DBRG - NYSE

Greetings and welcome to the DigitalBridge Group, Inc. Third Quarter 2024 Earnings Call. At this time, all participants are in the listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Severin White, Managing Director, Head of Public Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to DigitalBridge's third quarter 2024 earnings conference call. Speaking on the call today from the company is Marc Ganzi, our CEO, and Tom Mayrhofer, our CFO. I'll quickly cover the safe harbor. Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed on this call is as of today, November 1, 2024, and Digital Bridge does not intend and undertakes no duty to update it for future events or circumstances. For more information, please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC for the year ending December 31, 2023, and our Form 10-Q to be filed with the SEC for the quarter ending September 30, 2024. With that, let's get started. And I'll turn the call over to Marc Ganzi, our CEO. Marc?

Thanks, Severin. And welcome, everyone, to our third quarter 2024 business update. We appreciate you joining us on the call and look forward to answering your questions during the Q&A session. So let's get started with the first item today, financial performance. This quarter, DigitalBridge continued to deliver peer-leading growth in fee revenues and fee-related earnings as our investment platform continues to scale. We delivered another quarter of mid-teens fee revenue growth combined with expanding margins as revenues continue to grow faster than expenses. FRE was up 42% year-on-year and FRE margins were up 500 basis points at 34%. Persistent revenue growth and expanding margins are central to the DigitalBridge investment thesis, and we've continued to deliver here. Second, and probably the most important part of this quarter was capital formation. We are well positioned to exceed our $7 billion annual fundraising target with $6.1 billion already raised to-date. We'll talk a bit more about this in a minute, but it's important to note that the timing and composition of those commitments will shift some of the reoccurring FRE impact into 2025 and Tom will walk you through that and how it impacts out-in period FRE for 2024 a little bit later in the call. Third, capital deployment. We're seeing the best opportunities to put that capital work today. It's really simple. In this period, it's been in both our existing platforms and into new opportunities in the data center and tower verticals. Putting more capital behind growth at DataBank and Vertical Bridge, as well as new portfolio companies like Yondr and JTOWER. It was an exceptionally busy quarter in deploying capital and we're seeing really good opportunities in this market environment today. Let's start by talking about the uptick we're seeing in capital formation and how that sets us up for the end of the year. Next slide, please. So, look, the headline says it all. I'm pleased to report that we have $6.1 billion in capital formation year-to-date. This has been a tremendous quarter. And again, I want to reconfirm with you, DigitalBridge is set to exceed our $7 billion capital formation target. Last quarter, we were in line with the prior year at the same point and today we're tracking 13% ahead of last year. And the momentum has been picking up and as you can see, we've raised $1.9 billion in just the last 30-days alone and have less than $1 billion to go with two months left in the calendar year to exceed our budget and our targets, which we have strong conviction around. Since our last report fundraising has been dominated by our co-investment around DataBank with the odd super transaction and steady commitments to our digital bridge partners three flagship strategy. We have a very surgical approach to closing out another 30 to 40 logos on a global basis through the end of the year, which positions us to meet and again exceed our $7 billion target. Next slide please. One of the natural topics that's dominated this past year with investors has been the broader fundraising environment. Investors want to understand how heightened interest in AI and digital infrastructure squares some of the forces impacting private markets. You've heard it, it's realizations, it's DPI, as well as the changing and shifting macro conditions around the globe today. As you can see, we're starting to see a noticeable uptick in fundraising commitments and our pipeline continues to grow as investors respond to the growing demand for new data centers and network capacity. At the same time, we're beginning to see that private markets are thawing. And the process of educating LPs about the implications of AI and digital infrastructure is beginning to bear fruit. Simply put, their growing intent is increasing matching up with an expanding capability. As our growing LP base dedicates more capacity to owning the picks and shovels of AI and we think this is the best way to play AI is to focus on the digital infrastructure that's required to power the AI economy. This is ringing true with LPs all around the globe today. So we've been building momentum every quarter in new capital formation and we expect our fourth quarter to be the best this year with $3 billion or more of fresh capital. We've raised almost two-thirds of that, $1.9 billion, in the first month. And we have high confidence again that we're going to beat our targets for the year as our capital formation process has been accelerating and will continue to accelerate from now to the end of the year. When that new FEEUM is achieved, it generates reoccurring fees that drive our growth in future periods, which in turn will accelerate our FRE growth. Next slide, please. Ultimately, the capital formation is driven by an increasingly global platform with a growing investor base. I've talked about it in our investor day. I've talked about it throughout this year. Our capital formation team of over 30 professionals on a global basis is operating at scale and most importantly is now pitching our multi-strat strategy. As you can see on the left, that $3 billion in Q4 capital formation is coming from around the world and across our different investment solutions. And this is the key point of inflection for DigitalBridge, is the fact that we can raise capital all around the globe and across different products. This quarter, here in the fourth quarter, we expect our fundraising to be dominated by North America and Asia in particular, as we close out some important logos by the end of the year. One other thing to note about capital formation has been our strong re-upgrade, as well as a growing contribution from new logos at the same time. This is not only a great validation from our existing investors, but adding new LPs is a big long-term priority for us, and we're making progress on both fronts. One area that I highlighted last quarter that's particularly relevant and has been growing at a rapid pace is our private wealth channel, where we recently brought in Andrew Cocks to Head up our Global Wealth Solutions. Andrew has been a key contributor and strategist at leading global investment firms including most recently at KKR, Lexar and Goldman. There he was focused on the private wealth channel, which we think is a multi-billion dollar opportunity for DigitalBridge over time. We've seen early success with the data center sidecar vehicle we talked about last quarter and we expect that by the end of the year we'll have raised over $1 billion from the private wealth vertical channel to that product. That was a $1 billion that we did not have factored into our business plan for 2024. Andrew and his team are already designing new products and investment solutions that fit the demand for this channel. So stay tuned. We're super excited about this. We're excited about the depth of our pipeline of logos that are looking at our existing products that we plan to close between now and the end of the year and we're super excited about our ability to scale our private wealth channel and to continue to add new capital from new verticals. This is part of the plan in terms of scaling and getting DigitalBridge to operate at the next level. Next page, please. I want to finish with some perspective on a few recent transactions that highlight our continued investment activity across the AI infrastructure ecosystem. This includes backing two of our most trusted and successful platforms with over $5 billion in fresh capital, as well as launching new platforms that will be the source of future returns in the coming years. First, Vertical Bridge, our flagship private North American tower company, recently signed a $3.3 billion deal with Verizon to purchase its remaining own tower portfolio of over 6,300 macro sites, increasing Vertical Bridges macro footprint by over 50%, while reinforcing their profile as the largest private cell tower operating in the United States operating at scale. The next transaction I want to highlight is DataBank, where we brought in our partners from Australia Super to lead a $2 billion equity raise to fuel the growth of three new campuses that will add almost 800 megawatts of edge compute power, tripling the company's footprint today. Raul and his team are hitting on all cylinders, and now they're incredibly well capitalized to build out the next phase of their growth as they address the key market of edge compute workloads. We're really excited about what's happening at DataBank and now Raul's got the capital to go execute on that vision. Next up, we also established two new platforms earlier this month. The First, JTOWER. It's the largest independent tower company operating in Japan today. We're honored to be the controlling shareholder of this business in partnership with management. As some of you know, Japan is historically a relatively closed market. And our successful bid highlights the trust, our carrier partners have in our experience in operating mission-critical infrastructure on a global basis. Owning and operating eight tower platforms on a global basis was incredibly relevant here. So was our approach to the Japanese market and the years of time we put in, in a building trust with those customers and the management of JTOWER and its shareholders. That was not an easy process. But again, at DigitalBridge, we're playing for the long haul. And some transactions take years and years to cultivate, like our relationship with Verizon. That manifested itself through years and years of hard work. So these are difficult transactions to execute. And we do it through our relationships and our patience and our perseverance. Finally, we recently reached an agreement to acquire Yondr, a global hyperscale data center platform operating in nine markets across North America, Europe, and Asia. Yondr has over 420 megawatts of lease capacity today and potential capacity to grow to over a gigawatt. We're excited to be supporting their continued growth in what is one of the most attractive segments of the data center ecosystem today, leveraging our key customer relationships and our operating experience as builders of great businesses in the data center sector. With that, I'll turn the call over to Tom to cover the financial section. Tom?

