. We're getting KPIs and dashboards. We have granular data down to the data center down to the tower down to the -- ultimately to the new fiber routes that we're building, and we have strong control of our costing, which is a function of us having incredibly good back-office systems, which that's something we started doing back in 2003.

So having good control of the data and having those metrics at our fingertips has been helpful. But I don't know, Jacky, you're looking at the dashboards alongside of me, I mean anything and I missed in terms of what Ric just said?

No. I think you said it spot on. And Ric, we definitely did say -- talk about that in your conference last year. So we're proud of our CEOs for weathering this. And this has just proven that our industry and our sector is just really recession-resilient, COVID pandemic resilient and now inflation resilient.

Look forward to see you again in person, glad we pulled off 2 live ones last year in person and looking forward to everybody getting back together.

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

This is Michael on for Colby. Two questions, if I may. First, as we think of your pipeline for additional on-balance sheet M&A, how would you rank where you're seeing the greatest opportunities across the verticals of digital infrastructure? And then second, with public -- our valuations for public companies contracting amid these various headwinds, just wondering if you've already begun to see any contractions in private multiples. And if not, does this change the way that you think about a potential to take private?

So let's stack rank the priorities for the balance sheet right now. We are still very much focused on supporting our edge compute business databank. We announced the acquisition of the 4 campuses from CyrusOne in Houston that comes with a strong pipeline of hyperscale leasing. So we're pretty -- remain very bullish around that vertical. I'd say the secondary priority is hyperscale.

We will continue to add hyperscale campuses to our balance sheet this year, whether it's through Vantage or through other acquisitions of hyperscale campuses. We've begun to see pricing move into a zone where we feel like we can deploy the balance sheet, and we feel like it can be accretive to you, our shareholders. I'd say number 3, we've continued to look at mobile infrastructure. So whether that's towers or buying easements underneath that mobile infrastructure that for us feels very balance sheet correct and we're looking at that.

And then the fourth vertical that we've spent some time on and that I like quite a bit is buying long-haul fiber routes. And owning those long-haul fiber routes in partnership with some of our bigger customers. It's a big idea we started working on last year. It's beginning to gain some good traction. We think there's going to be a really good opportunity ahead to own good long-haul dark fiber or suboceanic fiber and to be able to buy it effectively at the right price to get the right cap rate and get the right yields. We think those are opportunities our investors are going to really like and resonate with.

As it relates to private market multiples, yes, we've begun to see a retreat in private market multiples and that creates 2 outcomes. One, we're seeing auctions get pulled. We've seen a couple of recent middle market deals get pulled because the sponsor wasn't getting the right price or it trades and it trades slightly below expectation of where they thought it was going to trade.

Look, the whole world thought everything was for sale 30x. That just doesn't exist anymore. The market has reset. My suspicion is after today, it will further reset. And we have some -- as we discussed in our prepared remarks, there are real headwinds out there. And in kind, it does take private market multiples a quarter 2 to catch up to the public comp set. So we'll just have to be patient wait and see.

The key to this is always about being pragmatic, being patient and making sure we take our shots with our balance sheet capital, it counts. And that's what I've been doing for 25 years, and we will continue to do that. I feel really good about the setup for '22, and I feel really good about the setup in weaponizing our balance sheet and using it correctly.

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

So I was interested in actually the comment you just made, Marc, any more detailed observations on asset values in fiber towers or data centers or other infrastructure on deals that you've just sort of seen in the market, I get the U.S. towers or really any region or asset class, any trend line that you've seen year-to-date, given the tremendous transaction volume and things that have happened with respect to cost of capital, have multiple gone in any particular direction that you have found noteworthy.

And then a question on the 2023 and 2025 guidance. It seems like you increased it by similar amounts for each period. But given the implied or given the capital raising piece that you've been able to put up, it seems like your 2025 guide might be a bit conservative. Am I looking at that correctly or is there something that I'm missing?

Let me start with the first part, and then I'll come to the second part, which always makes my Head of Public IR, really nervous. So the first part is, we're 50-plus days into the year. My observations are somewhat regional and somewhat asset based. I would say, in U.S. towers, we haven't seen any diminishing multiples on private market transactions, that that asset has held in pretty good. I think on hyperscale data centers, asset values are probably holding in, I would say, in retail colo or Edge colo, we see those transaction comps tightening up a little bit. And we're talking about where we saw a pretty heavy comp set between 28x and 31x. I think that marketplace is starting to move back into a more mid-20-ish sort of orbit.

