DBRG - NYSE

Greetings, and welcome to the DigitalBridge Group Fourth Quarter and Year-End Earnings Call 2024. At this time, all participants are in a listen-only mode. A 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. Please go ahead.

Good morning, everyone, and welcome to DigitalBridge's fourth 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 February 20, 2025, and DigitalBridge does not intend and undertakes no duty to update it for future events or circumstances. For more information, please refer to the risk factors discussed in our most recent Form 10-K to be filed with the SEC for the year ending December 31, 2024. With that, let's get started. I'll turn the call over to Marc Ganzi, our CEO. Marc?

Thanks, Severin. Let's start with our business update and put performance in the fourth quarter and over the course of 2024 into proper perspective. There are three core headlines that I want to talk to you about today: fundraising, how we're investing, and how we intend to scale the business. Let's start with fundraising. This is the key first headline. We had record fundraising of $9 billion in 2024. That includes $4.8 billion in the fourth quarter, putting us 28% ahead of our $7 billion annual target and marking a very strong finish to the year. Next, we outlined our objectives for 2024. I highlighted we had $15 billion of CapEx we were scheduled to deploy, principally into the data center sector. Here, we actually ended up putting to work around $16 billion in 2024 at the portfolio level. Framing that in proper perspective as an asset manager, our assets under management grew from $80 billion to $96 billion in a period of one year. This is over a 20% growth rate in terms of the assets and really showing proof positive that we're scaling the business. The last piece I want to highlight, which is essential to our investment thesis, and Tom will cover it in greater detail, is our ability to deliver strong financial performance with growing revenues and earnings. And look, I know this was a tough year in terms of our ability to deliver on those numbers in the second and third quarter, but I think in the fourth quarter, we put that to bed. Management fees grew over 20% this year and over 35% in the fourth quarter, while fee-related earnings grew over 30% in both the fourth quarter and over the course of 2024, with margins expanding in a trend that we expect to continue as DigitalBridge scales. And this is really the key tenant of what we're planning to deliver this year is scale, and I'll talk a little bit more about it in the third section of my presentation and commentary today. Let's go to the next page. So, on fundraising, as I mentioned, we generated record capital formation of $9 billion in 2024, with a strong finish to the year of $4.8 billion in the fourth quarter alone. We've asked public investors in the past not to focus on quarterly fluctuations and trust that we'll get the job done on fundraising. We have long-term relationships with LPs and our ability to grow our capital base over a year or longer is a much more relevant measure. And look, in the public environment, not all investors are prepared to be that patient, but we're gratified to have delivered fundraising 28% ahead of the $7 billion target. At $5.5 billion, co-invest capital to go out and buy and build new data center capacity, to meet persistent cloud and rapidly expanding AI demand was the biggest driver of fundraising over the course of the year, including significant commitments to fund growth at DataBank, led by AusSuper, as well as a fourth quarter commitment to support the acquisition of Yondr, our seventh distinct data center platform. In 2024, we raised $2.7 billion around our third flagship strategy, which now has total commitments over $5.5 billion. This platform gives investors diversified global exposure to the digital infrastructure ecosystem. This is where investors typically start their journey with us, and we've continued to expand our roster of LPs over the course of the year and will continue to raise capital in this flagship product through the second quarter of this year. Finally, in our core, credit and liquid strategies, we added around $800 million of new capital, driven by commitments to our second credit strategy, an alpha that's attracting capital to our liquid strategies. I want to give big credit to my partner Alan Bezoza and his team for a particularly strong 2024. Look, fundraising, in essence, is the lifeblood of our platform, to continue scaling and to meet the demands of large, capital-intensive, and rapidly growing addressable markets. And in 2024, we're pleased to have met the call. Next slide, please. So, I want to drill down on fundraising and particularly focus on co-investment and how the composition of our fundraising not only impacted our ability to achieve our earnings targets, but also highlights co-investment's strategic relevance to our platform. As you can see here on this slide, we definitely raised a lot more co-invest than we planned at the beginning of the year. Why did this happen? Well, first and foremost, it was driven by strong bookings growth across our data center companies responding to AI and cloud demand. This in turn impacted our ability to generate our 2024 FRE in-line with our guidance. That being said, I'm not going to apologize for $9 billion of fundraising. Even though we raised that at a lower blended rate of 70 basis points, it had the same impact of raising $7 billion at 90 basis points, our typical blended fee rate. Further, in 2025, I want to telegraph to you now that we expect to raise less co-investment in 2025. We expect this to be in our typical share of fundraising in the 30% to 35% range. I also want to take the opportunity to highlight why strategically co-investment represents a really key component of our differentiated buy-and-build strategy. One, it gives us an ability to fundraise continuously, that generates persistent capital flows to fuel growth at our [portcos] (ph), and develop a steady cadence of off-cycle capital formation at the corporate level. It really keeps the dialogue fresh with our LPs. This is important. Number two, while co-investment doesn't generate low fees, it actually represents high-margin incremental revenue since we're already managing the asset with little additional cost. Finally, co-invest expands our carry-eligible capital under management, allowing us to build carry value to DigitalBridge shareholders off a larger capital base. And look, while carry continues to be episodic in nature, it is a very important part of our long-term strategic growth and it is a huge part of our embedded value of the DigitalBridge share price. We've got to take that argument to shareholders this year and deliver on carried interest and make sure that that manifests itself in our FRE and our distributable earnings, which we intend to do this year. Bottom-line, we raised more co-invest than we expected this year, and while that impacted our ability to achieve our FRE targets based on timing, we see it as an incredibly strategic facet of our investment program. Next slide, please. When we look at fundraising, I want to broaden the aperture beyond FEEUM and put in perspective the total quantum of capital that we successfully raised in 2024. Raising this capital is critical to supporting the growth of our portfolio companies as well as our ability to unlock capital that generates DPI. As you heard throughout 2024, DPI is the critical metric at which LPs judge GPs today. If you're not delivering DPI, it's really difficult to go out and ask for new capital. We delivered on DPI in 2024. And look, this is what matters at the end of the day, it's not only about delivering DPI, it's also about supporting our portfolio companies and their ability to meet customer bookings and orders, and at the same time, achieving a key critical function, which is returning capital back to our LPs. In 2024, we raised over $24 billion in capital through a combination of primary equity to fuel new investments, and secondary equity to generate DPI. Then, on the other side of the ledger, we continue to be very successful accessing the debt capital markets. Accessing the debt capital markets we do through a variety of different techniques and relationships. First and foremost, we were successful in tapping the traditional bank financing market. Second, we were also very successful in accessing the securitized market, where we've been very, very successful historically at lowering our portfolio company's cost of capital through ABS and CMBS issuances. In fact, last week, you saw that on display with the successful issuance of securitized notes at

