DigitalBridge Group, Inc. (DBRG) Earnings Call Transcript & Summary

[Audio Gap] I cover the comm services and infrastructure space here at JPMorgan. Thanks for joining us today. I want to welcome Marc Ganzi, the CEO of Digital Colony and CEO-elect of Colony Capital. Marc, thanks for spending time with us today.

Thanks, Phil. It's good to be here with you.

To start, given these interesting times, can you talk about some of the actions Colony and its subsidiary businesses have taken to address the pandemic with customers and employees?

Yes. First and foremost, we put significant action into place, Phil, back in late January to ensure the safety of our employees. We closed our offices. We began putting the measures in place to ensure that we could function as a firm across our global networks of offices in Singapore, London, Paris, New York, L.A. and Boca. That has continued to result in what we think has been a very productive time period for us. And it's allowed us to work in a very collaborative way. I mean obviously, being a digital firm. We've had great success in having the ability to work and collaborate as we already had as a firm using Teams and Zoom and some of the other features. And obviously, the pandemic has really highlighted the resilience and the growth of our digital business. And so it's also have impacted elements of our legacy businesses. And certainly, we're prepared to talk about some of that as well. But I think, first and foremost, we take care of our people. We've been busy taking care of customers. I think you and I will talk a little bit about that today, just some of the things that we're doing with our customers and how we're helping them deploy more infrastructure. And then lastly, just helping our communities. That's also similar to what we do in terms of working with communities to ensure that infrastructure continues to run on time, operating at Five9 standards and ensuring that the commitments we've made to customers remain in place.

Okay. It makes sense to start upfront and address the health care and hospitality businesses. What's the latest there? And how are you thinking about those businesses?

Yes. So we made a decision last September to rotate into digital. When we first started our partnership with Colony over 2 years ago, they had about 2% of our assets were digital assets. Today, we sit at greater than 41% of our rotation to digital. We long talked about the importance of being able to rotate out of legacy assets. And so we made a number of proactive steps last year to rotate out of industrial, rotate off our European office portfolio, our partnership with RXR and as we turn the calendar to this year, obviously, COVID has had a significant impact on our businesses. First and foremost, let me be clear, as we think about Colony Capital as a parent company, it was much put in the press last Friday and over the weekend, just about some of the defaults that we had with our debt as it relates to the SPVs that own some of our lodging assets. It's clear to -- for us to make sure that folks understand that debt is not parent co guarantee. And we continue to maintain very strong liquidity at Colony today, and we're well positioned to meet all of our long-term obligations on a corporate basis. We've disclosed specific defaults down at certain investment level debt. This is nonrecourse debt to the parent co. And so as we think about that, really, what that will do, Phil, is it will impact some of our legacy lodging assets. And to be clear, the lodging sector is undergoing an incredibly difficult moment, probably one of the most difficult moments we've seen in lodging in modern history. Occupancy at 20% to 30%, broad challenges. Nobody is immune from it. Everyone's having proactive conversations with their lenders. We're no different. And so in terms of our posture, we're laser-focused on maximizing and protecting that value for shareholders. And we're going to continue to focus on those 7 different lodging silos. All of them have different capital structures, all of them have different debt. We're working with a very skilled group of advisers. And we're evaluating the value in each of those silos, and we're very confident we'll get the appropriate loan modifications where needed. And so over the long term, our lodging assets will ultimately change, and there'll be probably some significant changes to those assets, but we remain committed to working with our lenders. I think on the health care side, it's a little bit of a different situation. I think we're -- we've been very pleased, as we said on our earnings call last week, with the performance of the wellness infrastructure portfolio. We have over 90% collections in that portfolio between the hospitals and the medical office buildings, skilled nursing and our senior living facilities. Those assets have never been more critical to what's happening with respect to the pandemic. So our infrastructure is helping support the recovery in our country, and we actually feel really positive about where wellness infrastructure is. So in isolation, our focus right now is how do we protect value in lodging. And we're going to continue to rotate in the assets. I think the most important thing for investors to understand is we have a plan for rotation, where we had a long-term plan in place to rotate through our lodging assets and wellness infrastructure assets, along with some of our legacy real estate debt and private equity assets, which this year, we've already done $322 million in monetizations. We're continually evaluating and selling those legacy real estate assets and growing our asset base in digital. That's really the key of what our focus is today.

What does it look like in terms of a market of selling more of those legacy assets this year? Has the market really chilled in the last few weeks? Or is there a real interest?