Fiber deals has been pretty interesting. There's been 1 deal that we know private that got done, it got done at a pretty attractive price. It was a fiber-to-home overbuilder in the Midwest, and it traded in a range that probably a year ago would have traded in the mid-20s, traded into the high teens. So we saw some degradation there. And then we saw 2 processes get pulled because the pricing expectations weren't met.

So maybe a little bit of the sparkles coming off the shine there with fiber, but I think data centers, it depends on what asset class you're in and what's the weighted average duration of your customer leases. And then I think in U.S. towers, it's holding in. I think in Europe, we've seen towers trade off their peaks. The days of tower deals getting done there at 28x to 29x EBITDA. I think, are probably maybe behind us, but I still see a lot of value there.

And I see opportunities are going to still trade well into the mid-20s. So maybe a 10% haircuts evaluations there. Data centers in Europe have traded up, not down. That's interesting to me. There was one transaction, a smaller transaction that got done, and it looks like it's going to get done at somewhere around 3.9% to 4.1% cap rate. So cap rates are really tight for hyperscale data centers in Europe.

Fiber assets really nothing is really traded in the fiber-to-the-home space, a lot of these JVs are still getting done in the high 20s, which I don't fully understand the math behind that, but we've seen no retreat in fiber-to-the-home. And then that's really about it. I think Europe has been a bit of a checkered box. You got to really understand your swim lane and dig in. I think Asia is something that we see represents perhaps a little more value. We've seen tower deals there trade had a pronounced discount to European and U.S. peers, multiples have moved from 12x to 16x up to 15x to 20x. So Asia tower multiples are on the move up, Jonathan. Data center multiples are on the way up as well. We looked at the Mubadala and Princeton data center deal in Asia, and that was -- that traded really tight from a cap rate perspective.

And there really hasn't been a ton of fiber activity. I mean we did a deal in the fiber space in the fourth quarter that we won't disclose the price, but suffice to say, it was certainly cheaper than what we've seen in Europe and the U.S. So we're finding good value in Asia in private market multiples. But what's interesting there, Jonathan, is actually we see more organic growth in Asia than we do in North America and in Europe. So we continue to be really bullish about Asia and we like the markets we're operating in and we like the fact that our hyperscale customers are taking us there and they want to grow with us there.

And Jonathan, on the longer-term plan, look, you're right. But if you look at our recent track record and frankly, our long-term track record with Marc and then those numbers do look conservative, but we try to be pragmatic with our longer-term guidance. It's certainly not sandbagged. If we hit these numbers, it's a great day. And frankly, working for Marc for 2 years, we're always going to try to do better than that, and that's our commitment to shareholders and trying to maximize our value, and we will try to have an amazing day by beating them. So that's our goal and that's our commitment as a management team.

We like beating -- that's something we like to do. And I think we've demonstrated a pretty good tracker around that. And I'm very excited about the things we're doing. I think we're doing things that are challenging. We're doing things that are unique. We're doing things that other management teams are not doing. And that's exactly what gets. I think Jacky and I motivated at the end of the day is waking up and doing things the other management teams just aren't capable of doing.

Lastly, what drove the sequential increase in share count. It was larger than normal, anything to call out?

The only thing is really our convertible notes. That was already in the money. So some of that was tendered and that was it.

Our next question comes from the line of Eric Luebchow with Wells Fargo.

So Marc, just wondering, your operating business is just U.S.-based assets today. Do you have any thoughts on maybe adding some balance sheet exposure internationally, primarily developed economies like those in Europe and towers or data centers or fiber? And if you did go that route, maybe how would you hedge out some of the FX risk and such a strategy?

And then the second question, Marc, was around just the general data center demand environment. I believe you said Vantage would do 200 megawatts last year. We heard about some really large deals getting executed in Q4. So maybe what's your outlook this year from a data center perspective, both for hyperscale and enterprise? And do you feel pretty comfortable that, as you mentioned before, you can kind of keep returns in line despite higher supply chain costs.