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 financial highlights for the fourth quarter and full year 2024, followed by our non-GAAP metrics and balance sheet profile, and we'll finish by covering our outlook for 2025. Starting with fee revenues, we recorded $102 million of fee revenue in the fourth quarter, which resulted in full year fees of $330 million, an increase year-over-year of 37% for the fourth quarter and 23% for the full year. This was driven by capital raised in our flagship strategy and, to a lesser extent, a particularly strong year in our liquid funds. The increased revenue generated fee-related earnings of $35 million in the fourth quarter and $107 million for the full year 2024, increases of over 30% for both periods. As of December 31st, our fee earning equity under management stood at $35.5 billion, an increase of 8% compared to the prior year. Additionally, we have $4.5 billion of capital that will begin adding to FEEUM in 2025 as the fees on that capital are activated. We ended the year on a particularly strong note as far as capital formation, raising $4.8 billion of new capital in the fourth quarter, bringing us to $9 billion of capital raised for the year. We continue to maintain substantial liquidity with $140 million of corporate cash and total liquidity of $440 million, including our undrawn corporate revolver. Over the course of the year, we funded $88 million towards our GP commitments, and as discussed in prior quarters, eliminated $78 million senior notes in the first half of the year. Turning to the next page. As mentioned, we had a particularly strong close to the year from a capital raising perspective with meaningful increases in FEEUM in our DBP series and co-investment offerings, offset partially by capital return to limited partners and a reduction in FEEUM within our InfraBridge platform. Within the InfraBridge platform, one of the funds hit the end of its investment period in December and we now earn fees on invested as opposed to committed capital in that fund. Moving to the next page, which summarizes our non-GAAP financial results. Full year fee-related earnings increased to $107 million from $82 million last year, representing a 31% increase. We generated approximately $20 million of distributable earnings in the fourth quarter, resulting in $53 million for the full year, an 8% increase over our distributable earnings from 2023. Turning to the next page, which summarizes our carried interest and principal investment income. We reported a net carried interest reversal of $18 million in the fourth quarter. On the right-hand side of the page, we present the full year results which reduces the noise associated with quarter-to-quarter fluctuations and shows positive net carried interest revenue of $46.6 million for 2024, increasing our share of the net carried interest asset from $120 million in the beginning of the year to $167 million at the end of the year. As a reminder, the company accrues carried interest based on quarterly changes in fair value of the investments held across our portfolio of funds and does not represent a cash realization unless it's classified under realized carried interest. Net principal investment earnings were roughly flat for the fourth quarter and $22.6 million for the full year. This primarily represents income earned on the capital invested alongside our limited partners. Moving to the next page, this chart, as I've talked about in prior quarters, highlights I think the stability and consistency in growth both in revenues and margins that we've experienced over the last two years. LTM margin has steadily ticked up to 32% as of the fourth quarter. Based on our fundraising outlook, I expect this chart to continue to show growth in LTM revenues, FRE, and margin over the coming quarters as we benefit from catch-up fees on our flagship fundraising. The fourth quarter saw $3.2 billion of FEEUM inflows, primarily capital raised in the DBP funds and a few large co-investments, offset by $1.6 billion of outflows, principally related to the expiration of the commitment period on one of the InfraBridge funds that I mentioned earlier on the call. Turning to the next page, you'll see that the company continues to maintain a strong balance sheet with $1.4 billion of investments alongside our limited partners and ample liquidity. We continue to evaluate the appropriate capital structure for the business, including our preferred stock obligations. As mentioned earlier, available corporate cash as of December 31st was $140 million, with total current liquidity of $440 million, including our $300 million undrawn revolver. Turning to the final page of the financial section, I'd like to provide some guidance on what we expect for 2025 and how that compares to our longer-term financial objectives that I laid out at our Investor Day in May last year. Over the course of 2025, we expect to continue progressing toward our longer-term goals for FEEUM, FRE, and FRE margin. We believe that we have the opportunity to grow FEEUM to $40 billion over the course of 2025 on a net basis when taking into account capital raised offset by distributions to limited partners. Additionally, we expect to grow FRE between 10% and 20% as compared to 2024 and improve our FRE margins by approximately 200 basis points over the course of 2025. Lastly, I would note that unlike 2024 in which our FRE performance was disproportionately back-ended, we would expect our performance for 2025 to be somewhat front-loaded from a quarterly perspective this year due to the timing of expected fundraising. With that, I'll wrap up the financial results section of our presentation and turn it back to Marc.