So there's been good interest. We've executed 2 transactions already in the year. We're going to execute more transactions. It's just being patient. I think we've long had a history at Colony of being good and strong acquirers of real estate assets. And the fact that we are selling real estate assets today, I think, is testimony to the quality of the types of assets we have. And we're just going to continue to be patient. I think the key there is with respect to our legacy OE&D portfolio, we started the year at about $1.2 billion to $1.3 billion worth of value. We've sold about $322 million worth of assets, which have been great, putting some of that cash back on the balance sheet and using that as we rotate towards digital. We think there's at least another $100 million to $200 million in monetizations this year that we can consummate. And so we might be a little bit below our guidance of sort of $400 million to $600 million, which we were sort of talking about in fourth quarter last year. But so far, I feel pretty pleased given the pandemic and the fact that we've been able to secure $322 million, the monetizations in this environment, I think, speaks to the quality of the assets we have.

Okay. A question over e-mail is Albertsons, one of the sales that you've done so far, is that still for sale?

Yes. Listen, we don't comment specifically on private real estate monetizations. It just -- it wouldn't be prudent for us to do so, but we will continue to make monetizations in our private real estate portfolio. This is the category that we refer to as OE&D.

Got it. So let's shift to digital. What makes Colony's approach to digital infrastructure unique, and then maybe dig into some of the assets?

Yes. Listen, I think what makes us unique is that we're operators. Having been in the business for 26 years, and my team having been together for 3 decades is a pretty unique proposition. So as we make investments in companies, we have the ability to sit with the management team and to sit with customers and talk to them in a way that I think resonates from an operational perspective. And so having that operational purview gives us the ability to really dig deeply into the asset and dig deeply into the opportunity. And so understanding how to negotiate a complex master lease agreement, how to work with the utility on an easement, getting a well-served lighter to power up the data center or a permitting to get a small cell network built in Back Bay, Boston. I mean these are the -- it's a million details to operate these assets. It's not easy. And so having been there and having built those networks before, it really gives us a unique operational perspective. And for us, Phil, it's about the people. We've got a team now of 61 people globally that only wake up every day with a singular focus on digital infrastructure. That, we believe, does give us an edge. We've got a senior adviser team now of 12 executives across not only fiber and small cells and towers, but in colocation, interconnection and hyperscale data centers and managed cloud networks. And so we have this vast network of seasoned executives that really help us think through the strategy, the assets we want to buy and most importantly, the assets we don't want to buy. I would say another differentiator for us is this converged ecosystem of businesses that we have, 15 businesses, $21 billion of assets, having a 6 tower companies, 6 data center companies, 3 fiber assets, 2 large small cell companies. It really gives us a very unique opportunity where we can show up for customers and we can present ourselves as a global solutions provider or, Phil, we can show up for a customer and just focus on 20 search rings in a specific market where we're building towers. We have that flexibility to address a large customer like a Dish that wants fiber and wants powers and wants to build a nationwide network. And we can be very surgical and look at a very specific location like Ashburn or Montreal or Goodyear, Arizona and work specifically with a customer to address a specific workload requirement on the data center side. So having the ability to look across the ecosystem is very unique. There's not another REIT in the world that offers investors the chance to invest in a converged ecosystem. And whilst the noise is -- we're migrating towards this digital platform, we do think our story is very unique, and no one else has been able to replicate what we've been able to do in terms of ecosystem. So it's people, it's the advisers, it's the experience and most importantly, it's understanding how communications networks are more converged than they've ever been and understanding how to work for customers across that ecosystem.

A lot of the assets in the portfolio have varying sort of partnership structures with different other private equity companies. How do you get around that to get them to work together? And does that varying ownership block what could be efficiencies in management and costs over time?

Sure. Well, listen, we've always been privileged to work with other sponsors. And some transactions require a little more financial muscle than others. A great example of that, Phil, is our partnership with EQT. And we worked with them to acquire Zayo. They've been a fantastic partner, Jan Vesely and his team here in the U.S. are great partners. We communicate with them 2 to 3 days a week. And the key there is with that particular asset in that particular partnership, it was really finding a partner that understood the industrial side of the business and an EQT having vast experience in fiber. We found someone that had a common interest in working with Zayo, restoring Zayo back to what it was, which is really a solutions provider in broadband infrastructure. A clear business plan to limit the noise factor in Zayo and reduce the complexity and really get out there and focus on what's great about Zayo, which is the network. And it's a long-term infrastructure. So that's a great example of where we were able to partner with EQT. We've partnered with other great firms like Stonepeak and Goldman Sachs infrastructure partners and the Jordan Company. And we've -- I've worked with PE sponsors for over 26 years in my career. And we've had great relationships with Radial Partners and Blackstone and Macquarie. Macquarie is our partner in Mexico. So partnership is important. And the way you get to good decision-making is you build a good business plan, and you hire a great management team. And you build a business plan where you have a partnership agreement that really is very clear about decision-making, very clear about when you exit the asset and how you would go about exiting the asset in terms of the drag requirements or the tag requirements. So we think a lot about governance. We share that governance in certain situations, sometimes we don't own, where we own the entire company. But in instances where we do need to phone a friend, we view the rest of the GP world as being very friendly to us, and we're always happy to partner with them at Colony.

