Okay. Good morning, everybody. My great pleasure to welcome Jacky Wu from DigitalBridge. Welcome, Jacky. Thanks for joining us. Thank you. Thanks, Connor. Before we get started, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Jacky, it might be helpful for those in the audience who haven't been following DigitalBridge as long as some to just take us back and tell us about the jou rney that you've been on and where you are today and where you're going structurally. Great. Yeah. Welcome, and thanks for joining us. Three years ago, Marc Ganzi and I ascended to the CEO and CFO roles at Colony Capital. Severin White joined us around the same time as well. At the time, we were a $50 billion real estate investment trust really diversified across healthcare, hotels, industrial, and commercial real estate across the globe. Sitting here today, after three years of transformation, we are singularly focused on digital infrastructure investment management. We are no longer a REIT because our private equity investment management business has grown significantly, quadrupled over the last three years in terms of fee earning equity under management. Our assets under management is $65 billion. We touch every single continent except for Antarctica, and we invest in fiber optic cabling, data centers, cell towers, and small cells across the globe. We're pleased that we're done with that journey, and now we're just looking forward to just continue to fundraise and do what we do best, which is we are great operators, we're great investors, and we understand digital infrastructure. What was the rationale for making that pivot? Yeah, sure. We were growing so significantly in terms of our investment management business. We were fundraising at a prolific rate. If you rewind the tape, our DigitalBridge Partners I Fund, our inaugural digital infrastructure fund, was a $4.1 billion fund back in 2018. Since then, we've doubled. Our second fund in that series more than doubled. That was $8.3 billion, and that closed at the end of 2021. That pacing of growth made us realize a couple of things. A, we were really, really good at fundraising. B is investors, limited partners really trust us to be the stewards of their capital, certainly with respect to investing in digital infrastructure. That's really the DNA of our business. Marc Ganzi founded a number of digital infrastructure businesses where he was CEO founder and made a ton of money for his investors. Global Tower Partners being one of them. That was a transaction back in 2013 to American Tower. Ben Jenkins was a senior managing director at Blackstone, overseeing digital infrastructure. Our DNA is really understanding these networks, how they're built, having great customer relationships. Because of that, we are able to fundraise so prolifically and deploy that capital so prolifically over the last three years. Because of that pacing of growth, and investment management is not a readable asset, right? We made the decision to say, "We're not gonna slow down what we're really good at, and we're not gonna slow down the pacing of our growth just to stay as a REIT." We made the decision to convert back to a public C-corp. We had a ton of NOLs as a result of all the legacy assets from Legacy Colony. As a result of it really wasn't a material economic difference for us and for our shareholders, and it just made sense for us as we were growing this private equity business. Right. You still have some work to do on the last remaining stakes in the operating businesses. Can you update us? Yes. how that's likely to trend? Sure. We've got two businesses on the balance sheet. We have a digital operating segment, so it is still digital infrastructure. Because we own 13% of Vantage stabilized Data Centers on our balance sheet, and because we own 11% of DataBank on our balance sheet, anything over 10% from an accounting perspective and the fact that we have control, that combination required us to consolidate those two businesses, though we own 100% of it on our income statement and balance sheet. On our books, it looks like these things are, we are a big data center business. People look at our books and they don't even realize we're actually really a private equity business. Just by recapitalizing and bringing in new investors into these great businesses and getting our ownership down below 10%, our goal this year is to deconsolidate these two businesses. We're well on track with DataBank. Less than a year ago, we actually owned over 22% of DataBank. We recapitalized and brought in new investors at a mark that was over 30x multiples. It implied at almost a 2x MOIC on our investment in DataBank, and we were able to bring it down to a little under 11%. We're well on track to deconsolidate DataBank from our books. Because of that same playbook that we just did with DataBank, you know, one of the best-in-class edge compute data center businesses out there in North America, we believe we can do it even better at Vantage, which is we only own 13% of, and it's one of the premier hyperscale businesses out there in North America. Great. You talked about the exceptional fundraising environment. We certainly hear it today. The world's changed quite a bit in the last few quarters. How would you characterize the environment today? Yeah, sure. We're not gonna sugarcoat it. It is a tougher environment today than it has been a year and a half ago. What we're blessed about is the fact that in digital infrastructure, if you look at the underlying secular tailwinds in this sector, investors still