Thanks, Tom. Let's look ahead to our 2025 roadmap now and cover what I like to say the key three things that really matter. This may sound a bit like a broken record, but first, it's fundraising, where we've set out a net target to grow our fee-earning AUM to over $40 billion over the course of the year. Our fee revenue and earnings growth are more closely correlated to our active FEEUM over the period, so it's a better proxy for our financial performance. And look, this year, we're going to make sure that that cadence is in-line with our fundraising that tracks for FRE and that it's predictable and it's easy for you, our investors, to understand and that you can bank on us in terms of being able to predict that earnings potential and that earnings growth throughout the year. Taking FEEUM from $35.5 billion to over $40 billion over the course of the year will involve finishing fundraising for our third flagship and second credit strategies. At the same time, we'll be launching two new investment products and continuing to build on our initial success in tapping the private wealth channel where Andrew Cox has done a great job for us. When it comes to investing, in addition to building out cloud and AI training data centers, we're starting to see customers look ahead and around the corner and prepare for the next phase of AI, inference, where location matters and performance across the entire network matters. I'm going to talk a little bit more about this in a few pages. Finally, as I said earlier today, continue to scale our platform DigitalBridge. Tom just walked you through our guidance and I believe we're in a great position to continue to deliver the double-digit earnings growth and expanding margins that are central to our investment thesis. This really is the year where we scale and most importantly get efficiency in our platform. Next slide, please. So, when we look at 2025, it's going to be all about continuing to scale our multi-strat platform. As you can see here, we've mapped out our fundraising cadence by product over the course of the year, so there's no mystery to where we're doing our fundraising. The first half of the year, as I said earlier, will be focused on finalizing capital formation around our third flagship DigitalBridge Partner strategy, as well as our second credit fund. Then, as we get into the second half, you're going to see new strategic capital formation initiatives we've been developing kicking high gear, including our second private wealth offering and strategies built around digital energy and stabilized data center assets. We think these new product offerings are not only natural but strategic and really offer the potential to scale in size over time as we've been actively engaged with TLPs to architect these solutions that really fit the clients' mandate, that's really critical, bringing products to market that LPs want and that are topical and have the secular tailwinds that investors are really craving today. Throughout the year, our co-investment program will continue to form capital around some of our best new ideas that we formulated in our third fund. Whether it's JTower, [OBM] (ph), or Yondr, these are the next great platforms that we're scaling at DigitalBridge, and they will require co-invest capital and we will deliver on forming that capital. So, when you take a step back, between new capital formation and investment realizations, we see this multi-strategy program generating $4 billion or more of net growth, bringing our FEEUM to over $40 billion by the end of next year. Next slide, please. So, when you flip from fundraising to evaluating the investing landscape in 2025, one of the big questions out there is around how technology advances, like DeepSeek are impacting hyperscale CapEx, and more broadly, the investment in the AI infrastructure ecosystem. Interestingly, when we updated our 2025 CapEx targets to the big five hyperscalers over the past couple of weeks, the total is actually 20% higher than it was just six months ago, rising from $250 billion to over $300 billion. So, the velocity of what's happening in terms of CapEx for our customers is not slowing down, it's actually increasing. Serving cloud and growing generative AI workloads is generating very good incremental margins for these companies. So, they're motivated to build the capacity to meet demand and avoid hitting bottlenecks in their business cases. And look, everyone thinks it's all about data centers. That is simply just not true. It's about an ecosystem. You need the delivery mechanism to bring generative AI to devices, to IoT networks, to autonomous vehicles, to mobile phones, to wireless utility meter readings, your refrigerator, all of this is about the delivery and the promise of AI, not about building the biggest data center in the middle of North Dakota or Iowa. This is really about an ecosystem. We learn this in public cloud. So, look, it's worth noting these numbers don't include some of the emerging players that we're starting to see become more active, particularly OpenAI and some of its partners. Let's turn to the next slide to understand some of the drivers of this incremental demand. Look, in the media, you've seen this active debate over the past month or so around who is right and when it comes to the direction of travel on AI investment. And I'm not here to tell you who's right. What I am here to tell you is I've been doing this for three decades and I've been building infrastructure since the early 1990s. And what I can share with you is, on one hand, investors are talking about the need to accelerate investment to scale compute. The Stargate Project got a lot of attention outlining its goal to invest up to $500 billion over the next five years just to support the needs of one customer, OpenAI. On the other hand, you contrast that with the concern around the impact of a model like DeepSeek, which appears to materially lower the investment necessary to develop high-performance large language models. While we've never been able to validate the cost to build DeepSeek, there are valuable lessons to be learned in its protocol and the language that it uses to perform. Our perspective is that actually, both sides are right. You don't have to choose. And actually, this is really just about how the technology works. And that's captured well by Jevons paradox, which many of you become familiar with as the debate has evolved and played out in the public forum. Here, we've overlaid the cost of compute, which goes down on a per unit basis over time, which is natural, stimulating consumption and demand for more compute resources. None of this is really new news for us. DeepSeek is simply the latest development in a trend towards improving efficiency that was honestly already in place. It's a trend that ultimately is only good for stimulating demand, which we believe is one of the reasons you seek hyperscale investment that we've outlined on the prior page, and it's only accelerating. There, building to meet the demand, driven by the natural and necessary efficiencies of technology and breakthroughs that we're seeing across the entire AI ecosystem. Next slide, please. On this slide, you see in practice how lower cost actually drives demand for more better and faster compute over time. On the left side, there's great detail on the generative AI large language model cost curve, which has been decreasing exponentially. Here you can see DeepSeek on the lower right part of the graph, and that's only part of the story. While on the right-hand side, you see successive waves of technology adaptation that in every case have been catalyzed by cheaper, more ubiquitous compute, bandwidth, and connectivity. And look, again, trust me, I've lived and managed digital infrastructure businesses through all of these cycles. We were there in the early '90s building the first mobile network towers. We had a business that built the first fiber networks in 1997, post the Telecom Reform Act of 1997. We were also really critical in the early 2000s, building critical 3G and 4G infrastructure that really provided the backbone of mobile data, which fueled exponential growth and investment. And now, as we look at how we ultimately built public cloud over the last 10 years and now the opportunity to build AI. So look, today I can attest to this next wave through experience. Earlier this week, at the Board meeting of one of our growth stage investments, Articul8, the CEO went out of his way to highlight the uptick in pipeline, specifically tied to the most recent deployment of DeepSeek, with enterprise customers activated by the improving affordability of developing customer AI capabilities. So, there it is on display, Exhibit A. When you have lower cost compute and it becomes more ubiquitous, it's easier for smaller enterprises to make that CapEx decision to go build their own generative AI, and that's exactly what we're doing at Articul8, one of the over 50 investments that we have. So, our purview and our view here is we get to see it all. We see it from the infrastructure side, we see it from the customer side, and of course, now we're seeing it from the generative AI side. The key to this slide is really simple, bottom-line, the natural innovation you see today across the AI ecosystem is driving some of the most rapid adaptation I've ever seen of a new technology in history. Next slide, please. Let's take a look at how some of these developments are playing out in our ecosystem. First, one of the noticeable trends that we're starting to see with our own hyperscaler customers is the focus on the next phase of AI, which is inference. While data centers remain at the core of the opportunity, the giga scale investment that you're seeing in training clusters is increasingly going to be augmented by compute footprints that serve inference, which is the actual use or application of those pre-trained generative AI models in our daily lives. So, here, as I said earlier, location and performance in the rest of the network start to matter a lot more. We saw this play out in public cloud from the time period of 2013 to 2024. As you can see on the left-hand side of the slide, capacity today is dominated by training. But over the next few years, we expect inference to represent the bulk of workloads in data centers as applications and platforms embedded with AI begin to proliferate. That proliferation is really the dissemination of that data and those applications and those models move out to consumers, to devices, to enterprises, and to government agencies alike. But to do that, you have to have the network infrastructure to deliver those workloads. And again, history has a way of repeating itself. Look at the growth and the rapid growth at DataBank and companies like Equinix that do edge computing. There's no mystery to why public cloud workloads have moved closer and closer to the actual use cases. Generative AI will follow that exact same footprint, except it's more pronounced, and there's more consumption, which requires more dark fiber, it requires more small cell infrastructure, and it requires more mobile edge infrastructure, which will come in the form of towers and edge data centers. We're just at the beginning of really building out the generative AI delivery mechanism for infrastructure. This is really exciting to us and this is the thing that we're talking with LPs about today. Not big hyperscale campuses, but actually the associated ecosystem it takes to deliver the promise of generative AI. Next slide, please. A good framework for the profile of inference is to think of it as Cloud 2.0. Inference workloads are really about infusing traditional cloud-based use cases with new intelligence, essentially the same activities that we use for public cloud today, but those become faster, more efficient, and ultimately more useful. Just like the cloud, these use cases rely on infrastructure that's closer to the enterprise and to the consumer. You can see on the right-hand side here, AI agents will increasingly execute and orchestrate these common use cases. Whether it's search, enterprise workflows, e-commerce, social media, these are all latency-sensitive workloads that will benefit from the integration of generative AI agents and accelerate the age of inference. Next slide, please. So, look, before I wrap it up, I want to put these industry-wide trends into perspective and bring them down and distill it at the DigitalBridge shareholder level, to see how they're manifesting across our portfolio. The demand for cloud and AI training and inference workloads is driving rapid growth across our data center platforms globally, which we've gone from under 1 gigawatt of cumulative capacity four years ago to today almost 4 gigawatts of leased capacity across our portfolio that was lit at the end of 2024. By the end of this year, we expect capacity to have grown at a 68% CAGR growth rate over the past five years. That's amazing as it is industry-leading. Just as importantly, we've got a secured power bank that's second to none, that's almost four times that size, over 16 gigawatts, positioning us to continue to scale in the years ahead. I can't tell you how valuable it is to have a land bank and a power bank that we can lease into over 12 gigawatts over the next two to three years. While many of our GP competitors and other real estate developers are trying to secure the power, we have the power in place today and we have the land and we have the building permits. This is really an advantage that was embedded in the fact that we started down this journey over 10 years ago, not 12 months ago, not 24 months ago, we're not new to the sector, we've been here from the get-go. So, we've talked about this, that the most important component today is power. It's key to the equation. So, we've spent a lot of time at the portfolio company level supporting their efforts to bank this future capacity, and here it is on display for you, our investors today. We're excited about having the ability to meet customer demand because our power is already secured. Next slide, please. So, we talked a lot about megawatts, gigawatts, but really what we've never done is we've never explained what that means for you, DigitalBridge shareholders, and we need to do that. We need to unpack the value of a megawatt to you, our shareholders. So, let me try to do this in a way that's easy and tangible and really ties to the fee streams that we generate managing an increasingly large pool of capital. The carry participation DigitalBridge shareholders benefit from is embedded in the value of our data center businesses. So, the example you see here looks quite detailed and we're sorry for the detail, but it's important that you understand it, it's actually a pretty simple analysis using market-based assumptions that highlights the potential for substantial value creation via carried interest. Starting at the top with CapEx around $10 million per megawatts, as you work your way down, it's reasonable to see how we can generate a 2 times MOIC on our equity investment, which translates, in this example, to around $290,000 of carry per megawatt for every $5 million of equity deployed. This is actually a pretty simple algorithm. What's particularly compelling is that $290,000 per megawatt turns into $290 million when you're building a gigawatt scale, which I just showed you on the previous slide, we are doing that. So, in this scenario, 1 gigawatt equates to $1.55 of value on a per share basis. This is the kind of value creation we're talking about when we highlight the growing embedded value of carry for DigitalBridge shareholders. It's why we raise co-investment to fuel growth at our existing portfolio companies and why we continue to apply our buy-and-build strategy to new platforms. So, look, I hope this helps put it all together for you and explains our investment program in a perspective that is really tied to numbers and tied to the share price. You're certainly welcome to apply your own assumptions. We're always happy to have that debate with all of our shareholders. And look, at the end of the day, it's a theoretical framework, but we find it useful to bridge the translation between megawatts and what it means to you, our shareholders, at DigitalBridge. Next slide, please. So, as always, what I try to do here in our fourth quarter earnings at the beginning of each year is I try to lay out what my agenda is for the coming year. So, let's cover the 2025 CEO checklist. One, we talked about fundraising. The goal is to hit net FEEUM of over $40 billion by the end of this year. That will involve finalizing capital formation around the third flagship fund and our second credit fund, and then successfully launching our two new strategies built around digital energy and stabilized investment grade data centers. The third piece of that is launching our second private wealth offering, which is already in flight. I'm really excited about this. We had forecasted that we could raise $600 million in our private wealth channel last year. We massively outperformed that, raising over $1 billion of capital. I'm really excited about what we can do here as we scale that part of our business. Two, on the investment side, we expect to deploy another approximately $20 billion into AI infrastructure to support cloud and AI buildouts. From training clusters to the early stages of inference focused on deployments at the edge, we plan to be the leading investor this year, as we were in the previous year in the AI infrastructure ecosystem. Again, it's not just about big hyperscale data center campuses, it's about bringing that connectivity and ultimately making sure that those workloads get to the right place, and we have the right portfolio companies and we have the right investment strategies to enable that. The third key objective is around scale. I've been using this word a lot today, and it's really important. Continuing to generate double-digit earnings growth and expanding our margins is at the core of what the DigitalBridge investment thesis is go forward. We will make our business more efficient, we will make our business more profitable, and we're going to deliver better earnings growth for you, our shareholders. All of these initiatives position us to support the accelerating growth that we're seeing across the digital infrastructure ecosystem in AI, cloud, and mobility. So, I'll wrap it up today. I deeply appreciate your ongoing interest in DigitalBridge. And with that, I'm happy to open up the call to Q&A. Operator?