Thanks, Marc, and good morning, everyone. As a reminder, this earnings presentation is available within the shareholders section of our website. Today, I'll start with our quarterly financial highlights, followed by an update on our 2024 guidance informed by the pace and composition of our fundraising progress, and finish by covering our non-GAAP metrics and balance sheet profile. Starting with our third quarter results, we recorded $77 million in fee revenue and $26 million in fee-related earnings, both up substantially over the prior year period on a higher capital base. Additionally, we formed $1.8 billion of new capital during the quarter. And as of September 30, our fee earning equity under management stood at $34 billion, which represents a $4.2 billion or 14% increase over the same period in 2023. And as Marc mentioned earlier, we've continued to raise capital through October and have a strong pipeline and visibility on fundraising through the end of the year and into 2025. In the third quarter, we also generated approximately $11 million in distributable earnings, largely from recurring asset management operations and contributions from principal investments, while also benefiting from reduced interest expense after extinguishing our 2025 senior notes. Moving to the next page, we believe that the year-to-date capital raising and investment activity has positioned us well for 2025 and beyond. And as our year-end financial profile becomes clear, we wanted to provide an update with respect to some of the key 2024 financial metrics on which we have previously provided guidance. We raised $4.2 billion of new capital during the first three quarters of the year and are close to $6 billion year-to-date as we sit here today, giving us confidence in hitting our $7 billion target. We're also progressing towards our target on fee earning equity under management. Although we're likely to end the year near the low-end of our original range of $36 billion to $38 billion based on realizations and other offsets to new capital raise And as a result, we've revised the target downward slightly to $35 billion to $37 billion. From a revenue and FRE perspective, we continue to generate healthy year-over-year growth and believe that the fundraising activity this year will pay dividends going forward. However, the capital that we have raised this year has skewed more than expected towards co-invest capital and funds that charge fees on invested capital rather than committed capital that generate catchup fees, which will result in lower fee revenue in calendar year 2024 on the capital that we have raised. We're at $303 million of fee revenue on an LTM basis and are likely to come in between $305 million and $320 million of fee revenue for the calendar year 2024, which will be short of our range of $335 million to $360 million, but still represent a meaningful increase of between 14% and 20% over the $267 million reported in 2023. With respect to FRE, we're at $72 million year-to-date and $98 million on an LTM basis and expect to end 2024 with between $100 million and $110 million of fee related earnings, which would represent greater than a 20% growth versus 2023. A significant driver of the shortfall versus guidance relates to the composition and timing of capital raised this year. As I mentioned, we've had a larger contribution from co-invest and budgeted, which has a lower fee structure than fund commitments, and more importantly for 2024, does not generate catchup fees the way that commitments to our flagship strategy do. We believe that this is largely a timing and a pace issue and not an indicator as to the absolute amount of capital that we will ultimately raise in our fund products. We're confident that all of our funds that are in the market will complete their capital raises successfully, but some of this will roll over into 2025. On the next few slides, I'll give you a sense for our conviction behind the company's growth prospects, despite the shortfall in our 2024 revenue and FRE, as compared to the original guidance. Turning to the next page, the $1.8 billion of new capital formation in the quarter translated into a $1.4 billion net increase in our fee-earning equity under management from $32.7 billion at the end of the second quarter to $34.1 billion at the end of the third quarter. This growth is driven by capital formation in the DBP series, co-invest, and credit strategies. As of September 30, we've raised $4.2 billion of fee paying commitments in 2024. And as we've highlighted earlier, we've already had a great start to the fourth quarter and have a strong near-term fundraising pipeline as we look forward to the rest of the year and the start of 2025. Moving to the next page, which summarizes our non-GAAP financial results, the company reported $77 million of fee revenue in the third quarter, marking a 16% increase from the same period last year. The $26 million of FRE generated in the third quarter represents a 42% increase over the comparable period in the prior year, and the LTM fee-related earnings increased to $98 million, the highest that we've reported over any 12-month period. We also continue to see steady and consistent improvement in operating margins as growth in revenue exceeds compensation and administrative expense growth. Our margin increased from 28% to 34%, when compared to the third quarter of 2023. We expect this trend to continue as we raise additional capital over the next several quarters. Turning to the next page, which summarizes our carried interest and principal investment income. We reported a gross carried interest reversal of $15.8 million in the third quarter, which after associated compensation expense and non-controlling interest resulted in net carried interest reversal of $7.7 million for the quarter. As a reminder, the company accrues carried interest based on quarterly changes in fair value of the investments held across our portfolio funds and does not represent a cash realization unless it's classified under realized carried interest. On our balance sheet, we've accrued gross carried interest of approximately $940 million with net of compensation and controlling interest representing $181 million of net accrued carried interest to DBRG shareholders. Principal investment income, which is primarily income earned on the capital invested alongside our limited partners, was $6.5 million in the third quarter. Moving to the next page, this chart, I think highlights the stability and consistency and growth, both in revenues and margin, as we present those here on an LTM basis. LTM margin has ticked up from 31% to 32% as of the third quarter. Based on our fundraising outlook, I expect this chart to continue to show steady and consistent growth in LTM fee revenues, FRE, and margin over the coming quarters. The third quarter saw $1.6 billion of inflows, primarily capital raised in DBP funds and co-investments, slightly offset by $300 million of outflows. Turning to the final page of the financial section, you'll see that the company continues to maintain a strong balance sheet with $1.4 billion of capital invested alongside our limited partners and ample liquidity. We continue to evaluate the appropriate capital structure for the business, including our preferred stock obligations. Available corporate cash as of September 30 was $127 million, with total current liquidity of $427 million. With that, I'll wrap up the financial section of our presentation, and we'll turn it back to Marc for his final remarks.

