DigitalBridge Group, Inc. (DBRG) This autumn 2023 Earnings Name Transcript

DigitalBridge Group, Inc. (NYSE:DBRG) This autumn 2023 Earnings Name Transcript February 20, 2024 8:00 AM ET

Firm Contributors

Severin White – MD, Head of Public IR

Marc Ganzi – CEO

Jacky Wu – CFO

Tom Mayrhofer – CFO Elect

Convention Name Contributors

Michael Elias – TD Cowen

Jade Rahmani – KBW

Ric Prentiss – Raymond James

Richard Choe – JPMorgan

Eric Luebchow – Wells Fargo

Matt Niknam – Deutsche Financial institution

Operator

Greetings. Welcome to DigitalBridge Fourth Quarter 2023 Earnings Name. Right now, all contributors are in a listen-only mode. A short question-and-answer session will observe the formal presentation. [Operator Instructions] As a reminder, this convention is being recorded. It’s now my pleasure to introduce Severin White. Please start.

Severin White

Good morning, everybody, and welcome to the DigitalBridge fourth quarter 2023 earnings convention name. Talking on the decision right now from the corporate is Marc Ganzi, our CEO, and Jacky Wu, our CFO. We’re additionally joined by Tom Mayrhofer, who will probably be transitioning into the CFO position in the course of the second quarter of this 12 months, as beforehand introduced. I am going to rapidly cowl the protected harbor after which we are able to get began.

A few of the statements that we make right now concerning our enterprise operations and monetary efficiency could also be thought-about forward-looking and such statements contain quite a lot of dangers and uncertainties that would trigger precise outcomes to vary materially. All info mentioned on this name is as of right now, February 20, 2024, and DigitalBridge would not intend and undertakes no responsibility to replace it for future occasions or circumstances. For extra info, please discuss with the danger issue mentioned in our most up-to-date Type 10-Ok to be filed with the SEC for the 12 months ending December thirty first, 2023.

Nice. So we will begin with Marc summarizing the progress we have made on our key priorities in 2023. Jacky will stroll us by way of our new simplified monetary outcomes and switch it again over to Marc to put out our 2024 marketing strategy.

With that, I am going to flip the decision over to Marc Ganzi, our CEO. Marc?

Marc Ganzi

Thanks, Severin. Earlier than we look forward to 2024 in our third part, executing the digital playbook, I would wish to recap 2023 and summarize on how we delivered on our key priorities for the next 12 months. As I wish to say, it is the three issues that matter, fundraising, simplification, and efficiency down at our portfolio firms. And let’s put this report in a broader context, as a result of look, on the finish of 2023, we now have efficiently accomplished a multi-year transformation at DigitalBridge, taking a diversified learn throughout 5 actual property verticals and refocusing that enterprise solely on the digital infrastructure ecosystem the place my crew has been efficiently investing and working for over 25 years. Alongside the way in which, on this $80 billion transformation, we harvested actual worth for DigitalBridge shareholders, from the sale of legacy property whereas persevering with to develop, what I consider is the main world asset administration platform targeted on digital infrastructure.

So let’s begin with fundraising, the place we noticed terrific progress in fourth quarter. The mixture of recent capital formation, contribution from the InfraBridge acquisition, and FEEUM activation drove our price revenues up 59% year-over-year and price associated earnings in our funding administration section up over 64% year-over-year. That is actually {industry} main progress. A lot of that progress was fueled by new capital formation, $7.7 billion in new capital fashioned since January of final 12 months by way of right now, together with the closing of over $1 billion in our inaugural credit score technique, which is a key piece of the multi-strategy asset supervisor that we’re constructing right here right now at Digital Ridge.

Subsequent up, simplify. This actually was entrance and middle in 2023. De-consolidating our working segments efficiently with DataBank and Vantage SDC each shifting off the books. We received this executed. And as part of that course of, monetized a ton of worth whereas concurrently deleveraging our steadiness sheet by over $5 billion. That is an enormous win-win. We realigned our monetary reporting over the course of the 12 months to match our different asset supervisor peer set, together with enhancing our returns disclosure. And in fourth quarter, we moved the working section to discontinued operations. And I feel you may agree, the simplified monetary profile is way simpler to observe and to grasp for you, the investor.

Lastly, my third precedence, efficiency on the portfolio firm degree. That is all the time entrance and middle for us when it comes to what drives returns, what drives LP curiosity in partnering with us and what drives the continued progress of our platform. In 2023, digital infrastructure continued to carry out throughout all of our verticals. And curiously, we’re seeing the early impacts of Generative AI demand, notably throughout the information middle ecosystem.

Let’s cowl these three matters in a little bit extra element, after which I am going to flip it over to Jacky to cowl the financials. Subsequent slide, please. So it begins proper right here. FEEUM and AUM are two metrics that I now monitor vigorously. First, with AUM, we ended the 12 months up simply over $80 billion, which represents a 52% progress charge year-over-year. And as you possibly can see right here at FEEUM, our key income and earnings driver, continued its robust progress in This autumn, with the activation of our most up-to-date flagship technique. We’re now up over $10 billion or 47% year-over-year to $33 billion in FEEUM, pushed by a mix of natural capital formation and the contribution from the InfraBridge acquisition, which we efficiently and totally built-in this 12 months into our platform. The truth is, we’re assured that the InfraBridge platform will present a superb progress vector for us in 2025, amplifying our capability to make the most of the center market alternatives throughout a broader set of digital infrastructure and adjoining industries.

Subsequent slide, please. So, right here we’re, new capital formation. That is the slide I do know you all wished to see. It is the gas that enables us to satisfy the rising want for connectivity and compute. I am happy to report that regardless of a traditionally difficult fundraising setting, DigitalBridge raised near $8 billion in new FEEUM since January of final 12 months. That is $2.3 billion since final quarter, together with $800 million year-to-date, led by robust preliminary commitments in our newest flagship product. As I discussed earlier, our credit score technique accomplished the profitable closing of its first fund with over $1 billion in cumulative capital commitments.

Earlier than we transfer on to the following slide, I wish to put our fundraising into context as a result of look, our crew, Kevin, Leslie, they’ve executed an unbelievable job. New FEEUM is up over 60% in a 12 months, when world infrastructure fundraising was down over 50%. That is testomony to the power of our crew, to the ability of digital infrastructures and asset class, and to the dedication and focus of our agency to satisfy the decision of our prospects, bringing the sources mandatory to satisfy our key commitments. That is actually an unimaginable accomplishment, and I am actually pleased with our crew, and I am pleased with the agency.

Subsequent slide, please. So subsequent up, our second precedence was fairly clear, simplify. Right here the centerpiece was the profitable deconsolidation of our working section. On the left, I’ve highlighted not solely the profitable deconsolidation of DataBank, nevertheless it’s actually vital to notice the numerous worth creation for DigitalBridge shareholders by way of this funding. Beginning lower than 4 years in the past, we invested $466 million of DigitalBridge steadiness sheet capital, which doubled in worth to over $900 million by the point we recapped the enterprise in the summertime of 2022. Since we made the strategic determination to rotate our enterprise to an asset-light funding supervisor and deconsolidate our working section, we efficiently monetized virtually $500 million in worth that is come again to the DigitalBridge steadiness sheet. The truth is, based mostly on the place we’re set to boost the following tranche of capital to gas DataBank’s edge computing progress, the honest worth has elevated one other 20% simply within the final 12 months. We introduced that asset below a ten% threshold in September of final 12 months and deconsolidated it, whereas sustaining publicity to DataBank’s robust future progress profile, which as all of you already know is concentrated on edge computing.

The opposite essential facet of the working section deconsolidation is that there was substantial deleveraging of our steadiness sheet. We took consolidated debt final 12 months from $5.5 billion all the way down to below $400 million, with funding degree debt shifting off of our books. Consolidating that funding degree debt was actually a distortion that I consider made it unnecessarily laborious for buyers to grasp and consider and recognize DigitalBridge. Backside line, we have created important worth for DigitalBridge shareholders and we simplified our enterprise profile. Subsequent slide please.