So, we will now be conducting a question-and-answer session. [Operator Instructions] First question comes from Michael Elias with TD Cowen. Please go ahead.

Great. Thanks for taking the questions. Two from me. First, the color you guys provided on value creation per megawatt and gigawatt was really helpful. And just for what it's worth, I do think it's a bit conservative. But just building on that point, 2024 was a record leasing year for the data center industry. As we look at that your qualified demand pipeline across your data center platform entering 2025, just want to get a sense for how that compares to the pipeline you had this time last year. And then, the second question for you is, Marc, if I ask you to put your prognostication hat on, how do you see hyperscale data center development yields and pricing evolving in 2025? Thanks.

Yeah, sure. Good morning, Michael, and thank you. Those are two really thoughtful questions. Let's first talk about leasing pipelines. And again, Michael, I want to draw your attention not just to data centers. I think people are missing the joke completely. You have to look at towers, you have to look at small cell infrastructure, you have to look at fiber, and you have to look at data centers. So, I'll address your first point, which is just on data center pipelines. Our pipeline is up year-over-year. So, if you look back last year in terms of what was in the queue, in terms of total megawatts, which now we actually translate to gigawatts, we had a leasing pipeline last year across our seven platforms of just a little over 5 gigawatts of total interest in our portfolio. We ultimately translate that today to just over 6.2 gigawatts of new leasing proposals. So, if you contrast this year versus last year, the pipeline, not the actual leasing results are up year-over-year, about 22% in terms of pipeline. But what I find actually really interesting is that across the globe in terms of towers, our pipelines are up materially, and most importantly, the real surprise is fiber. Taking a look at our enterprise fiber businesses, Michael, those pipelines are up over 50% year-over-year, largely fueled by dark fiber transport routes, metro rings, and most importantly, data center connectivity. So, the entire ecosystem is performing. It's not just about data centers. We're going to keep pounding that into people's heads this year because we are the investor that looks at the entire ecosystem. We're not just following a trend. Again, 30 years of experience, 30 years of delivering returns. We're not that fussed about AI or DeepSeek. It's just another generational tectonic shift that we're there and we're building infrastructure for our customers and our partners. So, never get too high on the highs, never get too low on the lows. But our leasing pipeline across the globe is up 22% year-over-year in terms of activity and new customer applications. Your second question, Michael, again, I think was -- go ahead.

Around pricing and development yield, what you expect for the year?

Yeah, look, it's really interesting, in some locations, where we have an advantage, which is we have the power and we have the permits and we have the land and we already have an existing campus where we're bolting on and we can deliver for a customer inside of an 18-month framework, we can kind of set our own price. If it's a de novo greenfield and it's in the middle of Texas somewhere, and there's five different options for the customer for choose -- to choose from, we're probably not the right partner for you. Let me frame that correctly. There's a lot of tourists playing in data center land now, and just because they have land and power, they believe they're in the data center business. We've been building strategic campuses with incredible reliability, redundancy, power, cooling, and connectivity. These are things that take a long time to develop that muscle memory in-house. And again, having started down that path over 10 years ago, we feel incredibly well prepared to work with our customers and deliver the right workloads. In addition to that, some of our companies have a real distinct advantage around not only power, but having the right sources of power, having microgrids to control the flow of that power, and also, more importantly, having the right security. When a customer is looking to develop a private cloud environment where they need 100% reliability, they turn to us and switch. So, having different distinct platforms like DataBank that delivers edge compute in secondary markets where we can be incredibly surgical, our relationship with our customers, Michael, we try to build data centers that create the right investment outcomes. And that's not accidental, it takes time. So, for our portfolio, we have not seen development yields retreat. We've seen development yields actually stabilize. And we had the chance to take higher prices last year and perhaps take a little bit of advantage of the situation. We strategically chose not to do that. So, we've been able to maintain our yields through '24. Looking at our pipeline in '25, we'll be able to continue to deliver the right yields on a cash-on-cash basis. And then, obviously, our ability to tap the ABS and CMBS market, which was on display last week and is on display this week and next week heading to ABS West, we've got four new issuances coming to the market next week. Our ability to tap the credit markets is incredibly efficient and we have a big team that works on that internally and it's a real competitive advantage for us. That only takes that cash-on-cash yield. It turns it into a levered yield and it turns into a long-term levered yield with very few covenants and no cash traps. So, there's a lot of things that we do that are very specific to our tactics that preserves our returns and our yields. Again, we're not going to go chase raw land and power banks with no customer lease tethered to it, that's just not a strategy, that's a hope strategy, that's not what we do. Everything we're building has a customer lease tethered to it and it's usually in a market that we've been in for a while. There's a lot of thought and intention behind what we're doing. We're not going to be the one that chases down the yields down to that 6%, 7% range. We're still seeing our single tenant yields in the double-digit range, and that's where we're going to continue to deploy capital, is in the right locations with the right customers with the right set of lease terms attached to it.

Very helpful color. Thank you very much, Marc.

Thanks, Michael.

Next question, Jade Rahmani with KBW. Please go ahead.

[Technical Difficulty] Funds one and two are 2018 and 2020 vintage. Do you expect most exits and monetizations to take place this year and next?