Thanks, Tom. I'd like to wrap up our third quarter report by covering the progress we've made on the second-half of 2024 priorities that I outlined last quarter, as well as putting into context where we are focused on the longer term. First, on continuing to deliver peer-leading management fee revenue growth and operating margin expansion, we checked the box here. Fee revenues were up over 16%. FRE growth up 42%, and we expanded FRE margins to over 34%. As I noted earlier, delivering here is central to the DigitalBridge thesis. We've got to grow FRE, got to grow our margins, and at the same time, we've got to continue to generate new revenues. Two, successfully forming $7 billion in new FEEUM. Here, we're clearly on track to deliver. In fact, what I tell you is we're in a position to exceed. With over $6.1 billion of committed capital as of today, we're well ahead of last year, and with under $1 billion remaining to go with just over two months of fundraising left in the calendar year. Third is we are going to accelerate FRE growth into the back half of 2024 on the back of new equity commitments. Look, as Tom noted, the timing of capital formation, which is happening later in the year than expected, and the composition of that fundraising with more co-invest and less DigitalBridge Partners 3, which generates catch-up fees, has impacted our ability to deliver the end period FRE that we'd expected. Now, here's the key and the key takeaway from today's call. The silver lining is that as new capital formation is activated, like we've just done here in this quarter, those reoccurring fees will benefit future periods. We remain convicted on our ability to execute our business plan. Number four, continue to maintain a strong balance sheet and liquidity position. Here, we can check the box again. With cash in our balance sheet, both stable and consistent with the prior quarter. The last item, number five, this really centers around corporate M&A as we evaluate accretive acquisitions of adjacent asset managers. We haven't closed anything this year, but we continue to have a compelling pipeline and we expect to be active in the year. Finally, before I turn the call over to Q&A, I want to highlight management's key long-term priorities that underpinned both our investment thesis and our strategic focus. While delivering the results in 2024 is super important, we want to make sure that every investor understands that we remain committed to delivering our long-term fee revenue and FRE targets, doubling the FEEUM in the next five years with margins expanding from the 30s to the mid-40s. Make no mistake, we will deliver on this plan. Second, continue to create value at our portfolio companies by leveraging our heritage as business builders. This drives investment results, which in turn drive carried interests for you, our shareholders, and the next cycle of capital information that you're beginning to see here in the third quarter. Finally, on capital allocation, this is about redeploying the free cash flow that our business is now generating into high return on invested capital uses. First, including compounding capital alongside of our LPs, taking advantage of strategic accretive and tuck-in M&A, and continuing to optimize our capital structure when it makes sense at the right price. These three priorities remain at the center of our roadmap and inform the decisions that we make about how we form and deploy capital across the AI infrastructure ecosystem to the benefit of our limited partners, and of course, to the benefit of you, our shareholders. So with that, I want to thank you for your ongoing interest in DigitalBridge and attention today. I look forward to updating you next quarter on our progress as we close out 2024. Operator, please open up the call to Q&A and thank you again.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question is from Jade Rahmani from KBW. Please go ahead.

Thank you very much. I think you should address at the outset the disconnect that exists between the positive industry backdrop for digital infrastructure, which we're all familiar with, positive news flow about specific deals, specifically things that have come out even in the last few weeks, and yet the disappointing results. It does seem like the mix shift in fundraising is toward co-invest. And so the question is whether, you know, DigitalBridge is best suited as a merchant bank type of entity rather than, you know, running the flagship funds. So I guess if you could just ask why any investor concerns as it relates to the fundraising outlook?

Yes, good morning. Thanks, Jade. First of all, co-invest is a part of what we do, right? It's our heritage, it's where we started. And everything we're doing in co-invest links up to the flagship funds. So, you know, the ability to scale and create outsized outcomes relies greatly, Jade, on co-invest. So you have to remember when we're raising primary or secondary capital like we did in this quarter, it's being deployed immediately into growing the physical plant which is growing NOI, growing EBITDA across the 40 plus businesses that we own. So it's a powerful force multiplier and at the same time what it does is it creates more scale and it creates more carried interest on the investments inside those funds. So it is vital and given the amount of CapEx that our customers are spending right now, Jade, you have to have a big co-invest program, or you don't have the ability to get the FX to get the big bookings. I'll give you a case study on that for a second, which is Switch. We raised over $2 billion of co-invests in Switch, and we've continued to add capital to Switch. And since we've taken that business private, we've almost tripled the earnings there in a short period of time, two years. How do you do that, Jade? You do that through having what I call ready-aim-fire capital. Vantage has it, DataBank has it, Switch has it, Scala has it. All of our big hyper-scale data center platforms around the world have this ability to show up for customers and perform at a level where, candidly, other data center operators cannot perform at. So that's co-invest. Second, our fund products are working, whether it's our credit strategy, our flagship strategy, our private wealth channel. What I can tell you in this quarter is given the velocity and the acceleration in fundraising, I have total conviction around all of these products working and working simultaneously. A year ago, Jade, we were just a one-product shop. Today, we have credit, we have private wealth, we have flagship, and we have co-investments. All of those products in this quarter are working and they're performing. That is the headline you need to walk away with in this quarter, not that we're a merchant bank. We are a global alternative asset manager with multiple strategies and all those strategies are winning and are performing. That's the key takeaway from this quarter. Certainly, I'm sure you're frustrated as we are with where we are in terms of FRE, but given the slow velocity of fundraising in Q1 and Q2 and at the beginning of Q3, that had an impact as it relates to our performance in calendar year. Again, we are very convicted around where we are going next year. We remain completely unchanged in our five-year view of where this business is going. And a lot of this is timing, but we are actually quite pleased with the fundraisers. Not pleased with the FRE result, but extremely pleased with where we are in fundraising. And the pipeline for the rest of the fourth quarter Jade is incredibly strong. We've got over 40 dedicated accounts that amalgamate up to over $3 billion in possible opportunity and the fundraising pipeline is very strong between now and the end of the year. And these are high probability accounts that are doing flagship, credit, co-invest, and private wealth. Again, those are really the four pillars of fundraising right now, Jade. And again, last comment to you. All of those products are working and we're a multi-strat global asset manager, that's who we are. We're not a merchant bank.