So simply as you possibly can see right here, to provide you a greater sense of the influence of the deconsolidation on our steadiness sheet right now in comparison with a 12 months in the past, we’re speaking about, name it round $8 billion of property that had been actually related on the portfolio degree, not on the company degree. A number of key takeaways from the simplification embody the motion of the web fairness worth of Vantage, and DataBank property into funding, in step with the therapy you’d see at different asset managers. On the legal responsibility facet, I discussed earlier, over $5 billion in funding degree debt has moved off the books. Web-net, the complexity of our steadiness sheet is considerably decreased, facilitating investor evaluation in our enterprise. We wish to make it simple for you. So I actually wish to thank Jacky and the entire finance crew in addition to our authorized crew and our advisors and naturally our LPs. And you will see when Jacky talks by way of the financials, the simplicity and readability that comes from not having to deconsolidate after which subsequently separate two totally different enterprise models is sort of stark. On prime of that, it is cheaper to account for. So the adjustments generate actual financial savings. I can not thank sufficient of everybody on our crew for his or her laborious work on this initiative. And that features our companions at Vantage and DataBank.

Subsequent slide, please. Lastly, efficiency. Efficiency at our portfolio firms matter. MRR was up in throughout all of our 4 verticals once more, pushed by a mix of natural and investment-led progress. Information facilities proceed to be the standout this quarter, with MRR up practically 25% and the remainder of our verticals additionally performing extraordinarily properly. Towers up 7%, fiber up 6%, and small cells up 3%. Actually good, constant efficiency, and most significantly, constant natural progress. Demand for compute and connectivity finally underpins this progress, and our capability to ship for patrons continues to develop together with our portfolio.

So earlier than I flip it over to Jacky to cowl the financials, I wish to say a couple of phrases about Jacky. As most of you already know, this would be the final quarter that Jacky will probably be working in his capability as my associate and as our CFO. I first wish to spotlight his partnership, his friendship, and the unimaginable transformation that we have been in a position to accomplish collectively, Jacky, over the past 4 years. It has been one heck of a experience. Jacky’s tireless work ethic, his never-quit angle, was an enormous half and stays an enormous a part of the material that makes DigitalBridge so distinctive. As Jacky strikes into an working position the place I do know he’ll flourish, he’ll proceed to be part of that cloth. So Jacky, goodbye. Thanks from your entire companions and from all the workers and naturally the shareholders. You have executed an amazing job and we actually recognize you.

So with that, I hand the mic over to Jacky Wu.

Jacky Wu

Thanks, Marc, and good morning everybody. As a reminder, along with the discharge of our full 12 months 2023 earnings, we filed a supplemental monetary report this morning, which is offered inside the shareholder part of our web site. Beginning on Web page 15, our key working and monetary metrics have elevated considerably throughout 2023, led by our funding administration section, which continues to develop at an industry-leading charge. This quarter marks the top of our profitable company transformation with our sector-leading funding administration enterprise at scale and our company construction simplified. Extra importantly, recurring distributable earnings and free money flows proceed to pattern positively. We foresee this highly effective momentum to proceed in 2024 and past as the corporate continues to asset handle, notice superior returns, and fundraise off of this monitor report, which drives important yield and circulation by way of to distributable earnings and free money circulation.

Turning to Web page 16, the corporate’s distributable earnings was $18 million, or $0.10 per share, highlighted by new price revenues from the launch of our newest flagship fund, DigitalBridge Companions III, or DBP III, which had its first closing on November 1st. Property below administration elevated to $80 billion within the fourth quarter, representing a 52% progress over the identical interval final 12 months. Payment incomes fairness below administration elevated to $33 billion, which is a 47% enhance from the identical interval final 12 months. AUM and FEEUM progress have primarily been pushed by capital raised in our new methods and fee-paying co-invests in addition to the InfraBridge acquisition which closed firstly of 2023. Our fundraising pipeline continues to be very robust, fueled by new commitments to our newest flagship fund, DBP III, and we anticipate making important progress with our dynamic product choices in 2024.

Shifting to Web page 17, with the substantial progress in our funding administration platform additional enhanced by our streamlined company construction, the corporate achieved important year-over-year enhancements. In December, we accomplished the deconsolidation of Vantage SDC, and outcomes from the digital working section are mirrored in discontinued operations. Going ahead, the remaining non-controlling curiosity in Vantage SDC will probably be held as an fairness technique funding, much like the therapy of our remaining curiosity in DataBank, which was deconsolidated within the third quarter 2023. Monetary outcomes have been recast in all prior intervals introduced to replicate digital working section leads to discontinued operations. Consolidated revenues had been $350 million, which had been 29% larger from the identical interval final 12 months. Complete firm adjusted EBITDA was $32 million, up 88% from the identical interval final 12 months. This progress is primarily attributable to larger price revenues from our new merchandise and co-investments, which we are going to cowl in additional element on the next pages.

Shifting to Web page 18, the corporate continues to develop its funding administration earnings and fee-earning fairness below administration, generated by robust fundraising all through our product suite led by DBP III, fee-paying co-investments, credit score, liquid methods, and the addition of the InfraBridge funds. Payment revenues excluding incentive charges was $72 million and price associated earnings was $40 million, representing 59% and 64% will increase from the identical interval final 12 months respectively. Funding administration section distributable earnings elevated by 31% to $39 million from the identical interval final 12 months, benefiting primarily from new charges related to DBP III.

Turning to Web page 19, internet carried curiosity earnings, together with incentive price income, earlier than non-controller curiosity was $58 million in 4Q 2023, in comparison with $84 million within the prior 12 months interval, because of the honest worth will increase of our managed funds at a charge that exceeds the popular return hurdles, which generate carried curiosity to DigitalBridge because the supervisor.

Turning to Web page 20, price revenues in our excessive margin funding administration section have continued on an upward trajectory, led by our DBP fund collection and new product strains. Because the fourth quarter of 2022, our annualized price revenues elevated from $181 million to $289 million, and fee-related earnings elevated from $97 million to $159 million. And looking out on the proper facet of the web page, run charge annual price revenues are actually as much as $311 million.

Turning to Web page 21, the corporate maintains robust liquidity and has considerably de-levered its steadiness sheet. With roughly $475 million of liquidity, together with the complete $300 million accessible from our securitization revolver, our steadiness sheet stays poised for accretive makes use of. And present company debt degree with no near-term debt maturities permits the corporate to be nimble and positioning DigitalBridge for long-term shareholder success. I’m happy to report we now have achieved our goal company debt degree, adjusting for our perpetual most popular fairness and now extra aligned to our friends within the different asset administration area.

Shifting to Web page 22, our 2024 steering vary proven on the web page highlights the numerous progress made within the firm’s earnings profile. Payment-related earnings are projected to be between $150 million and $165 million on the finish of 2024, and are actually introduced to incorporate internet company overhead bills in keeping with our new simplified monetary reporting definition going ahead. We expect a powerful fundraising 12 months in 2024 pushed by our newest flagship fund, DBP III.

In abstract, Marc and I are more than happy with the corporate’s efficiency in 2023. We achieved many key milestones all year long in our journey of remodeling DigitalBridge into a number one asset-light funding supervisor within the digital infrastructure area. The corporate is now a lot less complicated and primed to generate long-term shareholder success by scaling the brand new merchandise in our dynamic funding administration platform. Our latest fairness fund, DBP III, is off to an ideal begin with some promising traction regardless of a worldwide slowdown throughout the {industry} in fundraising. And we’re excited in regards to the progress we’re seeing in our merchandise to begin the 12 months.