really love the sector. Demand for 5G, demand for mobile edge compute, demands as we're seeing it from the record bookings that we're getting across all the different silos of our businesses and our portfolio companies, we're pleased to say that we are still fundraising, and we continue to fundraise at a pretty good clip. If you look at 2022, we raised almost $5 billion last year, and that was without any of our flagship type of strategies out there in the market. This year what we've guided the street is an $8 billion-$12 billion fundraising haul in 2023. We feel good about being able to get $8+ billion this year. That's because in our conversations with limited partners, they're happy with our performance. They like the fact that we actually returned capital back to them last year. We had three amazing exits, Wildstone, which was digital billboards, we had DataBank, and we had Vantage Towers last year. Really good exits last year that demonstrated to them our track record, demonstrated to them that we get them good returns, and as a result, they're rewarding us with a check back. It's a smaller check. It's definitely taking a little longer for them to give us a check, but we're getting the check, and that's what is most important. I think you've made the argument before that a lot of asset managers are under-allocated to digital infrastructure. Yeah. That's absolutely the case. What we are seeing a lot of interest from is our traditional LPs or silos of those LPs that were previously anchored on investments like in real assets. Whether it's industrial or multi-families, or certainly, you know, more negatively commercial office, where now they're saying, "I don't really like those three sectors as much anymore because of that environment, because of the inflationary pressures, because of the churn, because people aren't going back to the office to work." They do like digital infrastructure. What we're hearing is that they are now looking at allocating a portion of their dollars previously for those other segments and giving us digital infrastructure a try. You've got a broad range of strategies now. If you think about that $8 billion, where do you see the most interest from investors? Yeah, sure. Our bread and butter is absolutely still our DigitalBridge Partners series. That's our flagship strategy. That's the principal strategy of the firm. These are typically on average $900 million-$1 billion on average check size. That's an average, right? It does skew a little bit, but on average, it's about that type of check size, equity check size. It's principally in the digital infrastructure space. That's fiber, data centers, both edge compute as well as hyperscale, and now with Switch, for example, enterprise private networks, to cell towers as well as small cells. Most of our allocation has historically been in the cell tower space, the fiber space, and the data center space. We continue to like those three sectors probably the most. It's gonna be that strategy that we expect a lot of the focus to be on in this year. We do have other strategies. We take our core competencies in digital infrastructure, and we've launched now a credit fund that's steaming towards that $1 billion mark, where we launched a Core Plus fund, Strategic Assets Fund, that's also steaming towards that, you know, meaningful $1 billion-plus sizing. We're very pleased about those strategies really advancing, and we've been able to take our core competency in digital infrastructure and really build upon those different types of platforms. You've grown the AUM significantly, as you mentioned, both organically and inorganically. You're $65 billion, I think you said. Mm-hmm. You've got a lot of competitors, the bigger asset managers looking at digital infrastructure. How do you think about scale? You obviously are more nimble, perhaps can look at different things, but at the same time, you know, there are benefits to being a lot larger as well. What's the right number here for the company? Yeah, sure. What we've laid out and Marc's laid out on a couple earnings calls as well as publicly in speeches as well, is that we absolutely believe this type of investing could easily get to over $100 billion of assets under management. We have an aspiration to do that. We've outlined and laid out guidance for to the street as to our vision for 2023 this year, but also 2025. Over the course of the next two years, we're hopeful that we can, you know, more than double the size of our business over the course of the next two or three years. That's our aspiration. We see a pipeline, a huge pipeline of opportunities globally. We haven't even meaningfully touched, for example, Africa or the Middle East yet in terms of deployment of assets. There's still a lot of opportunities to grow, both regionally as well as we look at sectors that continue to be digitalized, like healthcare, like transportation, like logistics. These are additional areas of opportunity for us to not just grow into new sectors, but also have our portfolio companies service customers in these sectors as well, and that's gonna continue to grow our assets. Great. The basic equation now is 90 basis points a year on those assets. Is that right? That's correct. Yeah. We charge on average about 90 basis points on our fee earning equity under management on average. Now our flagship or principal strategies skew higher, close to that 1.2% investment management fee. We also bringing a fair bit of co-investment dollars that typically, you know, size in that 40 to 50 basis point average. How