Can you discuss what drove the carried interest reversal? That was also a surprise.

There wasn't anything really individually meaningful in that. It was sort of portfolio evaluations that were appreciating roughly in line with our preferred returns. And so there was a little bit of up and a little bit of down across a number of different funds and products. But there was no like, you know, individual significant driver.

Thank you.

The next question is from Ric Prentiss from Raymond James. Please go ahead.

Thanks. Good morning, guys.

Good morning, Ric.

Hey, a couple questions. Marc, I think where we were off on ours was composition. You guys have hit on that a couple of times. The composition, the fundraising panel was coming in line when we were backend loaded. But the composition is the big key. Maybe you guys can walk us through how much of the catch-up fees that you were thinking would come in ‘24, how much have moved out into ‘25 first? Just give us kind of a magnitude of what happened with composition and how does the catch-up be moved out into ’25?

Yes, I'll let Tom start and I can backfill behind him, but we have pretty good clarity on that. Go ahead, Tom.

Sure, Rick. So year-to-date, at September 30, we've had about $10 million of catch-up fees. Those tend to kind of accelerate as the longer a fund's in the market. So I wouldn't be surprised if we have between $5 million and $10 million in the fourth quarter. So in our original guidance for the year, we have $40 million. So roughly speaking, I wouldn't be surprised if we ended up with half of those in ‘24 and half of those roll into ‘25, something on that order of magnitude.

Okay.

And then the other thing I would just mention, Ric, is to your point about timing issues and when fees activate, when they don't activate, co-investment fees activate when we close on an investment. So when that investment closes and the capital is invested, those fees kick in at that point. So when you get a big primary commitment of capital like Aus Super and DataBank, we're deploying that capital over the next 12 to 18 months. So those fees activate as you commit the capital, as you invest the capital not committed. So co-investment, the fees kick in on invested, not committed. So there's a little bit of timing there and that takes anywhere from you know one quarter to four quarters to deploy all that CapEx whether it's Vantage, Switch, DataBank, Scala, any of the big data center operators. We're rolling the CapEx and capital calls are happening every 30 to 60 to 90 days. Second, our credit strategy, as you know, from other alternative asset managers, from a credit perspective, that is also on invested. So our credit funds don't pay as fees on committed capital. And another part of our credit strategy that's working quite well, Ric, is SMAs. That's really kind of the state-of-the-art for folks that are big in credit, whether it's Apollo, Ares, ourselves. We all have SMAs where an investor will take a commitment to the fund. And then side by side with that, Ric, they'll commit incremental capital where it's in a separately managed account, an SMA. And we have discretion over those SMAs. They'll like a deal. Let's say they like a residential fiber deal in the U.S. and they'll commit 50 to that. They like a tower deal in Europe. On credit, they'll commit 50 to that. The minute that loan closes, those fees activate. And so again, there's a timing lag there as it relates to how we get paid in credit. So co-investing credit have a slightly different cadence than flagship and you know our private wealth channel that is on committed capital, so that's good news that looks a lot like the flagship product and as we scale our private wealth product, we were targeting you know $600 million we're well you know we're going to exceed that significantly inside this quarter. The private wealth product is working really well and so as Tom said those fees will catch up in the first quarter of next year. I hope that's helpful Ric?

It is and timing is obviously important. What on the flagship side, where are we at on Fund 3 and what is the hard cap for Fund 3? How should we think about that one since that does drive earlier recognition of catch-up fees?

Yes, so we're performing quite well on flagship. I don't think we're at liberty to give you the specific number as of today. We literally have commitments coming in, you know, every day, including last night, that some commitments come in. So again, we were targeting in the third strategy, $8 billion on the cover. We haven't put a hard cap on that yet. We've had some conversations with our top limited partners. We feel very good about hitting that $8 billion number in Q1 of next year. That's kind of what we're targeting. We have really good momentum, got over 130 accounts in the data room working on that fund. And so we could have a beat to that, but our goal is just to hit the number and deliver that number inside of Q1 next year. And our team has, again, strong, strong conviction that we're going to hit that number. But we're well on our way there, Ric. We're definitely well north of 50% of that strategy. We've got a clear path to get to that $8 billion target.

Okay, and last one for me is obviously carried interest is a large component of what the value of the stock could be. Recognition of carried interest is important. Like Jade said, obviously there was some accounting items this time on mark-to-market or fair valuations. But there's been a lot of news out there, a lot of rumors out there about some of the portfolio companies. Can't ask you to address rumors, but just as we think about carried interest performance, how should we think about the timing of that, the recognition of that? It feels like there's some prioritization on getting some of that realized in the not so distant future, but whatever you can elaborate would really help?

Yes, thanks, Ric. I mean, look, carried interest is a big, big part of our value proposition. As you know when we laid out the sum of the parts analysis on DigitalBridge last year you know we targeted about $1.4 billion to $1.5 billion off our balance sheet another 700, 800 off of carried interest and then the asset manager of course based on some multiple of FRE, which gets you the sum of the parts valuation of what DigitalBridge just worked today. On carried interest, we've always been very, very transparent about what we do in terms of selling our portfolio companies. We have great assets, they're super valuable, a lot of rumors in the marketplace around a number of our assets. We don't address those rumors directly. What I will tell you is people do come and they inquire about buying our platforms, if we find that there is compelling value, and compelling value for us is 30% to 40% premium to NAV, which is where we sold Wildstone, which is where we sold our Vantage Towers position, and where we sold other assets previously. We tend to be very conservative in how we mark our book. Tom walked you through the reversals and carry inside of this quarter and again it's a framework where we have independence Ric in terms of marking our assets versus the investment team. For example I'm not on the valuation committee that values our assets. We have independents around that. No one on the investment team interferes with that process. And so we generally tend to be very conservative in how we mark our assets. And then we have third-party validation around that process. The rumors that you're hearing in the marketplace is a function of the fact that we have very attractive businesses. And whether they're rumored to be an IPO, whether they're rumored to be for sale, or whether they're rumored to be, you know, processes kicked off, we've also been very clear with investors that we are creating more DPI, that's important. You know, part of the DataBank transaction has some DPI related to it. Some of the things that we're doing at Vantage has some DPI tee up, you know, for this year and next year. And so there's other opportunities for us to create those outcomes that we like, whether it's rumor or fact. I think, you know, time will tell, but we are actively looking at certain assets in Fund 1 and we will look to obviously create those right outcomes and when we do obviously go to sell some of those assets in Fund 1 it will generate material carried interest next year. And so that's our plan. I think we haven't been pretty secretive about that. I think we've told everyone out there that we're focused on DPI, but at the right time, Ric, right? We need interest rates to cooperate. We need multiples to cooperate. And we know the platforms we're building are some of the best in the world. So I'm in no rush to sell anything artificially, but if someone does come to us with compelling value, of course we're going to sell and we always believe everything is first built DigitalBridge at the right price and at a premium to NAV. And I think we demonstrated that on Vantage Towers. We demonstrated that on Wildstone. And we've done that in a few other instances where we sold assets. So I think the punch line is there's a bunch of potential opportunities sitting out there. We're evaluating all of them. And every day we're remarking our assets in terms of whether they're for sale or whether they’re going to hold them and continue to grow them or whether they're going to raise more co-invest capital and keep growing them. Those are kind of the three decisions we wake up every day on the 40 plus companies we own.