Hey, good morning, Jade. How are you? So, right now, Jade, we're super focused on delivering DPI on InfraBridge 1 and our first flagship. So, InfraBridge 1 is busy winding down that portfolio. We've got exits that are in flight there. So, we're excited about returning capital back to our InfraBridge platform. And then, of course, in Fund 1, we've also begun the process of creating DPI there and we intend to deliver more DPI across the first fund. I would say our average hold, Jade, tends to be between five and nine years. I think the vintage on Fund 2, even though we exited Vantage Towers quite early because we bought the Deutsche Telekom portfolio, we're still assessing whether we're going to exit anything in Fund 2. There are some rumors in the marketplace about two of our assets in Fund 2 being up for sale. I can't really speak to that. But what I will say, Jade, is we're always an astute seller. When we can achieve an outcome that is somewhere at a 20% to 40% premium to our NAV, that's where we become a very interested seller. I would say the vintage on 2018 is moving into a zone where it would be logical to assume that we'll begin to exit some of those positions. I think you saw a press release around Vantage EMEA, which is our European data center platform. We brought in some new partners there in AusSuper and GIC. We continued to put capital into our European Vantage yieldco, which allows us to sell assets from the devco to the yieldco, creating more DPI for our investors. So, that was one example, Jade, where we did deliver a really great outcome for Fund 1 investors. And we have a couple of other assets in Fund 1 that are currently, in what I would call strategic review, which means it could be held for disposition, it could be sold to a strategic, it could move into a continuation fund. There's a variety of levers that we can pull to create liquidity for our investors. I think one thing I would tell you, Jade, is in '23 and '24, we had eight different DPI outcomes for our investors. We returned over $9 billion of liquidity back to our LPs. I know sometimes in the asset management space, Jade, that's not super popular as we have to give up management fees, but I've always made it incredibly clear, for us to go out and continue to raise the kind of capital we raised last year, $9 billion, $2 billion ahead of what we told you we were going to do, you've got to deliver DPI. And so, this year there'll be more of that. We'll deliver DPI. We absolutely anticipate delivering some carried interest for our shareholders and we do think the environment is quite ripe for DigitalBridge to return capital, create the right returns, and most importantly, return carried interest to our public shareholders.

Looking at DigitalBridge's own capital allocation, can you talk to how much preferred has been repurchased so far this year and what do you expect? Because although the cost of the preferred isn't too bad in terms of a cost of capital, it has a big outsized impact on EPS, around $0.30 a share, therefore, buying back preferred is an accretive use. And do you expect to do much of that this year?

Yeah, thanks, Jade. No, we did not purchase any of the preferreds last year as they traded back up into par. We didn't really see a total return or an absolute return that was comparable to some of the things that we were doing on the balance sheet. I mean, from my perspective, if you take a look at our third fund and we look at where the returns are in the third fund, they're about 300 basis points to 400 basis points wide of Fund 1 and Fund 2. And when you're getting sort of high teens types returns in your funds and you look at the buybacks on the prefs being kind of a 7%, 8% trade, I view that as actually not the highest and best use of our balance sheet today. We have been very opportunistic in the past, buying back our preferreds. As you know, Jade, interest rates moved away from us, where the prefs do seem like a reasonably low cost of capital, but as interest rates are now coming down and we're seeing the securitization marketplace return, again, using the

Yeah, no, I agree with everything Marc said. I think the preferreds on their face are relatively attractive securities for us. They have little in the way of covenants or no covenants, no maturity, we are sensitive to the absolute magnitude of them. So that's the only thing I'd add is, we are sensitive to the absolute magnitude of the preferreds outstanding, but on an individual basis, I think the structure is relatively favorable for us.

Thanks, Jade. Any other questions, Jade?

Yeah, if I could ask one more because I get a lot of questions on this, which is the fund performance slide. Are those returns in-line with your targets, or do you expect any improvement with realizations?

Yeah. So, we've had two quarters where the absolute IRR, Jade, has gone down a little bit. We actually, since Tom has taken over, we've put in a new framework for how we do our quarterly valuations, which I'm really proud of. A lot of transparency, a lot of independence in those marks, and a new framework that's consistent with what the SEC expects of us. So that did drag our returns back a little bit over the summer, which impacted the Q3. We had a little more of that come through in Q4. But I think what I would tell you is, we get paid on MOIC. Jade, it's really important to understand that we don't get paid on IRR. And actually, in this quarter, our MOIC multiple went up across the funds and so that means carried interest is increasing over time. And I think you're going to see that impact this year more pronounced as many of our portfolio companies had a great year. We now are getting to see the full impact of those financials. And as I said before, the performance at the portfolio company level in '24 was outstanding. So, we had record leasing in towers. We had record leasing in fiber. I think I said that to Michael earlier. The fiber business has really come back. You're going to see, I think, a real uptick in some of those businesses in our marks in Q1. And then, of course, the data center businesses are all performing at a really, really high level. Businesses like Scala and Switch and DataBank were real standouts for us in 2024. So, I do anticipate that the portfolio will continue to perform really well. It is in-line with where the fund models are predicted they would be. And as we generate liquidity and we generate DPI, generally we sell assets on average, Jade, if you look back at the last eight exits, there were approximately about a 20% to 30% premium to NAV. I'm sort of telegraphing to you that the portfolio is, I don't want to say, under-marked, but when we sell stuff, we generally sell at a premium to NAV. That's been the historic performance of our funds in the last two years. If you look at exits like Wildstone or Vantage EMEA, or you look at Wildstone, which was our billboard business, all three of those exits were at a significant premium to NAV. And so, as we begin to return capital on Fund 1, return capital on InfraBridge 1, you're going to see that obviously the portfolio should logically tick up here in Q1 and moving into the balance of 2025. I think we feel really good about fund performance. I feel really confident in Tom's team and the independence at which we mark the assets. I'm a big believer in independence. And so, setting up a team that does that, it's independent for our investment team, is really critical because it really gives our LPs a lot of confidence in our NAV. This isn't like a synthetic NAV game for us. We're very, very accurate in terms of where we mark the assets.

Thank you very much.

Thanks, Jade.

Next question, Ric Prentiss with Raymond James. Please go ahead.

Thanks. Good morning, everybody.

Good morning, Ric.

Hey, couple questions for you. I want to start on fundraising, Marc, that was, of your three bullets, fundraising, invest, and scale, always the number one there. When we think about the DPI, you've talked about it a couple times how important it is. You mentioned just the previous question $9 billion returned over '23, '24 combined. How much is baked into the '25-ending FEEUM as far as DPI? Is it a similar level to the $4.5 billion that we saw in '24, or is it an acceleration, given what you said on Flagship 1 and InfraBridge 2 or InfraBridge 1? How much DPI are we thinking is baked into the '25 ballpark?

So, thanks, Ric. It's a really good question, and you're very astute. So, the way we think about it is just in terms of total FEEUM. What we did in 2024 was about $36 billion. We're guiding the Street to $40 billion-plus for 2025. And that assumes a little bit of what I call chutes and ladders, right? Everyone has played that game before. So, the ladder up is fundraising and the chute is DPI. And so, we are telegraphing to the Street that obviously we want to go grow our revenue base and I think we're going to do a good job of doing that. But we're also telegraphing to you as Jade pointed out very carefully, there's a couple of assets that are in play and we are anticipating, Ric, returning more DPI through the course of 2025. It's the natural progression of what we do. And also what that does is it frees up capital for investors who bring that capital back into, Ric, our new products. And we're super, super focused on that. So ultimately, we think we can form low side of the guide, kind of $5 billion to $6 billion of new capital, $1 billion to $2 billion in DPI, and that gets you sort of to a $4 billion net FEEUM number. That's our guidance. That's what we're putting out there. And obviously, given the lessons of last year, we're going to be pretty thoughtful, I guess is the word I want to use around guidance, and we want to make sure that we can deliver a quarter like this quarter where we beat your estimates, Ric. And that's kind of the cadence that Tom is trying to instill in this company and the discipline around the numbers and the discipline around the guidance. I don't know, Tom, if you want to add anything to that, but I think that's pretty straightforward.

Yeah, no, that's exactly it.

Under promise, over deliver is something we want to be able to count on. When you think of the longer-term guidance on that Slide 21, the Investor Day target for 2028 of $60 billion to $70 billion FEEUM, that implies an acceleration. Is that a thought that gross fundraising gets higher, DPI is less? How's the mix? And what leads to that kind of acceleration that if we do end FEEUM at $40 billion in '25, we could add another $20 billion to $30 billion over three years?