do you think about performance fees and, you know, you talked about some of the really nice exits? Yeah, sure. How does the kinda common equity holder- Yeah, sure. benefit from that? Yeah, sure. We're no different than a standard private equity business, but we have an 8% preferred. Anything higher than that, we recognize carried interest. The balance sheet, our corporation, our public shareholders absolutely are aligned with our limited partners in this in the sense that the balance sheet, the public shareholders get a share of that carried interest. To the degree we perform really, really well, the balance sheet is a general partner and has a general partner commitment, a sponsor commitment and equity check into the same funds. To the degree carried interest is recognized, and pleased to say all three of those exits last year, which were great exits, recognized that. Our shareholders were absolutely beneficial to some of those exits. That's where we create this really nice dynamic and alignment between our limited partners management, who are incentivized to certainly maximize limited partners, profits and the returns of these portfolio companies. Then the public shareholders who are also alongside the management as well as limited partners also get a share of that upside. Right. I think Marc was talking the other day about how the rise in interest rates was something you've been preparing for a long time, and you've, you know, made sure to term out your maturities and so forth. Here we are today. Talk about what higher interest rates means for the company, where you are, where you wanna be on leverage, and then how it affects your investments and your businesses. Sure. I'll segment it into really two parts. One is on the corporation side for the public shareholders, it's gonna be minimal impact. The reason why I say that is if you look at the corporation, absent our portfolio companies, just really the corporation, our capitalization and our debt on our books is really just a $300 million whole business securitization that is on our fee streams at the corporation. We have a $200 million convertible note that we already, you know, teed up to pay off with cash on hand. We've got plenty of firepower and liquidity on hand to be able to just retire that convertible note without taking on any additional liabilities or debt. It's really just this $300 million, you know, fixed coupon, fixed rate whole business securitization on our corporation. Minimal impact from that perspective. On the portfolio company side, a couple things. As Marc, as you mentioned, Marc was, you know, maniacal about making sure that we were disciplined. In our last earnings presentation, we shared some statistics across our funds. Only about 40% loan-to-value ratio on average across our funds. That's pretty low, certainly when you look at some other private equity firms and what they publicly disclose associated with their funds or their investments, for example, some as high as 50%, 60%, 70%, frankly. That's, that's difficult. We're on average 40%. On average, we have seven years remaining in terms of our debt across the portfolio companies. What we've also disclosed is that, you know, over 70% of the debt at our portfolio companies are fixed or hedged. It's pretty certain, and we've got downside protection associated with higher interest rates. With that said, though, when we underwrite deals at the portfolio companies and the funds, we want to make sure that we are baking in those higher incremental costs and also potential more incremental costs, as we heard from Powell yesterday, in his testimony, that there most likely will be more rate increases. What we've done is we've made sure a couple things. One is as we underwrite new deals, we certainly make sure that there's enough of a risk premium baked into and into our hurdle rates for purposes of a rate increase, and to make sure that we are securing our LP dollars, precious LP dollars, and those returns. The second is that, as we look at greenfield CapEx at the portfolio companies, we've also asked all the CFOs and all the portfolio companies, and they've been really good. Our operating partners and our CEOs and CFOs were right on target with this, is to relook at all the in-flight CapEx that was planned for at the portfolio companies and really asking for either higher rates from customers, higher lease rates, or, and/or, you know, certainly really questioning some of those new builds that, you know, may have been done a couple years back. Right. You, you talked about, you know, new deals, new acquisition, and how you underwrite those. Maybe pull back just a little bit. You've done a lot of deals, but you have some very strict criteria around what is a good deal. Just help us understand how you evaluate. You know, there's a edge data center over here. There's a small cell portfolio here. There's, you know, different regions of the world. What are the common elements that Makes a deal cross your threshold? Yeah, sure. I'll start, and I'll break it down in terms of our funds and also deals on the corporate side and the public company side. On the fund side, as we look at new regions or new countries to enter and new assets to enter, we like a couple things. One is, you know, certainly the political landscape associated with that target country. What are the risks associated with it? Do we understand the laws? Do we have local partners, and can we check that box? The second is, you know, certainly you know, is the counterparty associated with that anchor deal, one