Great. Thanks, guys.

Thank you.

The next question is from Richard Choe from JPMorgan. Please go ahead.

Hi. I guess I just wanted to follow-up on the capital formation environment. You're saying it's accelerating, but I think as some of the questions earlier about DBP 3 and kind of a later close, as we kind of go into next year, is this kind of, do you see an acceleration as next year starts or is this kind of culminating around DBP 3 closing at the first quarter? Just kind of getting a sense of how you see where things are going over the next, call it six to 12 months?

Well, I don't see it culminating. In fact, I think this is the sort of normal cadence, Richard, that we're trying to develop here at DigitalBridge. You know, that movement away from being sort of a one-product shop into being a multi-strat firm that focuses on the ecosystem. And I think we laid it out in the third quarter here, which is, as I said earlier, all the products are taking and they're working. That has continued here in the fourth quarter. In fact, even further validation of what we're doing in terms of credit, flagship, private wealth, and co-investments. Those are all products that are working quite well for us. As we move into next year, and we'll certainly have a more detailed conversation in our fourth quarter call, we've got new products that we're launching next year, new strategies that we're launching next year. Certainly finishing up the flagship product, the credit strategy will continue to form capital next year. We're certainly looking at other ideas around you know other forms of private wealth products that we're going to put in the market early Q1 next year. And then we're of course looking at DigitalBridge, we're looking at our core fund, SAF 1, our strategic asset fund is performing really well. In fact we've invested all of that capital out of our core fund. We're looking at a potential continuation of that strategy. So the key, Richard, is not to be reliant just on flagship. I think that's if you take away one highlight from this call, despite the FRE not being where we want it to be, you have to take away from this quarter and certainly in the next quarter that all of the strategies that we worked really hard to develop in the last 18 months are now validating. That's really important because what that does is it sets us up to continue to grow private wealth, continue to grow credit, continue to grow core, continue to grow flagship, and with the opportunity to introduce new products around owning digital assets and long-term vehicles and private wealth channels, and of course, our focus around energy, which we're really excited about for next year. So there's a lot of things that we're doing that are setting us up for success. But the key thing is this is really a quarter that validates that we're no longer a one strategy shop. That's the key headline coming out of the score. Strong fundraising, validation of the products, and the fact that we are now multi-strat firms and those strategies are all taking and are being, and from my perspective, they're successful from a fundraising perspective.

And regarding the data center sidecar for private wealth, you're saying that the expectation is up from the $600 million to $1 billion, but do you assume that, that's going to be an ongoing product and that could be a nice kind of continuous channel in from that asset class?

Yes, no, we're really excited about it. I mean, what Andrew did at Goldman, what he did at KKR was not just build one product, he built multiple products. And his cadence was raising billions of dollars a year, not $1 billion a year. So what we figured out in the AI data center sidecar vehicle is that we could get private wealth clients access to a couple of really good companies really fast. And investors really liked that idea. But think about where you can go with that. There's other forms of AI, there's other geographies, there's other verticals like fiber and towers, digital real estate. There's all kinds of things that we can be doing across the private wealth platform. And then the other thing that I really like about this, Tom, we were talking about last night is we do have a big co-investment product. We can plug our private wealth channel into that and they can take 10%, 20% of the co-invest. And by the way, that generates fees immediately. So we really see the private wealth group here at DigitalBridge accelerating. We have products that are lined up for next year that we think are going to be very successful. And I think as investors get more exposure to Andrew, you'll see what I'm talking about. He's an exceptional executive, great pedigree, and is going to build a really good team here that can deliver really reliable fundraising for us and new strategies in the years to come.

Great. Thank you.

The next question is from Eric Luebchow from Wells Fargo. Please go ahead.

Great, appreciate you taking the question. You know, Marc, you guys have been more active recently with some M&A, the vertical bridge, Verizon deal, the JTOWER deal you highlighted, and we've seen some other large deals like AirTrunk in the data center space. So where are we in terms of the M&A environment where you're finding value from acquisitions and what the pipeline looks like?