As right now marks my final earnings name as Government Vice President and Chief Monetary Officer of DigitalBridge, I wish to categorical my private gratitude to Marc and the remainder of our management crew, the Board of Administrators, all our staff, and all of our shareholders for what a really exceptional expertise these final 4 years have been. We’ve got seen an amazing change on the firm, from a enterprise the place over 80% of our property comprised of senior residing services, medical workplaces, hospitality, industrial workplace, industrial and different legacy actual property property made much more distressed and dislocated in the course of the COVID-19 pandemic to now a 100% fast-growing digital infrastructure asset supervisor. This firm and all of our stakeholders ought to be pleased with the numerous transformation. The inventory was at low single-digits. Our leverage was challenged whereas the highest line and backside line metrics had been in fast decline. However we endured and we persevered and we are actually robust and wholesome. I’d additionally wish to welcome Tom Mayrhofer, who has joined the manager crew because the incoming Chief Monetary Officer. Tom is an {industry} veteran with a confirmed profitable monitor report within the funding administration area, and he has already confirmed to be an ideal addition to the management crew right here at DigitalBridge. The corporate is about to perform some unimaginable achievements this 12 months and sooner or later, particularly with Marc on the helm.

And with that, I’ll flip it again to Marc for his remaining remarks. Thanks.

Marc Ganzi

Thanks, Jacky. Effectively, look, right here we’re right now, and the factor that the majority excites us about ending up our transformation is absolutely the bandwidth that frees up for all of us to focus solely on scaling the DigitalBridge platform. That is what our 2024 marketing strategy is all about, taking the robust momentum we have already constructed up and accelerating the DigitalBridge flywheel. And Look, as I stated earlier right now, it begins with fundraising, architecting funding options which are tailor-made to our shoppers’ wants. That is what permits us to type capital ample to gas the AI revolution. The second precedence for 2024 facilities on our portfolio firms, the place our budgets right now name for over $15 billion of success-based mission-critical greenfield building. That is CapEx that is being deployed at more and more engaging growth yields as rents have risen and our progress charges have risen throughout our information middle companies and the opposite three verticals. I am additionally excited a couple of important pipeline of recent alternatives to again nice administration groups and the launch of the following era of funding platforms at DigitalBridge. The third cog in our flywheel is all about scaling DigitalBridge on the company degree. That begins with driving company working leverage, bettering our earnings and money flows and finally redeploying that capital into the very best return alternatives for DigitalBridge shareholders. I have not been shy about this. Whether or not it is creating new funding administration merchandise or going out and shopping for nice funding administration platforms, we all know the way to purchase and construct, and we are going to execute that technique in 2024. So look, I am extremely enthusiastic about what lies forward for this 12 months. It is an actual alternative for us to lastly go on offense. So let’s cowl a few of these priorities in a little bit extra element.

Subsequent slide, please. Let’s begin with fundraising. New capital formation stays a key driver for our enterprise. To satisfy the rising demand that we’re seeing for AI powered funding in digital infrastructure, we’re focusing on over $7 billion in contemporary capital throughout our multi-strategy platform. We anticipate not less than 50% of that to come back from our flagship technique alongside a major co-invest increase to help the expansion of our current portfolio firms, which we now have demonstrated for the final three years. Our newer methods, credit score specifically, will drive the steadiness of our capital formation in 2024. We consider these targets are each achievable and engaging, representing over 20% year-over-year progress, once more, in a troublesome fundraising setting. One of many methods we’re attaining that is by way of increasing our LP base. As you possibly can see on the suitable, in simply a few years, we have grown our main LP base from 100 LPs to over 250 LPs throughout DigitalBridge. We predict there’s lots of room to develop right here, notably as our flagship enters its third classic and buyers are more and more accustomed to each the resilience of digital infrastructure as an asset class, robust secular tailwinds that underpin its progress and the monitor report of the DigitalBridge funding administration crew over the past decade. The truth is, we’re spending much more time now with our current LPs and new LPs, strolling them by way of the alternatives that we’re seeing which are rising from the demand that is being created by Generative AI. And that is a protracted, lengthy tail schooling course of and one which we expect goes to drive robust progress over the following couple of years in fundraising, notably because the demand manifests itself in new leasing. And that is the important thing, the conversion into natural progress and new leases and finally new building the place we’re displaying up for our prospects. I am excited to work with the capital formation crew this 12 months as we develop our partnerships with new LPs, a few of whom I’ve highlighted right here. These are actually considerate buyers with long run funding horizons and we’re excited to name them our companions.

Subsequent slide please. So let’s cowl the AI powered demand for digital infrastructure that backs our underwriting on new investments, notably throughout the information middle ecosystem. We consider AI goes to take a decade or extra to construct, and with 50 gigawatts of world information middle capability right now, over the following six to 10 years, we are going to double that capability to 100 gigawatts. As we see it, information facilities have gotten AI factories, with information because the enter and intelligence and insights because the output. Simply have a look at among the main logos within the area, Microsoft, Nvidia, Amazon, Meta, all of those firms are considerably rising their investments and capability to satisfy the present and projected calls for for AI. These prospects of our portfolio firms had been already attempting to remain forward of cloud demand and cloud to the sting. And now, AI has pushed that into an entire new gear. I am going to simply take one instance that I discover fairly unimaginable.

When Nvidia reported their most up-to-date quarter, chip gross sales to their information middle section had been $14 billion. Up 3.8x over the prior 12 months. That is simply merely superb. And it is vital to notice these chips finally want a house in a knowledge middle. It will be attention-grabbing to see what numbers they submit tomorrow. So deliver that again to DigitalBridge. In the present day, we have a pipeline of over 5 gigawatts searching over the following 5 years. That is constructing on prime of what is already one of many main world information middle footprints with over 190 information facilities throughout 80 markets on a worldwide foundation. This can be a large alternative, and it will take buyers who perceive energy, infrastructure, land acquisition, allowing, renewables, proximity and connectivity to terrestrial and sub-oceanic fiber routes, the most recent advances in cooling know-how, information sovereignty, and more and more software-defined networks to satisfy this demand. We have that experience. We have that have. DigitalBridge is prepared for the cloud-trained, edge-delivered way forward for AI.

Subsequent slide. So what does constructing the AI revolution appear to be? Effectively, right now information facilities are dominating CapEx with $11 billion of the $15 billion that is budgeted on the portfolio firms in 2024 and we’re actually targeted on these information middle investments. That is the place we’re main in mission crucial greenfield CapEx. And make no mistake, that is not a typo, $11 billion of dedicated CapEx. Simply to information facilities alone, North American and Europe are our most energetic markets right now, however the remainder of the world is accelerating. And I’ve stated, AI is cloud educated and finally edge delivered. That is actually a worldwide alternative at scale. What you see listed below are photos from energetic building taking place right now throughout our portfolio. This isn’t science fiction. We’re constructing new information facilities, we’re placing up new towers, laying new fiber optic networks. These are all crucial points of subsequent era digital infrastructure networks. That is truly only a small sampling. There’s so many different locations, we have shovels within the floor. However we wished to not less than provide you with a way for what the AI revolution seems to be like in the true world right now.

Subsequent web page. So, the ultimate precedence for me in 2024 is scaling DigitalBridge, focusing notably on profitability and working leverage. One of many facet advantages of deconsolidating is the flexibility to take a look at a transparent image of the progress we have already made rising our different asset administration platform over the previous couple of years. As you possibly can see right here, we have generated not solely engaging income progress, however rising earnings and considerably increasing our margins from the low 30s to the mid-40s in 2024. This occurred actually within the final 24 months. I am actually pleased with that progress we have made, scaling a excessive margin, asset-light funding platform. And so I am actually enthusiastic about 2024 and past as we proceed that momentum with strong income and earnings progress.

Subsequent web page, please. So lastly, earlier than I wrap it up, I wished to focus on our company capital allocation priorities, providing you with a way of the place we finally plan to deploy these earnings from scale sooner or later. Up to now few years, the largest investments we have made alongside of our LPs, compounding worth like we confirmed you earlier with the information financial institution instance. We predict that is an ideal use of capital and permits professional shareholders to get direct publicity to the worth creation we drive on the portfolio firm degree. Capital construction optimization has been one other large precedence for us. We have highlighted this in earlier earnings calls. I am not simply speaking about deconsolidation. We have made important investments in de-levering our company steadiness sheet over the previous few years. This may proceed to be a precedence, whilst we scale the enterprise.