You must be ghosting my e-mails. I was like exchanging emails with Sureel last night, and I asked him if he could do 400 megawatts of leasing and he sent me an emoji crying. Seriously, I think on the hyperscale side, we hopefully will do much of the same of what we did last year. We just barely came in under 200 megawatts of total leasing advantage globally. I think it was $1.95 or $1.96. We are forecasting a slight increase on that, probably 10% up in terms of total megawatts leased, and the pipeline is robust. Our pipeline is over 800 megawatts of opportunity between the U.S., Asia and Europe. There are some big chunky deals out there. You are correct. And we don't see any sign of abatement. And that's why we're really excited about adding more Vantage campuses to our balance sheet.

Your second comment is interesting. We've actually -- we've built a really sizable business in Europe, 9 campuses now for Vantage Europe. They're now reaching a maturation point where it does make sense, if the values are correct from a fairness perspective that we can begin adding some European hyperscale campuses to our balance sheet. So that's something Jacky and I started working on last year with Sureel and the Boards, of the 2 different boards, the DigitalBridge Board and the Vantage Board. And we like what we see there, and we do want to add some European exposure, and we want to be exposed to digital infrastructure in Europe that has CPI index leases. We think that's the best way to help fight against inflation and certainly help offset some of those FX exposures, particularly where we're euro-denominated against the dollar.

To that end, we've looked at a lot of tower assets Jacky and I have, and we continue to look at some tower assets in the European theater to add to the balance sheet. It's something that we think makes a lot of sense. But once again, making sure we have the appropriate duration of contract and the appropriate CPI increases.

So I'm not trying to telegraph where we're going, but I would tell you, we've -- as this management team has always told you, Eric, we do the work first. So last year, we did the work. We did a lot of work around bringing in European assets to our balance sheet. We've gotten comfortable with that underwriting. There's a little more work to do, but we're getting, a, comfortable and b, closer to being able to take a few shots on goal.

And Eric, the only thing I'd add is we do have a hedging program. I would say that we have focused it around more if there is cash to be distributed back to the U.S., and we'll focus our efforts on that and time it appropriately. But it's not going to be -- we try not to get too cute or intelligent with hedging other than just safeguarding any cash that gets distributed back to the U.S. And make no mistake, any business that we have in Europe or in other countries. First and foremost, our view is that the best return is going to be reinvested back into the business. So whether it's data centers or whether it's tower growth and new builds, first and foremost, would do that and reinvest it back into the business, which will not trigger an FX issue.

And just one follow-up, Jacky, maybe if you could tell me about the digital operating guide, kind of what is implied in there that's more organic versus some of the announced tuck-ins and transactions. And I think the acquisition of a small interest from a minority shareholder, if you can maybe kind of break that down in terms of what the outlook is for 2022?

Yes, sure. So in terms of both DataBank and Vantage, we continue to see core organic growth rates in the low to mid-single digits. So that's purely on the organic side, obviously, it's anchored by escalations that we've got contractual in there at the lease level. And then the rest is already acquisitions that were already done this year, that's going to be run rated out to next year. So all what we've got in our guidance is really what we've got contracted today from the acquisition of CA22, which obviously we have a run-rate benefit year-over-year on that. That was that tuck-in acquisition at Vantage. And then we've done some additional augmentation at DataBank, specifically around Salt Lake City as well as Minneapolis, St. Paul.

Yes, that's right. I think, Eric, we brought on at DataBank, we have new inventory coming in. Salt Lake 5 and 6 is getting built, MSP3 is being finished. We'll start Indi 3, Atlanta 3, Las Vegas 1 is about to be finished and Chicago 5. So a lot of really great tethered expansion happening at DataBank, and that's really going to fuel the organic growth side. The leasing pipeline at DataBank has never been bigger coming into the first quarter of the year. We have over a sales pipeline over $27 million in potential new organic bookings.

And this comes off the heels of core revenue growth at the Databank portfolio of about 7.8%, and then EBITDA growth is about 6.8%. That's before zColo. And now that zColo is fully integrated, we'll be reporting full numbers for the entire company next year. So the setup on DataBank is really strong for organic bookings and most importantly, as we bring on new inventory inside of core markets that fuels leasing activity for 2022. We're pretty excited about that.

Our next question comes from the line of Richard Choe with JPMorgan.

I just wanted to follow-up a little bit on the environment for Digital Investment Management. The growth numbers are strong for '22, '23 and '25. But with the higher rates and a little pullback in liquidity, what gives you the confidence that the amount of funds going into the business will continue, given the volatility that we're seeing?