Yes, thanks Eric. So we're proceeding to invest out of the third flagship strategy, and that's going quite well. Yondr was a great example of that. We didn't disclose the multiple, but it was good value, at least from a data center perspective, it was good value. It certainly wasn't the lofty multiple that was on AirTrunk. It was at a multiple much, much, much lower than that. And so we found some value there in Yondr because I think a lot of folks were sort of focused on AirTrunks and we had a second team that was working on Yondr, while we were working on AirTrunks. So I'm happy with that outcome because it's a great asset, it's got a great footprint, and on a relative basis we came in as a smart buyer there against what was paid for AirTrunk. I think the other things that you're seeing us do in the third strategy, JTOWER was something that we've worked on for two years. These things take a long time to gestate. We really like the Japanese tower market. Carriers are finally starting to share infrastructure there. That's kind of the tip on why you want to be in a market like that. Historically, Japanese carriers have not shared or traded infrastructure. Now they are in JTOWER and it's proven that out. So we're pretty bullish on that and being the first to the Japanese tower market as a foreign owner and investor and operator, we think that's really exciting. We're going to do big things with the JTOWER platform, so that's exciting. The Vertical Bridge deal, it's just about continuing a three-decade partnership with Verizon. It started when Alex and I were building sites for [Bellini Mobile] (ph), and it's continued through 30-years of trust and hard work and we're really happy with that outcome and you know raising you know a bunch of co-invest around that idea and strategy investors are lining up for that. It's a you know long-term leads with an investment grade customer, so again it's another situation where if you have the best assets in a particular market, let's make no mistake, we think the Verizon towers are the best tower assets in North America, investors line up for those opportunities, Eric. And that's where co-invest really works well for us. When you go and you can stand up and go get an opportunity like that and you win, there are a bunch of people at loss that merely flocked to our queue to say, I'd like to co-invest with you. And so for that opportunity, we get paid. We get paid for taking that risk. We get paid for winning. And so co-investment is good, it just comes in at a slightly lower fee and it comes in on invested versus committed capital. So I like what we did in the quarter again. I think Verizon was a big win. I think certainly, you know, what we did with DataBank, with Australia Super was a huge win for us. And then of course Yondr and JTOWER and a few other things were working on. The pipeline remains robust. We've got over 20 ideas we're working on. There's over 10 billion of new opportunities sitting in the flagship fund. We're incredibly active investing out of the third strategy. And we're also, as I said, we're incredibly active at looking at dispositions out of the first fund as well. So there's a little bit of puts and takes here and all in all, from an M&A perspective, we are finding value, Eric. I think data centers, it's hard to find value. Let's be honest. Towers, if they're really good investment-grade assets, also hard to find value. I think you saw the Vertical Bridge trade, and you've seen some other tower assets trade around the world. Towers on a private basis, Eric, really haven't retreated. Maybe multiples have come in 2 turns to 4 turns, but not much. Data centers, you could argue with the AirTrunk deal and moved up 2 turns to 4 turns. And fiber continues to be air pockets of value. I mean, we obviously saw the deal that Timo did. We saw the deal that Verizon did with Frontier. The fiber market is really active. You can find good value, but also for the really good assets, they're going to trade up and trade at a high multiple. But we do think the area where you can find value is fiber. It's just a little harder in data centers and you got to be careful about where you buy in towers and most importantly, you got to be careful about who your customers from an investment grade, non-investment grade perspective. So we stuck with the best investment grade customer that we know in this hemisphere and decided to go along with Verizon.

Great, thanks for that Marc. And just one follow up, I think you mentioned in your prepared remarks that you expected to close on some asset manager acquisitions in the fourth quarter, if I heard that correctly. So maybe you could elaborate on that a little bit? What are you kind of looking for with these acquisitions? Is it access to additional products like a traditional private equity, energy expertise, access to new LPs, more geographic distribution, kind of what are the underwriting criteria when you're looking at these transactions? Thanks.

You just answered my question, Eric. Thank you. All of you above, so M&A for us, first and foremost, it has to fit our financial profile. So we're looking for at least a 2.5 times return on our money. We're looking for returns more in the, you know, when we're investing our balance sheet, I want private equity returns. I don't want infrastructure returns. So, you know, Tom's background, private equity, Carlo, he and I are the stewards of the balance sheet. We protect it. And so we're looking for returns more than 20% in north of a 2.5 more Eric. And so in asset management land, multiples are kind of frothy at the moment. We've seen some big trades and some big multiples. So we're being selective and we're trying to find the right pockets of value and to find the right managers, right? I mean, when you're buying an asset manager, you got to buy the right people. So, you know, we've been pretty clear that we want to scale our credit platform. We've been very, very focused on that. And we have some really good ideas on that, that we're actioning right now. And most importantly, it has to be accretive. It has to be accretive day one. It has to be accretive to our shareholders and everything that we are looking at actually is a creative day one to our share price. So, you know, we love the idea of going deeper in credit. We'd love to over a five-year time period build a $20 billion AUM credit business that's been in my ambition for credit and we think we can get there. There's over $80 billion of digital infrastructure LBO pay for maturing in the next 24 months. Private credit is not going away Eric. And in fact, I would offer to you that I think it's scaling. You know, we continue to get bigger. So we're really focused on our credit platform and how we can scale that. And those are things that are happening inside this quarter as we speak. You know, whether they manifest themselves with a closing this year or not, it's not clear. But what I would say is that's a high priority for myself and Tom and Ben, is we are focused on scaling our credit platform. Second, you hit the nail on the head again, we've always said private equity is interesting to us. It's a natural adjacency because of some of the great firms out there that do, you know, telcos, that do cable, that do spectrum. There's a bunch of private equity firms we like, we've diligence, we've had conversations with. It is clearly on our shopping list. It's probably number two, would be to be in digital private equity. And so there's a couple of targets that that we really like and again these deals don't happen fast. You have to build relationships Eric, because ultimately who I'm transacting with is usually a founder and somebody who's been running that strategy or that fun business for a decade or two decades or some of the guys we're talking to have actually been in the business three decades. So we want to find the right partners. We want to find the right people that have kind of our attitude, our work ethic, our culture, and that's not always easy. But I would say on the private equity side, we definitely feel like sometime in next year that's a space that we will enter. We've talked about entering in organically where we build up our own product and we've also discussed about doing it through M&A. Energy same thing. We've been building it organically. We've been building a lot of energy projects around the world by our own. That's going to manifest itself next year in the form of some strategies that will produce fee and carry. But also, we're not afraid to go out and do M&A as well. There's some really interesting GPs that do energy transition that are, I don't want to call them subscale, but maybe have $5 billion to $10 billion, $20 billion of AUM. Their FRE is sort of modestly break even, a little higher than break even, and they're trying to scale too, like we all are. And fundraising even for alternative energy, if you're a subscale GP in the energy space, it's hard to go out and fundraise. There's very few folks that are fundraising at scale in the alternative energy space. So we've identified, you know, three or four targets that we really like in that space. We're spending time with them, again, building relationships and it takes time. At the same time, we're doing some projects with some of these folks. We're testing it. We're seeing, you know, how they operate in a solar project or a wind project or a microgrid. So a lot of things that we're deploying on the energy side, we're deploying with other GPs and getting to know them and figure out who's a good fit for us. So I'd say it's credit first. I would say it's private equity second, with a close third being energy transition. Those are the three areas that we're focused on. And again, it's got to be a creative day one, looking for north of a 20% IRR and 2.5 times our money. We want to be really prudent about how we use the balance sheet. I think throughout the year, we've been intimating that we're going to do M&A, but I think what you're hearing from you today is very specific metrics, very specific targets, and very specific verticals. We now have a very clear path in terms of what we're doing and I can't telegraph more than that without severing kicking me under the table. So that's where we stand on M&A right now.

All right. Fair enough. Thanks Marc.

Thanks, Eric.

The next question is from Jonathan Atkin from RBC Capital Markets. Please go ahead.

Thanks for taking the question. Good morning. A couple from my side, you earlier had indicated that DigitalBridges' GP interests and minority stakes in some of your data center companies have been underappreciated by the market? I'm just wondering any latest thoughts on monetizing those assets and what would be the use of funds if you were to sell?

So, again, in terms of our private assets or our balance sheet assets, maybe fine tune the question a little bit. Sorry.