Subsequent up, accretive digital M&A is one other important focus, notably right now. We predict there are engaging excessive return alternatives to develop our platform, And we now have an energetic pipeline of alternatives. We had been happy with the Wafra transaction we executed a few years in the past, shopping for again 100% of our funding administration enterprise. And naturally, the AMP InfraBridge acquisition has now been efficiently built-in with better-than-expected value synergies and a value-add growth in our funding mandate into center market digital plus investing. Lastly, on share repurchases and dividends, we have dedicated to a low however develop dividend coverage and anticipate opportunistic share repurchases to change into extra outstanding as we finalize the capital construction over the following few years.

Subsequent slide, please. In order that covers my prime three priorities for 2024. As you possibly can see right here on the CEO guidelines, let’s have a fast recap. One, fundraising. Get on the market. Safe the $7 billion in contemporary capital to satisfy the early phases of AI-powered demand we’re seeing throughout the DigitalBridge infrastructure ecosystem. Quantity two, proceed to maintain investing in our portfolio. This 12 months alone, we’ll deploy over $15 billion in success-based Greenfield CapEx, constructing out all these megawatts and, properly, gigawatts to satisfy buyer demand. This additionally means capitalizing on a rising pipeline of recent alternatives fueled by our newest flagship technique. Lastly, what we simply talked about, scaling DigitalBridge, delivering working leverage with larger margins and reinvesting these earnings successfully into the very best excessive return investments on the company degree. I sit up for updating you all year long, together with an Investor Day that we’re scheduling for Could after the Q1 earnings. So keep tuned. And look, thanks once more to your continued help and curiosity in DigitalBridge.

With that, I am going to hand it over to the operator and we are able to start the Q&A piece. Thanks.

Query-and-Reply Session

Operator

Thanks. [Operator Instructions] Our first query comes from Michael Elias with TD Cowen. Please proceed.

Michael Elias

Nice. Thanks for taking the questions. Two, if I could. First, Marc, you talked a couple of traditionally difficult fundraising 12 months in 2024. Simply curious as we enter the 12 months, how you’ve got seen the fundraising setting evolve, are you seeing LPs come again to the tables with extra urge for food for digital infrastructure? Curious your ideas there. After which second, on the information middle facet, nice to see the CapEx that you simply’re deploying into the sector. However one of many headwinds that we see is availability of energy. I am simply curious, as you concentrate on the state of play of the grid globally, what do you assume from the flexibility to entry incremental energy on the information middle degree and as a part of that, the way you’re fascinated with making certain the long-term entry to energy at your portfolio firm degree? Thanks.

Marc Ganzi

Effectively, to start with, good morning and thanks. Let’s begin with fundraising. Look, the fundraising setting is hard. I have been out on the highway the primary six weeks of the 12 months, and I’d say investor curiosity is excessive, investor curiosity is powerful, engagement is there. The calendar is lots deep with conferences. And we have lots of buyers which are working by way of varied merchandise with us, whether or not they’re doing on-site due diligence right here in South Florida, or whether or not they’re within the information room, or whether or not we’re negotiating remaining phrases. We have a deep pipeline. As I discussed final time, we now have over 200 buyers engaged on our present flagship technique. So we really feel superb in regards to the trajectory of the fundraising for our flagship product. Nothing has actually modified there. After which I’d say curiosity in new merchandise is up as properly, notably credit score. A few of the issues that we’re doing in our digital ventures group goes fairly properly, notably round co-investments. We had a implausible partnership with Intel. We went out to boost some co-invest capital, and we had been oversubscribed to the tune of 2x to 3x. So good concepts, good merchandise, good execution.

And positively, I am going to end with one factor, which is DPI. We have had an ideal monitor report of returning capital to buyers. We have returned over $4 billion of capital to buyers within the final 18 months. We’re returning extra capital to buyers this 12 months. We’ve got a collection of closings and a collection of property which are in strategic opinions. So we have executed a very good job of listening. I feel you must be on this setting, two phrases matter, pay attention and persistence. And I feel we have been very affected person and sooner or later, we have been rewarded. And I feel in the event you ship DPI, you ship good returns, and also you’re affected person, and you are not notably pushy, the outcomes come. In order that second piece is persistence, and it simply requires a special degree of persistence and cadence. And also you simply must be ready to possibly take a dedication 30 days later, 60 days later, 90 days later, you need to be ready to take a smaller test. Examine sizes are down wherever between 10% and 30%. We did have a couple of surprises the place some test sizes got here in a little bit larger. After which after all new logos. One of many nice issues about having a 28 individual crew that goes out and prosecutes our varied methods on a worldwide foundation is we’re having access to extra logos. And having a multi technique method the place proper now we now have three totally different merchandise in market, it actually exhibits the depth of what we’re doing and it actually exhibits, as I discussed earlier, the ecosystem and flywheel. So issues are working properly for us. We’re fairly joyful. 7.7 is the brand new 8. So, you spherical that up, we really feel like we hit our objectives of attempting to get to $8 billion in a troublesome [tape] (ph). And as I stated, we stay optimistic and constructive round this 12 months. And we have closed some capital. We will shut extra capital inside this quarter. And so issues are — issues from our perspective are in a reasonably good condition. However I do not wish to overstate in all probability what you have not heard from our friends like Blackstone or Carlyle or KKR or Brookfield, which is that fundraising is trickier right now. And so we simply have a special playbook, we now have a special cadence and to this point it is understanding fairly properly for us.

On the ability difficulty, Michael, you and I’ve been speaking about this for 2 years. I do not assume that is something new. I highlighted two years in the past that the grid was inadequate to satisfy the calls for of knowledge middle progress. So we began down a barely totally different highway two years in the past, going out and getting will serve letters when others weren’t targeted on that. We had been designing information middle capability in markets that maybe different individuals weren’t targeted on, whether or not you check out what we have executed in Reno, by instance, otherwise you check out what we have executed in Quebec, in Quebec Metropolis, by instance, otherwise you have a look at what we did in Berlin, otherwise you have a look at what we have executed in Cardiff, Wales, or Milan, or Warsaw. I imply, you bought to skate typically to the place the puck goes, not the place everybody’s up towards the boards in a scrum. And so we have tried to all the time be, because the chief on this infrastructure enterprise and digital infrastructure, we have all the time tried to be a step forward. So our 5 gigawatts that’s presently being contemplated, we do have energy sources for that. And along with that, we have been working very laborious on renewable sources of vitality. The swap funding was an enormous case research in that, in the truth that we all know the way to supply and develop renewable vitality adjoining to our information facilities. We’re working actually laborious on vitality independence throughout all of our information middle platforms. That continues to be entrance and middle for us. However once more, that is a mission that began two years in the past. If persons are simply now waking as much as the truth that we now have a grid transmission difficulty, you in all probability weren’t paying consideration two years in the past, otherwise you simply weren’t within the enterprise. Lots of people have jumped into the enterprise within the final 12 months, and the distinction between being a local and a vacationer. So we inform buyers, look, we’re actually, actually, actually targeted on ensuring that we’re making ready for the longer term.