Yeah. Again, you're thinking about it the right way. We haven't spent a ton of time talking about new product launches, Ric. But look, this is something that our investors need to start really getting their minds wrapped around. We are a multi-strategy firm now. We are not a one-trick pony. Our credit business is performing exceptionally well. It took me four to five years with Dean and Mike and Josh Parrish and Chris Moon, and Horace, and the entire team to get that mechanism going. You're going to see a massive acceleration in our credit platform this year. We're seeing opportunities that are fantastic. Our returns and credit are actually better than our flagship funds, which is kind of a bit perverse in my mind. I never thought our credit business would outperform our flagship funds, but our credit product, Ric, is one of the best-performing credit products in the world. And our team is scaling, writing significant loans, generating massive SMAs and co-investments. You're going to be hearing a lot about credit in Q1 and Q2. We're in the right place. So, that took us a little while to get there. Our liquid portfolio led by one strategy by Bill Hughes and Alan Bezoza, that business is now incredibly profitable. They're raising money. Alan's creating great returns and that's going to generate more capital. Every quarter that team keeps bringing in more capital. Number three, our private wealth channel, led by Andrew Cox, we're really honored and privileged to get Andrew on our team. He was a top player, kind of fell into our lap, had moved to South Florida, was at KKR for many years, where he built the private wealth platform. I told you, Andrew, in his first year, outperformed almost 2x his budget. He's got a new product in the market. We're really excited about that product. I'm on the road with Andrew a lot, talking to some of the biggest private wealth channels in the world. We have a lot of conviction, Ric, around private wealth capital formation. And keep in mind what we're raising is just a fraction of what people like Ares and Blackstone, and Apollo are raising. So, we think we can go take the argument to investors, private wealth investors, that the digital product -- DigitalBridge product is a better product than our peer set, and we're winning that battle and I'm really excited about that. Then, the last thing I would say is, Ric, the things that we're doing around power and the things we're doing around stabilized data centers are really interesting, unique, groundbreaking, in fact. Those two teams are now seeded, those strategies are now launching, and that's going to provide yet another channel for us to grow. I've said it publicly many times, Ric, for every $1 trillion you spend on data centers, you're going to spend $500 billion on power. Power is a massive opportunity and no one has gotten it right. Nobody understands the issues, no one understands the bottlenecks, we do. And we're building that power infrastructure adjacent to our global leading data center portfolio. 16 gigawatts of on power demand is a bigger power bank than DLR and it's a bigger power bank than Equinix. We have the biggest power bank in the world by far. It's not even close. And so, our ability to lease into that and to build power, sometimes renewable, sometimes not, but providing those power solutions and building those adjacencies to our data centers, Ric, is a huge opportunity. I can't even put a number on the TAM in terms of what we can do in power. So, this firm has evolved, Ric. We were REIT at one point. We became a C Corp. We became an alternative asset manager. We did all of that in 24 months. It was pretty frenetic. Now, we've settled into what we are. We're a global alternative asset manager. We have great teams. We have great products. We have an incredible fundraising mechanism led by Kevin Smithen and Leslie Golden. What they did last year in the fourth quarter was heroic. Very few firms on the planet almost raised $5 billion in the fourth quarter like we did. Even the bigger firms that we -- that we compensate against didn't raise $5 billion in the fourth quarter. So, we think we're punching above our weight class. We think we have the right products. We know we have the right people and investors are really keying into these new thematics that we're focused on, Ric. So, I have this long-term conviction around what we're doing in the next three years. I think we finally have our fundraising cadence in line and in order, and most importantly, as we keep returning capital, Ric, it gives us the opportunity to ask LPs to bring it back, and that's what you saw in the fourth quarter, capital came back. And it didn't come back just in our flagship strategy, Ric. People need to again accept that we're a multi-strat firm. It's not just about the DigitalBridge flagship series, it's about all the other products that we offer. And the solutions, because at the end of the day, Ric, what I've learned in the last year being an alternative asset manager, you really have to formulate strategies for clients. LPs just don't want your simple flagship fund. They want solutions, and some want yield, some want protection on downside, some want to play in value add, some want to play in our value-add long fund led by Bezoza. And so, now having this sort of multi-asset, multi-product approach really allows Kevin and Leslie to sit with a client and say, "How can we help you?" And so, the dialogue has evolved from selling one product three or four years ago to now being in the client solution set, which again is a lot like what Blackstone does, Ares, Apollo, KKR, we provide those set of solutions, but totally focused at the digital economy and at AI, and that's resonating with investors today, Ric. That's the big change in this firm in the last 12 months.

That's very helpful. And I think you're right, I think the industry needs to kind of focus on your power bank, your megawatt, what your gigawatts, so maybe we can move that ball forward and trying to get people understanding exactly what's the valuable asset, what turns into monetization. The second question I've got, and I appreciate the time here, is you've mentioned obviously several times, we'll have to go do the count in the transcript, carried interest, carried interest, carried interest, we're going to see some of that in '25. Talked about moving from episodic to more steady. How do you do that? Is it just the longevity of the funds? Is it the interest? But I don't think any of the carried interest benefit is really in the stock price today. How do you move it from episodic to steady and then get it into the stock price?

Well, look, you said it correctly, we don't get credit for it. I mean, if you look at the sum of the parts of what DigitalBridge is today, just based on our run rate FRE for this quarter at [140] (ph), the implied multiple on our business is actually trading at a discount to our peer set. We actually think DigitalBridge is a better platform than other GPEs because we don't have funds that have a two-, three- or five-year duration, Ric. We have long-term perpetual capital vehicles. We have continuation funds. And our average infrastructure fund, Ric, as you know, is 11 to 13 years. So, the steadiness of our FRE and our cash flows is certainly a lot more durable than somebody that's just exposed to credit or private equity, which are shorter-term products. We've got to do a better job. Severin, myself, and Tom explaining to investors this year the durability of our cash flows and the duration of it. And so, that's really important, casting our firm as a steadier long-term set of cash flows. The balance sheet is really powerful. We're going to take that case to investors as well. What we did at DataBank this year was incredible. What we've been able to do at Vantage is incredible. The performance of our funds is strong. And so, we've used the balance sheet in an intelligent way. We don't get credit for our balance sheet, which is between $1.2 billion to $1.4 billion minimum based on last year's marks. So, as DataBank and Vantage and other assets begin to scale, the balance sheet grows. The last component of the sort of one, two, three on DigitalBridge is carried interest. And again, we don't get credit for it until we start taking the episodic nature out of it. We understand how that works. I mentioned we have over 50 companies, Ric, today, and just in this year alone, we're going to make somewhere between credit and our flagship strategy and ventures and other things that we're doing in power, we're going to probably make about 12 to 20 distinct investments this year. As you saw, we grew AUM from $80 billion to $96 billion. That was an incredible step-up in just a one-year period, $16 billion. We told you today we're going to deploy $20 billion of capital, then we're going to exit $2 billion of assets or $2 billion of FEEUM, which would probably be about $4 billion of AUM. So, if you look at that, we should add another $16 billion of AUM this year. That takes us well into the kind of $112 billion region by my math, $110 billion to kind of $112 billion. And at the same time, our MOIC multiple continues to grow and compound. And so, this is also important because as we exit, we're not exiting the legacy investments, Ric, anymore. The original DigitalBridge 6, we're now exiting Fund 1 and we're exiting Fund 2, some investments over the next two to three years. And that's where that carried interest kicks in. That's where public shareholders begin to see the benefit of that. So, I think that we absolutely will have a more consistent delivery in carried interest this year. And I think if Tom and I can do that and we can demonstrate two or three exits where public shareholders win, it's not episodic, it's then something you can begin to underwrite. And we're not promising it in our guidance this year, but we are telegraphing to you that: one, the portfolio is moving up in value on a MOIC multiple basis, which is we're paid off of MOIC, we're not paid off of IRR; and then two, that we absolutely, given the vintage of Fund 1 and the vintage of InfraBridge 1, we anticipate returning capital back to shareholders. I don't know, Tom, if you've got incremental color.