Yes, yes. The balance sheet assets.

So, look, on the balance sheet, you know, we've got really two pillars of value. There are the positions in DataBank and Vantage and then obviously there's the GP stakes. So maybe we could just start with the, you know, where we are in terms of DataBank and Vantage. You know, today we're holding DataBank and Vantage SDC at $675 million. We're holding the DigitalBridge Partner Series at $340 million. And then the rest of our GP stakes at $362 million. I think on the DataBank and Vantage SDC assets, we just talked about raising, you know, over $2 billion for DataBank. There will be some secondary involved in that. That secondary closing will happen later in the quarter, if not first quarter next year. We do plan, Jonathan, to bring some capital back on DataBank. Tom and I are sort of deciding how much secondary we want right now in consultation with the board. But given the market where we raised money with our Super, we're excited. I think that's a good validation of our hard work. And I don't know, Tom, if you want to comment on that at all. Feel free to?

Yes, and look, I think there's two components to it, which you articulated. The regular way GP investments in the funds, the DBP series, I think those will just have a continuous churn and realizations on those will fund our commitments on the next fund and kind of continue to churn without making any kind of commitments or promises to the extent that there was a meaningful transaction related to one of the large positions on the balance sheet. I think we evaluate the capital structure. And is that an event that we used to pay down and defer or something like that. But I look at them in two different buckets. The GP investments are just part of the business. We're always going to have them. It's a little bit of feeding itself. Those investments will feed because the next times the sort of DataBank and Vantage are, you know, more singular investments that would have probably unique uses if we were to have a significant transaction at some point, which is not in the far, you know, just at some point in the future.

Yes, I think also in Vantage SDC those athletes are proving to be really unique and very defensible. So I kind of like that asset sitting there and sort of accruing at where it's accruing. And there's some renewals that are coming up where to be very direct. We're under market by a lot now. In Vantage SDC, Jonathan, as you probably remember, owns most of the Santa Clara data centers that we own, which are really valuable, that sit in some really strategic locations where those rents were done, Tom, seven, eight years ago. And now if you check the market, you know, those rents are much higher. So we'd certainly like to extract maximum value on Vantage SDC before thinking about any monetization plan. But look, it comes back to on DataBank and Vantage SDC, we've got two really high quality assets, investment grade assets that are generating steady and consistent double-digit organic growth and returns in the high-teens. And for our money, that's exactly what our balance sheet should be doing at the end of the day. So we're very comfortable with those positions. I would say the Aus Super, the $2 billion plus fund raise, we are going to take some secondary off the table. The valuation is very compelling. And again, it's an area where we can prove that, you know, at a premium to NAV, whether it's a small premium or a large premium, when there's an opportunity to return capital, you know, back to the balance sheet, Tom, you and I will think through that and we'll do it thoughtfully.

Thank you. Maybe just two quick ones. Fiber investments, a lot of AI-driven demand in fiber, new routes and so forth, and just kind of the appetite to deploy capital around expansion, I guess, picking up

Well, let's just start with Latin America really fast. I was down in the region last week. Pretty exciting, particularly in Brazil. Brazil has a lot of exciting things happening. You know, we had a very good quarter down in Scala. They continue to win key logos. And more importantly, you know, the guy has the power. So much like in the United States, Jonathan, you've got to have the power and you've got to have continuous power and you've got to have it at the right locations. In Scala, we're lighting up another 500 megawatts in our new substation, our new microgrid there in Tambor. I got a chance to actually go see that microgrid getting built, which is pretty exciting. And that's pretty cool, because that microgrid is bringing in all that hydro power from the north. And Scala is one of our really sort of bright shining portfolio companies where we've got 100% renewable energy that powers those data centers. We release that transmission infrastructure and we bring that hydro from Brazilian from Minas Gerais. And so 90% of the power in Brazil is renewable. So it's a great market and we're really excited about what we're doing there in Sao Paulo. But we're looking at challenger markets like Bogota, Santiago, Mexico City. And we're seeing a significant uptake from the hyperscalers in those markets. So data centers in Latin America has been one of the bright stars and we're going to continue to support Scala and we're very excited about it. You know our fiber businesses down in the region are performing well. We've got one fiber business in Chile. It's a wholesale operator. We'll re-operate infrastructure for other folks. We're ahead of plan there. We really like what's going on there, and we're excited. We have three tower companies in the region, all of them posting positive organic growth, in the -- what I would call high-single-digits, low-double-digits, but the big standout was really the Andean region. ATP, which is Chile, Colombia, Peru, those guys are kind of on pace to post somewhere between 14% and 15% organic growth this year. Highline in Brazil is doing well as we're starting to see massive take up in colo for 5G, 5G amendments and 5G overlays, intensification sites. We're sort of predicting kind of, you know, 9%, 10% growth there. And Mexico is just sort of steady. It's not a super exciting market, but it is a very consistent market for us. So there we're kind of delivering, you know, pre-escalators we're delivering about 4% or 5% organic growth. With the escalators given the inflation rates in Mexico right now, that growth rate looks more like 10%, 11%. So I like all three of our tower businesses in the region. They're all performing quite well. We've got good customers. We've got an active built-to-suit pipeline, you know, over 2,000 towers in construction between MTPA, TPA, and Highline. Highline alone will deliver 1,200 BTS towers this year, so there's a lot of BTS work to do there. We're seeing really good 5G densification and we're generally really constructive on towers in Latin America right now and I think you saw last week SBA paid you know for Central America standards they paid a you know a nice price for the set of assets with Millicom, which is not exactly, that's not an investment grade customer, but it is a good customer. And I think you see SBA breaking out its balance sheet for the first time in a while, then where did they go? They went to Latin America, which by the way, you look through the tough times in the tower industry, going all the way back to the dot-com crash when American Tower needed to go do a good tower deal, where did they go? They went to Mexico. And that deal with Nextel was one of the best deals that American Tower ever did. It was dollar-based, good customer, and it really helped American Tower navigate some challenges in 01 and 02. So we continue to believe that Latin America is a really important market for the tower industry. American Tower supports that view, SBA supports that view, we support that view, and we remain incredibly constructive on towers in Latin America.

And then maybe, so on fiber, I guess the question was also U.S., because there's been some headlines out of Unity and Lumen, hyperscale demand, a lot of it long haul. What's kind of your perspective on trends driving fiber investment?