And to try this, you have to have nice administration groups, you have to have capital formation, you must have good concepts, and you must have executives which were there, executed that. We simply introduced on board Alex Hernandez, who was previously the CEO of Talen, to work in our funding administration crew. Alex is a multi-decade veteran within the vitality transition area, is aware of the way to deliver renewable sources of vitality and different sources of vitality to information facilities. And so we’re excited to have him right here working with our inside crew on that and dealing with the InfraBridge crew that is engaged on vitality transition. And we stated it after we purchased AMP and transformed to InfraBridge that vitality transition was going to be an enormous difficulty. And additional to that, we additionally introduced in {industry} skilled, Christian Belady. So, Christian, as most everybody is aware of within the {industry}, comes from Microsoft, has a tremendous monitor report in constructing information facilities, however most significantly, understands the way to supply renewable vitality and understands the shopper perspective on why renewable vitality is so vital. And as I’ve stated earlier than, once more, this isn’t a brand new narrative for us. We stated it two years in the past. Having renewable vitality is not simply one thing that appears good on a t-shirt that you simply’re ESG compliant. It is, to be sincere, Michael, it is desk stakes. And if we will be finally the — persistently the supplier of the following era of digital infrastructure, we now have to try this in live performance with our prospects. And that is understanding their wants from an vitality effectivity perspective, renewable vitality, totally different sources of cooling, and simply pondering otherwise. We’ve got to proceed to evolve as a agency and that is one thing I’ve all the time been open to. And I feel you see with the concepts that we’re prosecuting and the those that have joined our crew, we’re very targeted on this and have been so for some time. That is, once more, not a brand new narrative.

Michael Elias

Thanks for all the colour, Marc. A lot appreciated.

Marc Ganzi

Thanks, Michael.

Operator

Our subsequent query is from Jade Rahmani with KBW. Please proceed.

Jade Rahmani

Thanks very a lot. By way of the fundraising outlook, would you say that there is additionally alongside a slowdown in fundraising elevated competitors within the verticals that DigitalBridge goal? To what extent is {that a} consider your outlook?

Marc Ganzi

Effectively, I feel if it is — keep in mind there’s two dimensions to this different asset administration enterprise. One is we exit and we compete for capital throughout our product set. So we have to exit day by day and compete. And I feel, inside this quarter, we demonstrated our capability to compete. And I feel, to be sincere, we kind of punched above our weight class, in the event you have a look at among the efficiency of the opposite different asset managers when it comes to their fundraising. Second, down on the portfolio firm degree, we have been competing for 30 years. In order that’s a enjoying discipline that I really feel very snug on. I like competing for brand spanking new BTS orders. I like competing for brand spanking new small cell orders. I like competing for brand spanking new information middle capability. And I feel in that regard, as you heard right now, down on the portfolio firm degree, we skilled natural money circulation progress year-over-year up throughout all 4 verticals. And our portfolio firms are going out and profitable. Swap had an unimaginable first 12 months below our stewardship when it comes to new bookings. Zayo had an amazing 12 months and an ideal turnaround, EBITDA up 6%, 7% in a troublesome macro, demonstrating {our capability} to get on the market and go compete and finally ship a marketing strategy. So look, we will compete day by day. We compete on the portfolio firm degree. We’ve got to compete for patrons. I feel what all the time offers me a good bit quantity of optimism is that the pockets that we exit and compete for, that piece that we take of the pockets is rising. And while you see the tailwinds that we now have had the final decade and also you have a look at the tailwinds we now have in entrance of us for the following 10 years, I imply we’re not even executed constructing public cloud, we’re not even executed constructing edge workloads for cloud, and right here comes AI that requires a strong set of connectivity options to the information middle, requires huge compute energy, energy effectivity, new information middle design. After which past that, as we glance over the following, two to seven, eight, 9 years out, there’s an entire ecosystem that comes with AI that follows the same blueprint to what we went by way of in public cloud, which is because it’s kind of cloud educated in large information facilities, as we have stated, it is edge delivered. And the sting supply idea, I will preserve pounding house all 12 months as a result of I need you guys to grasp it, which is that edge supply requires a capability to deliver that throughout the ecosystem. So only a few can try this, proper, which is, do you have got the fiber? Do you have got the tower infrastructure? Do you have got the sting compute infrastructure? Do you have got the small cell infrastructure? Do you have got the flexibility to dump right into a managed setting, like a prepare station or an airport or a stadium the place you have got Wi-Fi 6 and you’ve got the aptitude to ship large bandwidth options and ship these forms of Generative AI functions. We will preserve speaking about this, much like how we had been speaking about energy two years in the past for information facilities. After we provide you with themes to consider, it is not unintended. It is as a result of we now have actual world expertise in what’s taking place. And so possibly we’re a few quarters forward of the group, or the vacationers, as I wish to say. However what we’re doing right now is delivering for patrons. And we’re delivering an ecosystem set of options that may be a bit differentiated from our opponents. And we now have to maintain doing that. We’ve got to maintain evolving. And we now have to maintain taking outsized pockets. It is actually vital.

Jade Rahmani

Thanks. By way of the steering vary, trying past what you supplied to 2024, I consider the final FEEUM goal was $49 billion for 2025. So if $7 billion is now the speed of natural progress and fundraising, ought to we be pondering extra alongside the strains of $44 billion, $45 billion as an affordable goal for 2025?

Marc Ganzi

Look, we have not put out these targets. What we now have executed is given a selected set of parameters round what we really feel we are going to ship this 12 months. I feel that was fairly clear from the earnings presentation. As we have made this remaining transition from diversified REIT into different asset supervisor, a part of that transition this 12 months is now reporting like our peer group. And so you must possibly flush a little bit little bit of the outdated method we reported, which was extra in a re-cadence and extra based mostly on run charge to now truly going to what our peer set does within the different asset administration area, which is reporting on actuals. And so finally, we plan to provide that degree of consolation to buyers on our Investor Day, which we’re planning for Could. We’ll have that date for you shortly. In March, we hope you may come down right here and present up in individual or you possibly can present up just about. Both method, I feel it’s going to be a really instructive day for us and with our buyers and naturally with all of you within the analyst group. So we sit up for that.

Jade Rahmani

Effectively, would you say is there any motive for a re-acceleration in progress in 2025? As an example charges average, and that a part of the headwind subsides. That would add to LP investor confidence in deploying capital. Is there a possible for a re acceleration?

Marc Ganzi

Effectively, look, an acceleration for us could be amplified fundraising, proper? As a result of that finally results in FEEUM and FRE and distributed learnings. So, we have given you a $7 billion information for fundraising this 12 months. It flows by way of very evenly to the remainder of the important thing metrics that you already know about our enterprise. I do not assume there’s any magic to ‘25 versus ‘24 versus ‘26. I think we’re in a very steady cadence in terms of how we’re delivering on existing products for investors, which is that key metric DPI, returning capital back to investors. I think everyone needs to understand that if you return capital back to investors, you then can ask for more new capital. But I think investors are becoming a lot more hawkish around DPI. And in terms of giving new commitments, it is heavily linked to your ability to perform for them. So right now in this year, we’re focused obviously on the three products that we’re fundraising for, that $7 billion that we talked about. We’re very focused on portfolio company performance. We’re very focused on the exits that we have planned for this year and delivering great outcomes for investors. And then that gives us the ability to go out and fundraise in ‘25 and ‘26. And as you can tell from the cadence of credit and InfraBridge and our flagship strategy, there is a pretty, as you can start to notice in pattern recognition, there’s a logical progression from when you launch new products. Also, I want to be clear, we have not left M&A off the table for this year. We do think there’s adjacencies in digital alternative asset management that we do not have in our quiver today. So we’re going to go out and think thoughtfully about how to grow that, whether it’s standing up new teams organically, or whether it’s buying an existing platform like we did with InfraBridge. We’re going to grow our asset base and we’re not afraid to use M&A as an ability to do that. And we have lots of different ideas and targets there. So there is the opportunity for outperformance and acceleration in ’25, ‘26. I want to be clear with you, it’s not interest rate driven. Everyone seems to think that interest rates are the magic elixir. It’s not. The elixir in the alternative asset management space, if you’re a serious CEO running a serious company, is returning capital to investors. DPI matters. Because at the end of the day, the organizations that deliver and bring capital back to LPs are the organizations that have the ability to ask for new capital commitments. That to me is really the focal point of what we’re trying to get done this year.

Jade Rahmani

That’s a great point about it’s not only interest rate driven. I wanted to ask a follow-up. I don’t know if you’d be comfortable answering it, but looking at the FRE and translating it to a per share distributable EPS basis, what range do you think might be reasonable?