Yes. It's a very thoughtful question, Richard. Look, I've spent the last 60 days traveling around talking to LPs, part of our theme of getting back out there and connecting with our LPs. And a couple of themes have popped up to the surface in these discussions. One, our investors, which is over 200 private investors globally, pension funds, endowments, insurance companies, they are looking to reallocate their portfolio.

In irrespective of inflation or interest rates rising, these professional organizations, Richard, manage billions of dollars of capital. Their job is to be an asset allocator. And every endowment or pension or insurance company we see, they all say the same thing. We're under allocated to digital infrastructure. We're overweight private equity, we're overweight real estate, we're overweight liquid securities, but we're always underweight digital infrastructure.

And so when we launch new products like credit and core, and we think about turning the page next year and looking at our next fund, these are the areas where we see huge opportunity and they see opportunity. So they come to us and say, where should we be allocating capital in 2022? And we say, look, in this environment, you want to be a) defensible, which is our [SAF] fund, our core fund; and b), you want to be in credit, why you want to be in credit. The credit cycle is changing. And I mentioned a couple of processes where sponsors went out, Richard, to go sell a company, they didn't get the result and they need growth capital.

We've originated 7 loans. All of those 7 loans are to digital infrastructure companies that seek growth capital. We've already realized 2 of those loans in excess of 11%, and that TAM is growing and we're the only firm in the globe that's focused exclusively on digital credit. So for what we do, once again, I can only speak Richard, to what we do at DigitalBridge. Capital inflows are coming into us, and they're coming in at a record pace because our approach is differentiated and it's very unique. This may not be the same for other asset management firms that perhaps invest in other asset classes, where investors are potentially overallocated, but we are in the one swim lane for asset managers right now globally that is under allocated.

And this is where we really have been able to differentiate ourselves. It's not an accident that we've continued to outraise our forecast. And we've got great teams, great products. And candidly, I'd just say we're a little bit lucky, right? We're moving into an uncertain environment where global LPs really want to risk off. Our SAF fund exactly achieves that. Being in core allows them to risk off, being in credit allows them to be opportunistic. And so once again, our swim lane is growing. Our TAM is growing. Our ability to raise capital is growing. And so we've made enhancements to our team. We've expanded products.

This is why we've come to you with a significant beaten raise in that category. We have high conviction and high confidence in exactly what we're doing right now. This is a great moment for us. Once again, I can't speak to what other people are doing. I don't worry about that. I worry about what we're doing. And I know what we're doing is working with LPs.

Great. And given the cash, I guess, on the balance sheet or liquidity available and then also the funds in the investment management business, it seems like you're in a better position with maybe some disruptions going forward with -- versus competitors or deals that you're in. Can you talk to us a little bit, do you think you're a net winner here or you have exposure in terms of overall market risks?

So look, we're sitting on a little over $900 million of cash today. Wellness will close in literally a couple of days. And then plus our VFN, it kind of pulls us to $1.2 billion to $1.3 billion of liquidity, and we have our BrightSpire position. So we've been very careful, Richard, about harvesting cash right now because we do think things have turned.

And we looked at a lot of balance sheet opportunities, a lot of balance sheet assets last year. How it was pretty vocal that they were passes for us. They worked for other people. We understand why it worked for other people to buy the assets they bought, but it didn't work for us. And it didn't work for the return profile that I think investors why they buy DigitalBridge shares is because they know our track record of 20-plus years and what our returns are.

Now we're in a position where we do see airline fractures and valuations. We do see public multiples retreating in some of these different data center businesses or fiber businesses or ground lease businesses. There's been a pretty sizable contraction and the window is beginning to open where we see opportunity. And I think by being once again by being ultimately a good steward of the balance sheet and being prudent in how we deployed that balance sheet last year, we've taken our shots where we have good ball control, and we've taken our shots that are candidly going to be accretive

I mean, California 22, the Houston acquisition at DataBank, all of those are accretive to where we trade. And so I think we're telegraphing to you where we're going in '22. And once again, this is a management team that has a lot of confidence in what we're doing. And we feel very strongly that we're going to be able to execute our plan this year. And on the pricing in terms, we want to do it at -- that's important.

Our next question comes from the line of Dan Day with B. Riley.