that's not just creditworthy, but one that we can build that strategic relationship with and have a long runway to build that strategic relationship with. You mean the tenant? Yeah. The tenant. Yeah. Exactly. Over the course of a longer period of time. Also, you know, the economic dynamics associated with that region. You know, are there three or four really critical players that's creating this balanced competition that we like to see, to have a burgeoning industry kind of grow? Those are the things that we typically like to look at, when we enter into, let's say, Malaysia data centers or the Philippines' cell tower market, for example. Those types of tenants, we need to check those boxes. In terms of just, you know, pure greenfields, what we look at in conjunction with management is because we have a DNA of operations and understanding how customers build their networks, is really understanding what type of content or what type of workloads are being put onto those data centers. Is it sticky enough, or can it be replaced? How inelastic is that workload? The second piece of it is, you know, what's around that area as well? Is it really servicing any sort of a white space or need? Where are the thematics going over the course of the next five or 10 years? For example, when we looked at enterprise private networks, in a recent data center transaction, you know, over $10 billion transaction we did last year, public to private. We really love that thematic of building these private networks, enterprise private networks, as we see logistics, autonomous electric vehicles, et cetera, continue to build out, as we see a demand for banks, healthcare, government type of workloads and content not being able to be replicated in the public cloud. There's still that need. We really like to understand the underlying customer needs as well as the overall secular thematics before we make that investment. That's on the fund side. On the M&A side and corporate, as we looked at AMP Capital, for example, buying the equity infrastructure business, investment management business. For us, the underwriting typically is, you know, is it augmentative to our platform? Are we buying skill sets with people that we otherwise wouldn't have been able to replicate or been difficult to by hiring our own people? Is it creating any sort of LP concentration risks with our customer set with limited partners? That's the underwriting that we look at typically on the corporate side. Great. Great. On M&A, multiples, I think Marc in the past has said that he felt like maybe some of the deal multiples were less interesting to you, and that it would be better to grow organically. Yeah. build-to-suit or new data center greenfield. Have we got to equilibrium yet? I think we're getting there. You know, certainly I think public side, there was a little bit more irrationality in terms of the short run, as to where we saw some of these multiples kind of land. You know, certainly good companies and like Equinix or American Tower or SBA, you know, at their lows during the crisis, I would say, of the significant rising interest rates over. We've seen their multiples kind of rebound a little bit. They're trading a little bit more healthier than where they were, as low as six months ago. There's probably still a little bit more room to grow. It's because we're still seeing that deviation between private markets and public markets. I actually still think that the private markets in general, because it's more patient, I think, have it a little bit more right. What we are seeing is a flight to quality. Really good cell tower businesses, really good data center businesses, continue to command a really good multiple. You know, high 20s, for example, still in the wireless tower side, even as low as still in the low 30s for some really good cell tower portfolios. On the data center side, we have seen that compress a little bit more, but the good ones are still and should still trade in that mid-20s range. We're still seeing some really good, healthy multiples. We're seeing better buying opportunities now. Certainly, when cell towers were trading in the four to the high 30s, that was where we were like, "All right, like, that's a little aggressive," right? We have seen some of that compress a bit, and we like where that's going as we now are looking at deploying more of our capital. Marc started off in towers, but it was early and sort of talking about convergence and looking at data centers. With the portfolio that you have now, how do the portfolio companies work together to kind of get the value? Because we have this future of data centers at the base of towers, but it seems like it's taken a while. Yeah, sure. They work together because we leverage comparative advantage. At the end of the day, we are, you know, financial economists at heart, and we believe in comparative advantages, and we have companies within our funds within the DigitalBridge family and umbrella that specialize in building and managing customer relationships within their segment. Zayo being in fiber, Vertical Bridge being towers, DataBank being in edge compute, and Vantage being in hyperscale. The collective four can go up to a Verizon or go up to an Amazon and really provide, you know, certainly provide more holistic arrangements to the degree they need it, certainly as they build out their network or what they need to satisfy. Certainly as you hear, you know, Verizon talk about enterprise 5G, you know, or private networks, or T-Mobile talking about 5G, the combination of four