Jacky Wu

Yeah, we’re not guiding to EPS. I mean, obviously the other factors that drive it from FRE down to EPS or distributable earnings will be our interest expense as well as preferred equity. But at this point in juncture, given the realizations and other things that matter to distributable earnings and EPS, we’re at this point not guiding to that right now.

Jade Rahmani

Thank you.

Marc Ganzi

Thank you, Jade.

Operator

Our next question is from Ric Prentiss with Raymond James. Please proceed.

Ric Prentiss

Thanks. Good morning, everybody.

Marc Ganzi

Hey, Ric, how are you?

Ric Prentiss

Great, thanks. First, thanks for getting us to the simpler story. I know it took a lot of work and it was busy. And hats off Jacky, it’s been great working with you and we welcome you to beginning to know Tom better.

Jacky Wu

Thanks, Ric.

Ric Prentiss

Questions. Marc, I want to follow along. Obviously fundraising is a key topic. So and first also thank you for getting the calendar year guidance. We appreciate that ‘24 is a calendar year guidance, so check box on that one, too. When we think about the $7 billion in fresh capital in ‘24, how should we think about the pacing through the year on that one? And then on the realization, the DBP I, DBP II, like you said, DPI is important. How should we think about what that pacing of those returning capital to investors should look like? And the next piece of the question too is, how should that return to capital affect kind of our thoughts longer term ‘25, ‘26, ‘27?

Marc Ganzi

So I don’t think there’s a specific algorithm between DPI and what investors bring back to us. I want to make sure you guys don’t feel like there’s a direct correlation there. I think that, we’ve delivered about a little over $4 billion of DPI. I think it’s $4.6 billion of DPI in the last 18 months. We have scheduled to deliver another $5 billion of DPI this year. Could go a little bit higher. We’ll see. It’s really focused on a couple of our continuation funds, some of the legacy DigitalBridge funds that we had. Our returning capital right now, there’s some exits in Fund I. There’s some InfraBridge exits. So we’ve got a bunch of stuff teed up. And we’ll continue to update you each quarter as we deliver that DPI. I think on the $7 billion this year, we’ve been pretty clear that the bulk of that will be flagship. So we’ve got closings that are scheduled for the end of this month. We’ve got a big closing scheduled for March. We have rolling closings, Ric, pretty much every 30 days. And remember, we’re no longer a one product shop, right? So between co-investments, continuation vehicles, the flagship product, our credit strategy, our late stage venture growth strategy, we’ve got an ample amount of products in the market that there’s always a closing happening at some point in time. So the key to that is just updating you guys on a quarterly basis about how much we raise inside the quarter, and then ultimately how that offsets against our annual objectives. So, so far, good start to the year. Good January, right? February’s lining up pretty good. March is lining up very strong. And everything seems to be as we have planned it. As I mentioned earlier, Ric, there’s one key word to all of this, which is just patience. Whether you got to wait two weeks for a signature, you got to wait 30 days for a fee letter, you got to wait 45 days for an investment committee to reconstitute itself, every place has a story and an issue, and we just need to be good listeners, which we are. We need to be patient, which we are, and the results will come. We have a very, very good feel for what we’re doing. And which is why we sit here today with the results that we just delivered to you and the conviction level that we have for the story this year and out in the ‘25 and ‘26 where we’ve already got new products lined up for launch later this year, that’ll be our ‘25 products. And then if we continue to deliver on Fund I and Fund II, we can continue to grow our flagship strategy in ‘26. So everything is pretty well thought out, right? I mean, we have a very specific set of goals and objectives. And the good news about having the multi-strat setup that we have today between InfraBridge, right, the flagship product, late stage venture growth, credit, SAF, which is our core fund, and our two liquid securities and our continuation funds group, we have enough products out there that can keep growing. And don’t forget, Ric, as our portfolio companies grow, in the middle of the year, we may announce a big co-investment, right? So we may go out to all of our LPs. Let’s say, I’m not going to pick on one company, but let’s say Scala or Switch or Vantage Europe ends up outperforming, it’s not uncommon for us in the middle of the year to do an equity raise very quietly. And then all of a sudden that pops up in the next quarter and you’re like, oh, wow, where did that come from? Well, it came from success based CapEx. And so we’ve got a rich history of doing that. And again, whether it’s a Scala or whether it’s a Highline or whether it’s a Vantage Europe or whether it’s a Vertical Bridge, all of these companies require capital. And when they’re succeeding and they’re taking outsized wallet share, it’s easy to go to LPs and pass the hat and ask for a top up on co-invest equity. So you’ll see that. Each quarter, you’ll see a co-investment strategy, bring in some new capital, perhaps you guys don’t expect it. We don’t model it, right? But as our portfolio companies grow, so does the equity table and so does the ability to form capital around our best management teams.

Ric Prentiss

It might be a little premature, but Tom, you’re in the background there on the call. It sounds like you’ve got extensive experience in the alt world. What are you seeing so far as kind of the pros and cons of DigitalBridge versus others in the alt asset manager space? And what do you think the market’s missing as far as people look at DigitalBridge?

Tom Mayrhofer

It’s probably a little premature for me to comment on that specifically, but what attracted me to DigitalBridge is that we have a focus and an area of expertise that differentiates us. And so that’s what attracted me here. I think that’s fundamentally what’s important when you think about investing capital.

Ric Prentiss

Hey, Marc, you’ve obviously been around a lot longer, we’ve known each other, gosh, 20, 25 years. What do you think are the pros and cons on what you guys now are the simpler story, and what is the market not giving you credit for yet maybe?

Marc Ganzi

Well, Ric, I think we’ve been pounding the table now for three years and I’ve been at your conferences quite a bit, being an evangelist of the asset light digital infrastructure player. And even though we’ve taken an alternative asset management skin, deep at our core, our capillaries, our heart, our brain is that of an operator. And when you’re asset light, Ric, you can go faster, right? And when you’re asset light, you can form capital quicker and you can take wallet and I love doing that. I love competing and I like to go out and I love it when our portfolio companies go win the key jump balls because we can move a little quicker and we can form a little capital. And make no mistake in AI infrastructure, you’ve got to have a big wallet if you’re going to go compete for some of this business. So we’re out there doing that. And as you can tell from the likes of Equinix and DLR, they’re out there trying to form capital away from their public balance sheets because they have to. It’s the only way they can survive, which is why DLR did the business, did the deal with Blackstone and why Equinix did their deal with GIC. I think it’s sort of proof positive that what we’re doing is the new thinking in infrastructure, a more evolved way to invest in digital infrastructure, which is why our investor base has some crossover. You see traditional infrastructure, TMT investors in our share price. And then you see obviously folks that hold other alternative asset managers moving in to our stock in the last 90 days, because they understand what we’re doing and the fact that we are the next-gen alternative asset manager, lean, focused, flywheel, product-centric, customer-centric. These are things that are unique and even unique, Ric, in the alternative asset management space, we’re at our first financials conference today, which will be interesting. But we’ll still attend your conference, right? Because we have a big say in what happens in your world. But we now have a voice in the world of, again, the Blackstones and Carlyles and KKRs, because, our fees, our revenue, our earnings, and most importantly, the scarcity of what we do is so unique. And I think as time goes on, you’re beginning to see us grow into what I think is an appropriate multiple for this business. We’re not industry leading yet. I think my goal is to have the highest multiple in the industry because I think what we do is more unique. I think what we do is a little bit more sticky. I think our fee streams are a little bit longer. And as we get out on the circuit and we talk to investors in the financial services space, like we’re going to do today at one of your competitors conferences, we’re going to go make that case, that the durability of our management fees, the uniqueness of what we do, the scalability of what we do, our ability to grow AUM, FEEUM and FRE is very unique because it’s fueled by a secular tailwind that hits credit, that hits core, that hits flagship, that hits InfraBridge, that hits our liquid securities funds. All of these ideas and concepts are unique, curated, tailored, different products and perhaps what our peers are selling. And so as Tom said, being focused matters. Investors want focus. They want to be with somebody that’s an industry specialist and that understands how to invest in these secular opportunities. You’re seeing the same thing, Ric, in renewables. Investors pile into folks that are focused, that have that industrial background, and that’s why I think you’re seeing some of the success. Now, I think the big elephant in the room about our valuation, Ric, is just carried interest, right? I remember talking to some friends of mine at Blackstone who now are the senior leadership there. Over a decade ago, when they went public, there wasn’t a great appreciation for their carried interest. And now today, I think investors expect on a quarterly basis, Blackstone to deliver carried interest and they do it and they do it really well. They’re best in class. And so we need to get into that same cadence, right, where investors can trust the carried interest delivery. And we’ve got a big chunk of our carriers is for the public company. And right now we don’t get valued for that at all. So that’s a big opportunity. But that’s something that’s earned, Ric. We got to go earn that. And I plan to do that. Just like we spent the last four years earning your trust and earning investor trust, we will spend the next four to five years earning the trust side on the carried interest delivery for our shareholders.