Just one for me on the IM side. Obviously, nice to see the raise the guidance and the discussion around the new fund types that's really exciting. Just with all that in mind, I wanted to ask about the blended management fee how that is expected to evolve over time, a little shy of 1% in the fourth quarter. I'd imagine some of these products might have a lower management fee. Some might have a little bit higher than your kind of flagship private equity funds. So just any commentary around that? And longer term, where the FRE margin can go, whether 60%, 65% over time and how you think about that?

Yes, you're right. So new products coming online. Credit and SAF do have a lower fee sort of profile. Those strategies typically are kind of in the 90 to 100 basis point range. And that's, I think, what you should expect. We do have other strategies that are in flight, and we anticipate bringing in more capital into our liquid portfolio. We have some co-investments we're doing right now that will generate some new FEEUM. And obviously, ventures will get launched later in the year that has a higher fee profile.

But by and large, you're thinking about it the right way. I think the real key to here is profitability. So if you listen carefully in our prepared remarks, we talked about building the right teams to go out and capitalize on these new opportunities. So we spent that G&A last year to put the right teams in place to go out in the field to compete and win. So what we do anticipate is while we build out these new strategies, we anticipate EBITDA margins moving up over time because we've hired the key -- the key to these new strategies is hiring the senior people.

Guys like Matt Evans and Peter Hopper and Alex Villela and Dean, they don't come cheaply. And so getting the right product heads around these strategies and then filling out the teams a lot easier. But I feel good about our ability to increase margins in the back half of this year. And certainly, Jacky in '23 and '24 as we bring on other new strategies and products we see the EBITDA margins improving in our IM business greatly. I don't know, Jacky, if you have additional color.

Yes, that's right, Dan. So in our guidance, we've assumed and if you look at our historical IMF rate average is 95 bps. So we're maintaining that throughout the forecast and the guidance period. And as Marc said, 90 to 100 bps is where we're seeing these products at. So we're maintaining that IMF rate. And with respect to margins, if you look at our 2022 guide, the conversion rate, excluding our catch-up fees that was mostly incurred in 2021, we're converting EBITDA at a 90-plus percent rate. So that's going to drive more to continue to drive more than higher. And certainly, as the new products come online, as Marc discussed, that's going to flow straight down to EBITDA.

I wanted to ask one other one. I think a common question I get when I'm talking to people is, what's the value of the combination of the investment management side with the digital operating side? I guess people that I talked to have seen the valuations that some of these independent investment managers have gotten in the public markets and have asked me, like wouldn't it make more sense for this thing to sort of, just trade on a stand-alone basis or split the 2 up? So I think I know the answer to this, but if you could just talk about the platform approach between and the synergies between the digital operating side and the [IF] side. And what do you see is the value of combining these 2 together?

Yes. Look, I think the great part about having the digital operating business is as we build assets and we develop assets in the investment management side of the business, where you can be perhaps a little more forgiving and greenfield, as those assets mature, we bring them on to balance sheet when they're prepared to harvest.

And it really creates a great pipeline of opportunity where you can bring strong long-duration contracted assets that have fixed escalators or CPI escalators and still have a little bit of growth left where you can bring them on the balance sheet where they're truly appreciated by our investor base. None of that happens without the IM platform, right? There's the symbiotic relationship between the 2. They work together. It is one global investment team, by the way.

All the new opportunities come into the IM business and as if we work our way through our investment allocation strategy, ultimately, at the end of the balance sheet has the opportunity to look at everything if it's gone through that asset allocation strategy. So we feel pretty lucky to have arguably the best farm club in the world, right, using a baseball analogy that we can go out and curate over $7.8 billion of new projects this year on a global basis.

That is just something, once again, that other management teams can't do. Our global reach, our access to capital allows us to harvest those ideas and then ultimately bring them back home to balance sheet where we get to create those long-term predictable earnings that I think investors really appreciate about DigitalBridge.

Great. And then last one for me, just a quick one. On the BrightSpire stake, I think they reported, I think they said they might be interested in purchasing some of their shares back, maybe taking out in part or whole of your ownership of it. Just curious how you think about and how price sensitive you are in selling that stake, like, would you sort of prioritize the liquidity of one big chunk there. Are you looking to get sort of closer to book value as you divest that stake?