are also needed to be able to create that type of solution for their B to E type of segments, right? That's beneficial. Why I think it's a better model, we believe, than, you know, trying to do it all yourself and own it all yourself and put it all on the balance sheet is it's requires a lot of capital. There's not enough capital out there for one individual company to try to do it all on their own. There's also not enough skill sets to be hired by one company to do it all on their own. I think leveraging partnerships, but all within that family makes the most sense. You know, we're pleased that we've been able to do that on a number of occasions, like for example, with DISH, you know, a couple years back, Marc talks about that quite a bit, but we're able to be a solutions provider. Great. You referenced strong bookings earlier. You know, macro is a big question at the conference. There's concerns about cloud optimization. You know, what's your read on, you know, overall demand right now? You know, it's funny because Vertical Bridge, I think one is we didn't suffer from any of the, you know, the T-Mobile Sprint churn that maybe some of the other, more notable publics have been announcing or talking about or having to report on. You know, our core organic growth rates have been consistent and steady, in that high single digits on a core organic basis, absent build-to-suit, absent buying new towers, just pure leasing activity. New leasing, core organic leasing activity has been very strong. We've seen that consistency, and it's been tried and true in the cell tower space for us, at least in our experience, that even though maybe one year AT&T or DISH may be a little bit more down, we are seeing demand pick up from T-Mobile and Verizon, for example. This year alone, the pipeline from those two carriers have been very, very good. Look, it's gonna need to be there. You've got, you know, Verizon and AT&T, especially Verizon, spent a lot of money on mid-band spectrum. They have to deploy it. We believe we are a partner of choice. We build towers more prolifically than any other large publics, and we're there to support it and, you know, we're seeing that demand. Great. I think investors see these as long duration assets. Inflation is 6% and change. How do you think about, you know, pricing power in domestic towers and... Yeah. Look, on the tower side, we have seen some prop ups in pricing, certainly not to the degree, you know, of what reported inflation is, because in the U.S. markets, those, the inflation is somewhat capped with the fixed escalators. At the same time though, if you look at towers, it's not a very capital-intensive sector at all. You know, a lot of times you don't even mow the lawn, right? Frankly, at the base of the tower. The gross profit margins continue to be, especially for a two-tenant tower, it's upwards close to 85%, 90%. You know, in terms of the risk-associated inflationary pressures, it's not a lot. It's not a labor-intensive business. Data centers, what we've seen is actually we have been able to command some increases in pricing, right? I think Equinix and some of the big publics talk about it themselves. They've talked about, you know, being able to have pricing power to raise cost per megawatt, you know, upwards of 8%, 9%, right? I think they've talked about that. We're certainly seeing that, not even at just 8%, 9%. We're in some instances seeing some double-digit type of pricing increases as well. Because the reality is supply is relatively inelastic, it does require us to do a fair bit of work to do it. Customers absolutely still need it. It is mission critical type of workloads for them to be able to get that. because demand is certainly hot and supply is still somewhat limited, we're able to, you know, have pricing to the degree that it makes sense for us to service them. On the supply, can you just talk about supply chain issues? You know, what are the critical factors there? I know there's been a lot of talk about the energy, you know, getting, you know, the utilities to deliver. Yeah, sure. You know, obviously on the data center side, energy continues to be and sourcing power continues to be, you know, the difficult part associated with it. We try to get ahead of it, certainly with wholesale arrangements, and/or other arrangements with not just local utilities, but also finding backup power that makes sense. And energy cost certainly is passed through to customers. That's really the only risk that we've seen, you know, on the data center or supply chain side, and we try to get ahead of it with multiple providers. You know, Switch, for example, leverages a lot of renewable energy as well, right? That's also been helpful where their locations are at. We like that ESG thematic as well, in doing our part with the environment. Other than that, in terms of supply chain, I would say that was a story from a two years back during COVID. We haven't seen really material impacts associated with supply chain or building or steel or anything like that, to be able to get our data centers or our cell towers up and running. We kind of rode the storm during COVID by having some pre-buys, actually before COVID really hit, and we were lucky enough we had that days of supply to be able to satisfy the demands of our customers. We kind of rode that pretty well. Energy will continue to be the thematic, but, I think we've done enough on our sourcing to be able to mitigate that. Great. Jacky, unfortunately we're out of time. Thank you so much... Thank you. -for coming here today.