I think it's all a matter of the vintage and the kind of seasoning. We're -- I think as Marc mentioned a few minutes ago, Fund 1 is really now entering kind of prime vintage period for starting to exit. Fund 2 sort of had some -- we're kind of getting there, but in general, it's a matter of time and seasoning as we get over the next year or two to a point where we're regularly selling maybe not as many new companies as we're buying, but we're regularly selling a couple of assets a year.

That'd be great. And I'll echo Michael's comments. Slide 31 is great. So, thanks, guys. Appreciate all the color.

Thanks, Ric.

Next question, Richard Choe with JPMorgan. Please go ahead.

Hi, I wanted to follow up on the sales and fundraising infrastructure. Can we get an update there?

I'm sorry, Richard, the what, sorry?

The fundraising and sales infrastructure that you outlined at Analyst Day?

Yeah, no, thank you. So, the global sales team today, Richard, is 38 in total. We've continued to invest in our salesforce, led by Kevin Smithen and his number two, Leslie Golden, both really great professionals with a lot of track record. We did add Andrew Cox in the private wealth channel. We anticipate adding at least two, if not four full-time employees to support Andrew as we scale our private wealth fundraising mechanism. But we run that platform just, Richard, on a global basis. We've got a team based in London. We've got a team that is based here in the US, in Boca, and in New York, and then we have a team, of course, in Asia, headquartered out of Singapore. So, we highlighted on Analyst Day, it was 28 full-time employees in 2024. Today, we're at 35 full-time employees in our fundraising team. We've continued to scale. We've added specialists in credit. Chris Falzon has been amazing in terms of raising capital for our credit team, Andrew Cox on Private Wealth. And I think what you see is, we look at it, Richard, in sort of two axes: one, geography; two, product set. But really having salespeople in market, in geographies where we can really go out and bring those products to the market. I would highlight our Asia team just by example. We've got a great team in Asia. We saw pronounced -- really, really pronounced performance in Asia this year in fundraising. We've got also a fantastic team in the Gulf and the GCC led by Sylvio Tabet. He's been fantastic. He's supported by two full-time people that do fundraising there in the Gulf out of Abu Dhabi. And really the Gulf and Asia were really standouts for us in terms of fundraising. But then, again, North America is our home market. We've got fantastic commitments out of our flagship front from US Pensions. We partnered up with CDPQ on Yondr, a huge co-investment from them. And these are great situations, great client relationships that are paying us fee and carry. And by having a bigger team with more geographic reach, Richard, we can really bring our multi-strat approach to the market, sit with LPs, really treat them as clients, and bring them those very tailored approaches that we talked about in our earnings call today. So, the team has gotten bigger, the performance has increased, our product set has increased, and our ability to have product specialists in the geographies that we think are the hot opportunities for fundraising has really proven out this year, and you're going to see that, Richard, on display in '25. We're expecting even better results from our team.

That makes a lot of sense. I guess, going back to an earlier comment, you're saying that, a lot of the data center growth from AI is actually captured mostly in data centers, but you're starting to see that a lot in fiber now. Can you talk a little bit -- we're obviously seeing it in fiber, but how that plays out over this year, maybe next year for small cells and towers and other edge infrastructure? Just because I think a lot of people are waiting for it and they just haven't seen it.

Yeah. Well, I think, look, across fiber, small cells, and towers, as I said, we saw pronounced pickups in the fourth quarter. And just looking at the data from January, Richard, particularly on towers, we actually had our best January of leasing in the domestic US market in the history of Alex Gellman and I being together for 31 years in towers, this was the best January he and I have ever seen. And I can't put my finger on it, but what I would say is, as generative AI moves to the mobile device, you're going to see a massive pickup in mobile data traffic. Some people, Richard, as you know, estimate a 10 times pickup in mobile data traffic. I don't entirely subscribe to that view. I think sort of three to five times feels more directionally correct. But as you know, with a finite amount of spectrum, Richard, you've got to engage in what's called frequency reuse. And the only way to do that is cell splitting and putting more macros online and eventually densifying between the gaps of that splitting with small cell infrastructure. So, we've seen a big pickup in macro leasing. We think that continues and that investment by the carriers was announced last week in the earnings of T-Mobile, AT&T, and Verizon, but it's not just there. We've seen pronounced CapEx expenditures in Europe at GD Towers in some of our European tower platforms. EdgePoint had a great year of leasing in Southeast Asia. ATP down in the Andean region had a record year, 18% organic growth there. And in Brazil, in Highline we also had double-digit organic growth. So, we run a global tower business. Obviously, Vertical Bridge is our flagship property. GD Towers in Europe is our flagship property. Both of those businesses exceeded their guidance in '24. They're both off to great starts in leasing. And I think the fiber business has been an incredible surprise to me. You look at businesses like Xenith IG and

Great. Thank you.

Next question, Randy Binner with B. Riley. Please go ahead.

Hey, good morning. I'm mostly covered. It's been a great call so far. Just a couple. Marc, on the fundraising for 2025, are you laying out a dollar billion expectation as you did in '24, or is it just the FEEUM at this point?

Yeah, I think we're just going to stick to FEEUM. I think it's the metric that you judge Blackstone, KKR, and Apollo on. So, we think that that's the right metric is FEEUM and FRE. And then, obviously, if we do our job, it leads to DE, right. And we want to grow DE this year. I think the FEEUM metric and the FRE metrics are important to Tom and I because it's just sort of the adult nature of our business. We don't need to sit around and point to an artificial fundraising number. What we need to do is deliver steady FEEUM and FRE growth for you guys and for our public investors. So, that's kind of when I talked about the sort of maturation of our financials and the maturation of the finance team that Tom has built, that's what we're doing is really bringing adult financials to the Street. And, I think the other thing that we don't talk about is just margin. We had a 200 basis point increase in margin. Tom and I are very focused on cost. Again, we're digging deep into where we can deliver more cost synergies across the business. We think we can continue to grow at that double-digit organic growth rate, but at the same time, Tom and I are very focused on picking up another 200 basis points of margin. We're doing that through, what I would call, simple business decisions that are just common sense, elimination of G&A, elimination of redundant positions and just trying to be more efficient. And Tom brings that discipline from his two decades of doing that at Carlisle. And I think both he and I have a lot of conviction around cost savings and building margins.

Yeah. And actually, to that, the admin expense line in the model, like circa $37 million was higher than we modeled for the quarter. And I apologize if I missed it, but was there a call out of anything kind of unusual in that in the fourth quarter?

There was a little bit of noise in the fourth quarter. We had a little bit more expense related to some of our fundraising initiatives, given the amount of capital that we raised and a few other, sort of, small things. I think that kind of where we've been quarterly in the past, somewhere between there and the fourth quarter is probably a good number, but the fourth quarter was a bit anomalously high.

Like, on an absolute basis, though, going forward with the growth in the franchise, would like for the full year, that's going to be over $100 million going forward. Is that fair?

Are you -- you're looking at the GAAP numbers or the FRE numbers?

Just for administrative expenses.

Yeah, I think we sort of -- I sort of tend to focus more on the cash flow part and the numbers that go into FRE. And so, we were running around $17 million, $18 million, maybe $19 million, and we were at like $21 million for the fourth quarter. So, that was kind of a bit a couple of million-dollar overage. I think that we'll sort of be within that range on a quarterly basis next year.

Okay, that's helpful. Thank you.

Go ahead. Anthony, your line is live.