Look, on fiber, there's a lot happening, right? And each theater presents different challenges and opportunities. And I won't go into granular detail, but Europe, I think you've got a bit of a shakeout happening. We see some of the Altnets that can't make their interest payments having to be restructured or pushed into other vehicles. So there has to be kind of a cleanup trade in the Altnet space, particularly in the U.K. And in Germany, we saw a lot of Altnets at very high valuations with a lot of debt. So the fiber to the home model in Europe, it works great in France. But the rest of the country, there needs to be a little bit of cleanup and probably some rationalization. I think on enterprise fiber in Europe, you know, we continue to really be constructive on

Thank you.

Thanks.

The next question is from Anthony Howe from Truist Securities. Please go ahead.

Good morning, guys. Thanks for taking my question. I'm just curious, what's the economics for the private wealth products and the data center sidecar product? And has this platform been fully built out with the proper team? Is that platform been built out?

Yes, private wealth, I mean, it's pretty easy. The way we built the private wealth channels, we hired Andrew. He joins a team of 30 plus investment professionals that run our marketing team on a global basis, headed up by Kevin Smith and Leslie Golden. What we loved about that product is it required literally no SG&A. We're literally getting, you know, 100% flow through on that product in terms of margin contribution and FRE contribution. So those are the kind of things we want to do. In due course, I think Andrew's goal is to, his budget is to hire four to six FTEs next year in the 2025 budget. And we think his cadence can double versus what he did last year. And so we think the private wealth channel is incredibly profitable. So if we can raise $1 billion to $2 billion a year at our average fee rate of 100 basis points, that turns out to be, I think, a very profitable product with us, with a very small team. So we're excited about that. Again, I cannot reiterate how important it is that we've developed this new channel. It really has opened our eyes. And by the way, just listening to Ares and Apollo and Blackstone and KKR and other alternative asset managers that are performing quite well in this vertical. And now that we have this product and we're a digital specialist, we immediately are performing quite well. So we're excited about it. It's a very profitable venture for us. And these products are going to perform extremely well.

And Marc, you mentioned that like that 2024 plan didn't factor in $1 billion raised from the private wealth platform. So which products fell below your expectation in terms of capital formation?

Well, look, we'll get into that in the next quarterly call when we sort of lay out our fundraising guidance for 2025. But I think I just sort of telegraphed a little bit to you which is, you know, we'll raise over $1 billion this year. We're pretty consistent that we should do that next year, if not higher. I'm not going to give you the exact number of how much higher we're going to go next year, but the products that Andrew and Kevin and I are designing right now for launching Q1 next year, we think they're going to be very attractive and they're going to take quite fast. And so we've got a couple of products on the runway. We'll sort of be a little bit more, I think, prescriptive in the Q4 call early next year and lay out for you our business plan and private welfare next year. We're very excited and to be honest, I'm very surprised how fast this took, it took. The uptake on this product was a lot faster than I expected. It exceeded my expectations.

Just last one for me. Has the quota-bearing sales rep that you guys recently hired started generating revenue yet?

Actually, yes. He closed two accounts in the last seven days. So we're excited, I think we've developed some really great relationships with some of the pension funds in Germany and in Switzerland and in Austria and this is where Erson has been really great. He understands that market so well and so we're performing well in that area and look, it's not just him, it's a team effort, right? And so there's so many folks on our sales team that are performing this quarter. You know, we had a bunch of logos closed last night all around the globe. And it's not just one region, right? I think we laid that out in the earnings call. It's -- you know, Asia is really important in this quarter. The Gulf is important, just got back from there from three days of marketing there. I go to Asia next week. North America is performing quite well. We're starting to see green shoots out of Europe. All four regions are going to perform for us the rest of this quarter and are going to perform extremely well in 2025. There's a lot of momentum carrying into 2025, and there's a lot of accounts that we're focused on that are closing now here in 2024. Again, I can't emphasize it enough. The things that we've laid out for you throughout the year, disappointed in our results in Q1 and Q2. We've now seen that turn in Q3. Q4 will by far be our best performing quarter. And the real headline here is all four regions are producing capital and all four core products that I mentioned are producing capital. Co-invest, private wealth, credit, and collection. All of those products are taking commitments right now and all four regions are producing commitments and that's why we have all this conviction leading up to the end of the year in fundraising.

Thank you.

The next question is a follow-up from Jade Rahmani from KBW. Please go ahead. Jade, your line is open. Okay, we will move on. There are no further questions at this time. I would like to turn the floor back over to Marc Ganzi for closing comments.

Well, look, thanks, everyone. Appreciate your time and attention in what I think is a quarter that kind of has a little bit of the tale of two cities. You know, obviously we own our FRE print. We certainly, Tom and I would have liked it to have been better. But we do think that what is happening here at DigitalRidge is really exciting and is validation of the hard work that we put in for the last year. That transition from a singular focused, you know, flagship only digital infrastructure firm to a multi-strat firm is on display in this quarter. Fundraising is the big, I think, headline for this quarter. The delivery of 6.1 on our way to 7, but most importantly, our conviction and confidence in exceeding 7. The last thing I would say is, you know, now Tom in the chair of three quarters, the things that he and I are focused on are really continuing to generate revenue, but most importantly, focusing on profitability. And I think you're going to see that manifest itself a little bit in the fourth quarter, but certainly in the first and second quarter ‘25, as we begin to focus on mining costs and improving margins. We talked about the margin improvement of 500 basis points. We can do better. We will do better. And we're going to produce better margins next year in terms of our profitability. So that's really our core focus, right? Our focus is continue to drive the revenue growth through fundraising, continue to manage our assets smartly and acutely, where there's good exit opportunities that exist, we'll take those shots. If not, we're going to continue to compound and grow value. And then the last thing I would say is, as we scale into all this fundraising that we've delivered here in the fourth quarter, and certainly in the fourth quarter of this year and Q1 next year, improve on the margins. That's a big opportunity for us. And you'll begin to see that manifest itself in Q4. And certainly you'll see that manifest itself in Q1 and Q2 next year. As we bring in the capital, we get the catch-up fees, and we turn some of these products that are based on invested capital into fee-bearing products quickly. So that's our focus. We look forward to connecting with each and every one of you. We're always open for comment and the opportunity to sit with all of our investors. I want to close in saying I want to thank our entire team, particularly our sales and marketing team, Kevin, Leslie, and the entire capital formation team are doing a very good job in a tough market. And we're delivering exceptional results here in the quarter. And we're going to continue to deliver exceptional results next quarter. But I'd be remiss if I didn't thank our team. They're working hard, they're traveling, meeting with clients, and most importantly, they're now delivering significant commitments. And that's going to really propel us into ‘25, and it gives us the conviction around our five-year plan. We remain totally convicted around our five-year plan, and I would say we're more excited about where we are today than we were in previous quarters this year and we look forward to continuing the dialogue with you next quarter delivering the results. So thank you and I look forward to connecting with all of you. Have a great weekend. Take care.