Ric Prentiss

Makes sense. Thanks, everybody. Jacky, again, best wishes.

Marc Ganzi

Thanks, Ric.

Operator

Our next question is from Richard Choe with JPMorgan. Please proceed.

Richard Choe

Great. I just wanted to follow up on the $11 billion in data center CapEx. What kind of return rate should we be expecting from those investments? And I think there’s some worry that we’re kind of entering this peak data center demand environment. Can you talk a little bit about kind of the sustainability that you see? I know you went over a little bit on your pipeline, but in the past, pipelines don’t always turn out to what they should be.

Marc Ganzi

Yeah. No, Richard, as always, you’re asking the right question, right? I think we should always be concerned at the peak, not the trough. And so having — like you, having been around this sector for three decades, I mean, I’ve watched the peaks and the valleys in cell towers, I’ve watched in small cells, I’ve watched in fiber, I’ve now watched two leasing cycles in data centers. And I think, Richard, you’d probably agree with me, we’re in a third cycle now, since the inception of the industry where we’re at a peak. I actually will take the view that I think rental rates, Richard, will continue to go up. I do think it is very market specific. Given that we are a global operator, we do operate in five different continents, just to be clear. We’ve got operations in Africa, got operations in Asia, Latin America, the US, and Europe. And so we have a pretty good purview of what’s happening out there. And certain markets, lease rates are up 10%, 11%. Certain markets, lease rates are up 25%, 30%, 40%. And Richard, it is heavily correlated to power and power availability. And so as certain markets, like for example, the flat markets or Northern Virginia or Santa Clara, or even out of Hillsboro, these are capacity constrained markets where the landlord has the advantage. And how you use that advantage is really important, and I won’t get into the strategy of pricing and what we do, it’s not appropriate. But our 5 gigawatt pipeline is super qualified in the respects that we have land, we have permits, we have will serve letters, and we’re prepared to deliver that capacity. That 5 gigawatt number last year, just to put it in proper context, our pipeline this time last year, Richard, was 2.3 gigawatts. So our pipeline is up over 2x, right? And so we’ll lead through that pipeline as the year goes on. And again, what is also unique to our story is that we have six different data center platforms. So we’re not just myopically focused on big cloud hyperscale campuses, right? AtlasEdge is building hyperedge compute in Europe. DataBank is building hyperedge here in the US. AIMS is building hyperedge in Southeast Asia. So we have three edge compute companies that are very focused on a specific product, a certain vertical, and a certain set of customers. Take a step back. Look at what Vantage is doing and look at what Scala is doing in Brazil and in Santiago and Colombia. There we’re delivering at scale big hyperscale campuses focused on cloud customers and cloud logos and some AI logos. Then, last but not least, private cloud, 100% renewable. Switch, very differentiated, very unique, highly secure. These are things that resonate with the customers, particularly Fortune 100 customers and big government agencies that really are focused on data sovereignty and data protection. We’ve had a fantastic first year results at Switch, and Switch is poised to deliver another big year of results. But again, that is Tier 5. It’s a very differentiated product. So again, having these six different companies where we can show up and be incredibly surgical and act local with the customer and already have the power lined up, already have the land lined up, and already have the building permits lined up, that’s advantage DigitalBridge at the end of the day. And so when we present to you an $11.7 billion CapEx number for this year on new data center spend, that’s committed, that’s signed. So those were leases that were signed 12 months ago, 18 months ago. What we’ll do this year is we’ll work through that 5 gigawatt pipeline and hopefully we convert somewhere between one and 1.5 gigawatts of new leasing, maybe more. Our sales teams are pretty confident that this could be the first year we could surpass 2 gigawatts of leasing across all of our portfolio companies. We’ll wait and see. We’ll keep you updated on it but I think the punchline is the markets that we’re operating in, we see price elasticity but we see defensibility around what we’re doing from the power position we have, the permits we have, and the customer relationships we have. That to me is the strategic moat at the end of the day, is being a year, 18 months ahead of our competition in terms of the land, the permits, and the power.

Richard Choe

Thank you for the color.

Marc Ganzi

Thanks, Richard.

Operator

Our next question is from Eric Luebchow with Wells Fargo. Please proceed.

Eric Luebchow

Thanks. Good morning, Marc. So maybe you could touch on kind of the buy versus build equation across your key industry verticals. It seemed like you’re more focused on building via CapEx and greenfield in 2024. Wanted to confirm if you’ve seen any kind of changes in transaction multiples across your key verticals.

Marc Ganzi

Yeah, thanks. Look, we’re not bullish nor bearish on M&A versus building. I think inevitably we skate to where we think we can achieve the best IRR. And so for right now in data centers, it’s built. Buying existing data center platforms are incredibly expensive. And the returns are incredibly tight because five or six infrastructure firms show up who claim to be in digital infrastructure and need to buy something. And so that’s not a race we play in. It’s not a place where we perform particularly well. So this is why we’ve been for years building these six platforms and building our construction pipeline and most importantly, building our partnerships with tower source providers. That’s really been the magic for us. In that swim lane, we’re focused on greenfield. I think if you look at towers, we’ve seen tower multiples retreat a little bit, not much, but there’s been some value opportunities where we’ve dipped our toe in and we found an opportunity to do some tuck-in M&A and we do that discreetly and quietly and we don’t do it with a lot of fanfare. So we are buying towers, but we’re also building towers. We’ve got a big pipeline of towers in Europe with GD Towers with our friends at DT. Vertical Bridge has a monster pipeline of new BTS towers, but they’re also engaging in M&A. EdgePoint has a big BTS pipeline of over a couple thousand towers for customers in three different countries in Southeast Asia. And ATP and MTP and Highline are all executing down in Latin America. So we’re very busy. I would say our global built-to-suit pipeline is somewhere between 5,000 and 7,000 towers today across all the different tower companies. That actually might be light, Truth be told. And then I think the M&A pipeline is somewhere between 15,000 and 20,000 towers when you amalgamate all the M&A acquisition work we’re doing around the globe in Asia, Latin America, Europe, and the US. Again, in the tower business, we operate in four different theaters, so we’re pretty busy. Moving on to fiber, I think this is where you’ve seen the biggest degradation in multiples. Fiber-to-the-home, there were some deals that kind of got done in the crazy days of COVID in the mid-20s. I think you’re seeing those multiples retreat down in kind of the 10 times to 14 times range. Enterprise fiber, again, good enterprise fiber, was trading in the go-go days in the mid-20s, retreated to the high teens and I would say today is retreated even further down into the low teens and again, kind of in that 12 times to 14 times band. But it just depends on the business model, depends on the market, the management team. We saw fiber-to-the-home business in Florida trade for over 30 times to a sponsor last week, and that just kind of blew our minds. So there are outliers and certain fiber models are pricing well and certain fiber situations aren’t even pricing. It’s just a no bid. And we’ve seen a couple of different auctions where the auctions have failed because there wasn’t a bid sufficient to proceed, where the sponsor was like, look, I’m holding out because I got this marked on my book at 18, and all the bids were at 12. So I think fiber still has a shakeout in pricing and in the M&A landscape. And we’ll continue to track that space pretty carefully. I think the small cell space is very interesting because we haven’t quite hit 5G densification. So as that growth kicks in and we move into the next phase of leasing, I think you’re going to see multiples move up in the small cell space because particularly in Generative AI where you really need to have low latency edge delivery of those applications to mobile devices, I think you do see a pickup in small cell infrastructure in ‘26 through 2030. I think that’s kind of the four year pocket we see being a lot of demand in small cell. So there haven’t been any material trades in the small cell sector in the last 12 months. There have been a couple of businesses that have been up for sale that didn’t get the price the sponsor wanted, so they pulled it back. And those are valuable assets. And so I think time will tell, there’s a bid-ask spread between what a sponsor wants to sell a small cell infrastructure business for and versus what the market wants to pay. So I think time, growth, and interest rates will sort of reconcile that. But for the time being, we don’t have enough data to suggest that small cells are trading up or trading down. We just know that there’s a material bid-ask spread. So that’s kind of my picture on greenfield versus brownfield. In the meantime, fiber greenfield is good. Small cell greenfield is okay. You saw our growth numbers from last year. Both those verticals are still delivering positive year-over-year growth, but clearly not delivering the kind of demand that we’ve seen across certainly data centers and towers.