Yes. Once again, this is a boring answer. Pragmatic is the right word, I think Jacky and I have taken. We love what Michael is doing. BrightSpire is performing exceptionally well. We think they've got a lot of runway ahead of them. When the windows exist, where we think we're getting fair value, we'll entertain selling the stakes right now. Jacky and I don't need the cash today. So we're enjoying his dividend. It helps fuel some of the things that we're doing.

So once again, we're going to be active listeners. And when we do need the liquidity, the good thing is we've got a great partner, Michael, who's performing really well for us. And if we can get fair value for our stake, which we continue to have a sizable stake, then we'll look to continue to, in an orderly fashion unwind our stake in BrightSpire. But make no mistake, we're really happy with Michael and the team and Andy and everybody there. They're doing a great job, and we want them to continue to keep doing what they're doing.

Our final question comes from Jade Rahmani with KBW.

A follow-up on Investment Management. CBRE, which is a very large commercial real estate services firm mentioned on their call that infrastructure is a priority. Now they didn't parse it between broader infrastructure and digital infrastructure. But I'm wondering if you see them or firms like them as a potential partner that could generate revenue-generating services given DigitalBridge's overall expertise and operational know-how. And these services would extend beyond investment management fees and balance sheet investments. So a way to broaden the DigitalBridge platform and provide yet further value.

Thanks, Jade. It's a great question. And Bob Sulentic a good friend and a partner of ours. And Jacky and I are sitting here smiling because they're great -- such a great firm, and we have a lot of connectivity with them. First of all, we're their partner in digital infrastructure investing. So all of the investment work that CBRE does, CBRE Caledon, which is their investment manager out of Toronto. We brought them into the digital infrastructure space.

And I just can only say they've been a fantastic partner and did a bunch of deals with us. So we'll continue to work very closely with CBRE. We find that they're a value-add partner and we've really enjoyed the partnership. So we'll continue to bring new ideas to them, and we'll continue to grow our assets under management with them. Second, Jacky, we also have a partnership with CB. You want to talk about that in terms of what you're doing in the back-office side.

Yes. Sure. CBRE is our partner on a lot of the fund accounting fund reporting across our funds. So as we continue to grow in scale, CBRE has been growing and scaling with us on the vendor side. So we're very pleased with the partnership there. And as Marc said, they're a good friend and a good stakeholder.

Secondly, and I'm not sure if it was asked earlier, but how much equity capital are you targeting for deployment from the balance sheet into digital operating in 2022?

We are not guiding that at this point, which is why our guidance for 2022 excludes new M&A platforms. And as Marc said, we will continue to do what makes sense for our shareholders if the price is right, the opportunity is right when we get the best returns that yield good cash flow, then we're good. But otherwise, we're not guiding that at this point.

Okay. But the right side of the balance sheet, do you believe is where you want it to be?

You mean in terms of total indebtedness and where we have net leverage right now?

Yes. Yes. Do you prioritize new investments from the balance sheet over any debt repayment or things of that nature?

Go ahead, Jacky.

Yes, we'll always compare the 2. But obviously, we love digital infrastructure. And to the degree we find the right price, then we'll prioritize that. But if not, then we'll be opportunistic with continuing to offer -- to look towards our capital structure and repay some higher price cost of debt.

At this time, we have reached the end of the question-and-answer session. I will now turn the call back over to Marc for any closing remarks.

Yes. Thank you. Well, first of all, thanks to the analyst community. We appreciate your thoughtful questions and your continued interest and coverage in the company. We're very, very excited. I think that's an overused word for today's call, but there's a lot going on here.

And in conclusion, I want to just say a couple of closing comments. We have worked really hard to get to this place and we appreciate the trust that you've given Jacky, myself and Severin, and we're looking forward to launching here in '22 and moving forward in this pure digital model. And the simplicity of what we built is, I think, what should really make investors excited. Two businesses that are scaling, two businesses that are performing and most importantly, our ability to form capital and execute ideas quickly. This is really the hallmark of the investment thesis at DigitalBridge and why we're excited to accelerate and to build.

So we appreciate the thoughtfulness. It's a dialogue. We welcome all of you down here to South Florida. It's a nice time of the year to come visit us. We encourage investors and analysts alike to come spend more time with us. There's a lot going on here. We're happy to be transparent, but we're excited about the simplicity and the go-forward growth strategy of what we're doing here at DigitalBridge. Thanks, everyone, for your support. Have a great day.

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.