Sorry, guys. Good morning, guys. Thanks for taking my question. Hey, Marc, just curious right, from talking to your LPs, do you think there's a preference for co-investment over the flagship fund, given that the current investment focus is on data center development over acquisition and other digital infrastructure?

It's a great question. I think just judging by our third fund, people were really excited actually about JTower, that was the one investment product that people got really excited about from a co-investment perspective. First tower company in Japan, flagship investment. We kind of timed the exchange dollar against yen in a really good spot. So, it's turned out to be a really great platform for us and so people gravitated to that. Yondr turned out to be great because we have this great relationship with CDPQ. They're our partner in VerticalBridge. But take for example, a client like CDPQ is not in our flagship fund, but continues to be an incredible partner across all of our platforms and that's just how that client likes to work. There were more subscriptions to the flagship fund than there was to co-investment. So, if there's any sort of notion that investors prefer co-invest over the flagship, that's just not true. We took more subscriptions into the fund than we did into co-invest vehicles. That being said, the quantum of co-invest sometimes episodic and quite large, can sort of stick out a little bit like a sore thumb like in Yondr. In Yondr, we'll end up having probably eight to 12 co-investors in that deal. Same thing with JTower, we'll probably have a dozen to 14 co-investors. But the flagship product works harmoniously with co-investment. So, a lot of our clients will say, hey, I'm putting X amount of dollars into flagship fund 3. I'm allocating X amount of dollars for co-investment. You, Marc, you and your team go figure out where you're going to put my co-investment dollars to work. So I really like that. That for me is our favorite product where we take a commitment from the fund and then we have a bespoke SMA that's at our discretion where Tom and myself and the management team and our investment committee have the discretion to make that co-investment, and that's becoming actually a lot more popular where we have a stapled co-invest vehicle attached to a flagship fund product. It's the same thing in credit. We'll get a commitment to the fund and our credit fund 2 and then stapled to that will be an SMA. And that SMA is very similar to what ARES and Apollo do all the time. In fact, most of the commitments to ARES and Apollo Credit funds are in the form of SMAs today. So, this is the state of the art, right? Again, it comes back to the client, shaping the strategy for the client, making sure they're getting what they want, and then from our perspective, making sure that we get paid for that, that's actually really important, is that we've been a lot more stern on fees. We don't work for free. That's the new mantra around here. And when we do co-investments, we're getting paid for those opportunities and those ideas, whether it's a management fee, a work fee, administrative expense fee, we just don't work for free anymore.

Makes sense. And can you remind me, what's the carry infrastructure for the co-investment fund again?

So, every co-investment vehicle is different. So, it's not like the fund where it's a 1.6 and 20%. Every vehicle's a little bit different. I would say across all of the co-investment vehicles, if you were sort of to aggregate it and sort of land on a spot of where you think it might be, I would say, by and large, we're getting kind of blended basis, the management fees on co-invest are anywhere from as low as 30 basis points to as high as 60 basis points, depending if it's a continuation vehicle. And then on carried interest, it's kind of, I'd say somewhere between 10% and 15% is kind of the norm. So, not quite the same carried interest we get on flagship, but very competitive. And I would say if I had to prefer something, I would take, I would take carried interest in co-investment vehicles over management fees just because our co-investment vehicles historically over the last 11 years have performed really well. I don't know if that helps you, but I can't give more precision because we do have a lot of co-investment vehicles.

No, that's really helpful. Really appreciate it. And one last question from me. Can you tell us little bit more about the digital energy and stabilize data center strategy product?

Yeah, I'd be glad to. The first is really focused on energy. And it's not an energy transition fund per se, it's really about building power and dealing with the bottlenecks that exist in Europe and United States around transmission and distribution, we think that continues to be the problem. So, we're super-focussed on building infrastructure adjacent to our data centers that enables all forms of energy to flow through our data centers. And with also a sharp focus on battery storage, micro-grids and it can be renewable power, it certainly can be LNG, but the key to this is making sure that our data centers have consistent power flow to them and that we are providing value to our customers. Those are kind of the two key tenets to what we are doing. So, we have a backlog of about a dozen projects we're working on today. We've got an operating partner working with us on it, and we've got a big team here at DigitalBridge working on it and working on it for two years. We've already had some episodic forays into some of these ideas at Scala and at Switch where we've demonstrated we can be a 100% renewable power and continue to grow at double-digit CAGR growth. And so, that's really the applied learnings of what we have had in our portfolio companies and then taking those applied learnings and putting them into a fund structure. So, more to come when we launch, but we've got a deep pipeline, we've got a great team, investors are really excited about this, we've kind of had no names whisper tour on this where we've talked about it to investors and we think there's billions of dollars of capital parked on the sidelines for this idea. Again, it's an idea that nobody else has. We've seen other GPs talk about doing renewable power to data centers, headlines, lots of press releases. We're not into that. We're into the execution phase of this now and about deploying power and making sure that we can grow our power bank from 16 gigawatts and that we can add effectively 4 gigawatts per year to our power bank. So, this enables that. It helps it. It doesn't necessarily need to be tied to a DigitalBridge data center. We're actually working with some of our competitors in terms of bringing power. And so, stay tuned. We're pretty excited about that. On the stabilized side, look, there's about $90 billion of stranded assets out there. We already have two yieldcos. We've got Vantage yieldco in the US. We've got Vantage yieldco in EMEA. We've already figured out how to crack the code and create that structure and raise the capital. Now, what we've decided is we want to create a fund to go out and buy stabilized data centers, investment-grade data centers, and a real estate fund, not a traditional DigitalBridge fund per se, and also not to buy our own product, but really go out and work with the other GPs that we partnered with successfully in the past. We've got a great relationship with Brookfield. We've got a great relationship with Blackstone, sharing loans with them. We've worked with GIP and BlackRock. BlackRock is one of our great partners. EQT has been a great partner in

Thank you.

Thank you.

Thank you. I would like to turn the floor over to Marc Ganzi for closing remarks.

Well, look, thank you, everyone. We really, really appreciate everyone's time and attention. This was really -- from our perspective, a good quarter. Disappointing second and third quarter, but really in the fourth quarter, we promised you that we would go out and work hard and deliver the results, and I think we did that. We delivered record fundraising for the year, $9 billion. FRE delivery in the upper end of the revised guidance, double-digit earnings growth, so the business is performing well. And most importantly, our portfolio companies are performing not just in data centers, towers, fiber, associated small cell infrastructure, and wi-fi and IoT networks, all of these things are lighting up at the same time. And I think it's important to understand that our story is about the ecosystem. It's not a data center story, it's not an AI trade. What DigitalBridge is, is the leading alternative asset manager focused on products for the digital economy and investing in the digital economy for the long-term, not the short-term. Our multi-strat approach has now been on display. You saw it manifest itself in the fourth quarter with strong performance from all of our products, not just the flagship product. And as we introduce new products and scale and deliver margin improvement, we think this is the stock you want to watch and own in 2025. We're really excited about what we're doing. We were certainly disappointed in our results last year, particularly in the third quarter. We think we got a lot of that cleaned up. That's on me. I take ownership of that. And going forward, Tom and I are working together to, as Ric Prentiss says, we want to go out and be the group that under-promises and over-delivers. We have a very sensible business plan for 2025. We believe we have all the ingredients to go out and beat those expectations. We're going to work hard for you and we're going to work hard for our customers. Again, we want to thank you for your support, your interest, and your faith in our stock and our story. We're going to go out there and work hard for you, and we look forward to engaging with all of you. Should you want to have access to us and the team, as we always say, you're always welcome to come down to Boca Raton. Tom and I will be delighted to host you. We should have a series of Investor Days with different analysts coming through here in the next six months. I encourage all of you to come down visit DigitalBridge, spend time with us, and I think you'll be pleased with what we're going to do in 2025. Again, thank you. Have a great day.