Eric Luebchow

Great, thanks. And maybe you could touch on kind of M&A opportunities within the alternative asset manager space. I mean, we saw a large transaction announced earlier this year between BlackRock and GIP. And just wondering if you think there’s more consolidation opportunity to come in what your M&A pipeline may look like in terms of tuck-in and other asset management platforms?

Marc Ganzi

Good two questions. I was wondering when those were going to come. So on the first one, I mean, if you take a look at the two trades, the General Atlantic trade and the BlackRock trade, and then you look at KKR’s acquisition of Angelo Gordon, I think you do see a pattern — sorry TPG’s acquisition of Angelo Gordon, you do see a pattern of M&A activity in the sector. I don’t think that slows down. I think that’ll continue. I think that what people are recognizing is when you have a good platform, you have one accounting system, one SEC reporting, one asset management platform, one fundraising team, you do get economies. What we’ve learned is you do get economies of scale as you get bigger. And having a multi-strategy approach, whether you’re Ares, whether you’re Apollo, whether you’re Blackstone, that is the playbook. And different of our competitors choose to do different ways. Blackstone, by example, is very comfortable standing up a new product and growing through their own teams, they’re really good at it. You see what Ares has done in both ways. They’ve done M&A and they’ve done it through greenfield and then obviously you see what BlackRock is doing as they move into alternatives. I think this will continue. And I do think there’s a number of middle market infrastructure GPs that are subscale, that have looked at going to an IPO route, they realize they can’t get there. It’s tough to get public. We learned it the hard way in four years of building this business where it is. And so I think you will see more M&A activity in the space. Multiples are pretty hot right now. The GIP multiple was pretty rich. We think it was somewhere in the low 20s. Go figure for this year, sort of full impact of the FRE and FEEUM that GIP will deliver for BlackRock. So we think that Larry and the team did a smart acquisition and it gives BlackRock a whole new suite of products to sell to their clients. And same thing with General Atlantic in terms of what Bill Ford’s trying to do in energy transition. And so everyone has good industrial logic to what we’re doing. Our pipeline, we won’t comment on it. We have a number of ideas that we’re executing right now and we feel comfortable that we will in due course execute some of those ideas.

Eric Luebchow

Great. Thank you, Marc.

Marc Ganzi

Thanks.

Operator

Our next question is from Matt Niknam with Deutsche Bank. Please proceed.

Matt Niknam

Hey, thanks so much for taking the question. One question, one housekeeping. On just the main question, you talked about obviously seeing early impacts of GenAI demand. Can you talk, Marc, maybe about how much data center leasing of late is tied directly to AI and when you may see this demand translating to more activity for your fiber and edge assets? And then on the housekeeping, I think there was reference in one of the footnotes around $40 million in catch-up fees this year. It appears it’s pure margin. I’m just wondering if that’s included in the guide for $335 million to $360 million in fee revenue for the year. Thanks.

Marc Ganzi

So first on catch-up fees, it’s normal nomenclature for our business that when a LP joins a fund late, we have the ability because it’s on committed capital. We have the ability to build those fees and we do so and Jacky and Tom and the team do a good job of doing that. The second question, can you repeat the second question again for Jacky and Tom’s benefit? Thanks.

Matt Niknam

Yeah, if it’s included in the $335 million to $360 million fee revenue guide.

Jacky Wu

Yeah, it is included. Yes.

Matt Niknam

Yeah, thank you.

Jacky Wu

And that’s consistent with our benchmark peers.

Marc Ganzi

And the first part of the question, sorry?

Matt Niknam

Yeah, first question was just on AI. So obviously you’re seeing it in data center leasing. Just wondering…

Marc Ganzi

Yeah, yeah. So what I would say is, if you look across a 5 gigawatt pipeline today, last year AI was about 20% of our pipeline. I would say today, AI workloads probably constitute and AI ecosystem, right? So whether it’s a CoreWeaver, or Nvidia, or an ARM or somebody like that, I’d say today it’s probably about 40% of our pipeline. And then as it relates to when it will impact fiber and edge, it’s already impacting fiber. I can tell you that. So we already are seeing data center connectivity demand that’s being driven by those AI workloads. And some of that is existing fiber conduit that we’re selling into. Some of that is new route architecture going into existing DigitalBridge data centers. And some of that is brand new de novo fiber that’s going to a data center that’s being self-performed by a customer. So never before has it been more important to be close for our cloud and AI customers on the fiber side. And we’re pretty busy there. On the edge concept, we’ve actually been pretty clear. AI edge leasing is probably three to four years out, truth be told. I mean, right now we’re leasing into big language-based models that are pretty — a little less latency-sensitive is what I would say, but they’re more focused on power density and the delivery of big, big workloads. So think 400 megawatts, 800 megawatts, a gig of power. I mean, these initial language based models need to be — they don’t need to be in data center alley. They don’t need to be in the flap markets in Europe. They can be in other places. So with that less sensitivity, it does represent a good opportunity for us to build more fiber, but we’re also building some of those workloads for our customers. So I think on the edge AI side or Generative AI edge, that’ll be something that’s probably more of like a, starting in ‘25, but really a ‘26, ‘27 and ‘28, kind of delivery story.

Matt Niknam

Great, thanks so much and congrats again on the quarter.

Jacky Wu

Thank you.

Marc Ganzi

Thank you. Thanks, Matt, appreciate it.

Operator

We have reached the end of our question-and-answer session. I would like to turn the floor back over to Marc Ganzi for closing comments.

Marc Ganzi

Well, first of all, thank you to all of you, our investors, for your continued patience and support of what we’re doing. We appreciate those of you in the last quarter that have joined our shareholder roster. We always appreciate new shareholders. And as we’ve made this transition and move into a new speaking circuit which starts today for us, we look forward to meeting with all of you and telling the story and giving you more visibility into what we’re doing. Really excited about our upcoming Investor Day. We’re looking forward. I hope all of you will take advantage of that. And again, the most important part of this call besides the results and the delivery is Jacky to my left here. I want to thank you, Jacky, for your partnership and friendship. I’m excited about what you’re doing for us going forward. Jacky’s concerned in a bunch of our portfolio firms, and he is very important to the efficiency of these property. And I do know, Jacky’s excited to get again to his roots a little bit bit and be down within the weeds with the deal groups, which he likes. That is one thing he is fairly keen about. And so aligning his ardour with the place he will be actually helpful to DigitalBridge shareholders is thrilling. And, Tom, welcome to the room. Welcome to the dialog. Wanting ahead to partnering with you and telling our new remodel story. So, thanks. That concludes our feedback and I sit up for seeing all of you out on the convention circuit. Take care. Have an ideal day.

Operator

Thanks. This may conclude our convention. You might disconnect your strains at the moment and thanks to your participation.