Speaking of Zayo, you called out a very strong quarter in Zayo with the strongest bookings in 3 to 4 -- for 4 years. What drove that benefit? And is there a change happening within Zayo that's sort of reinvigorating that effort?

Yes. Listen, I think first and foremost, I think the Zayo story perhaps didn't completely resonate in the public markets. And I think as Dan has always thought about that business, it's long-term infrastructure. And so the type of networks that we're building for the long term, we think are obviously ones that require patient capital. And so by putting infrastructure capital in place, it's giving that management team the time to be a little more patient and a little more thoughtful in its decision-making. And I think also with respect to the pandemic, there's been a massive surge in what we would call spot bookings, and that's really existing customers, taking up more lit capacity, where we can dial up that capacity quite on an accelerated basis for them. And then further to that, more dark. So there's been a significant uptick in dark infrastructure for what I would call fill-back carriers' carrier activity, where we're providing infrastructure for other carriers. And Zayo has had a rich history of working with AT&T, Verizon, T-Mobile, Charter, Comcast, CenturyLink, where they share network with other providers, and they provide that network infrastructure. So as a -- there's really 2 pieces to Zayo that are critical. One is that long-term broadband infrastructure, where we work for other carriers; and then the metro networks where we're working for enterprises. And fortunately, for us inside the quarter, both of those businesses were booming. Enterprises needing more capacity to data centers to fuel applications and certainly more connectivity for helping out other carriers expand their network capacity.

And are you able to move assets sort of back and forth between investments? You mentioned a couple of key pieces of Zayo, you didn't mention zColo. Which may fit better in one of the other data center companies? Or is that better to keep internally and create some kind of differentiation there with fiber?

Sure. I think, look, zColo is a really intriguing asset. And I think our philosophy is that Zayo as a stand-alone business from a broadband infrastructure perspective is a huge opportunity set. And anything that can sort of confuse that mission or perhaps even distract from that mission is something that EQT and I will take as a decision where we want to simplify the long-term business plan of Zayo. So we've -- it's -- we don't comment on ongoing processes, but we've looked at the strategic rationale of zColo. We'll continue to look at that strategic rationale, whether it makes sense inside of Zayo or outside of Zayo, but we'll take that decision with our partners carefully. Similar with Allstream, Allstream being a competitive local exchange carrier up in Canada, a good business, does a lot of work with -- on the -- on what I would call the sort of enterprise side and faces more -- is a more retail-facing business, a little bit different than Zayo. That business could certainly benefit from being independent. So we're looking at a variety of potential outcomes for that business. But at the end of the day, it's really coming back to making Zayo a simple story, focusing on its strength, which is its network and its carrier relationships with customers. And we're obviously certainly excited to continue to grow that relationship and help Zayo continue to grow its networks. We're very excited about what's happening with Dan and the team in Boulder right now.

That's great. Contrast your data center ownership on a wider basis, how is Vantage different from DataBank and Scala? How does the European market really compare to the U.S. and Brazil?

Yes. There are 3 entirely different markets right now. And I think it's just a timing, Phil, of what's happening in hyperscale. And sort of if you look back 2, 3 years ago, in the U.S., domestic leasing levels, as you know, from everyone from DLR to CyrusOne to CoreSite to QTS, we saw massive wholesale leasing volumes in hyperscale going back to 2018 and '19. And '19 saw slightly more muted levels in North America, and we began to see a rise in European workloads. That has continued into 2020. And so we've seen a massive upsurge in leasing activity in Europe as hyperscale deployments begin to proliferate throughout the continent. Historically, those hyperscale workloads sat in just a few markets. But now what we're seeing is the web scalers begin to look at some of those secondary markets as well. So the preliminary workload sat up in the Nordics, sat in Frankfurt and sat in London, I would offer you today that workloads are increasing at a significant pace in places like Paris, Milan, Warsaw, Zurich, Cardiff in Wales, Dublin, Amsterdam. We're seeing significant volume activity in demand for new workloads in these other markets, which was pretty consistent with what happened to the U.S. 2 to 3 years ago in hyperscale. So Europe is really coming into its own in hyperscale. 2019 was a fairly muted year in U.S. hyperscale leasing. But I think you'll hear from some of your channel checks and talking to some of the hyperscale operators in the U.S., we've seen anecdotally some of those workloads come back in Q1. And so we think there's going to be significant more new opportunity in the U.S. We've seen Ashburn leasing pick up a little bit. We've seen Santa Clara leasing workloads pick up, and we've seen places like Quincy and Québec City. Those are also areas where we're seeing increased leasing activity. And then in Latin America, it's really -- they're at the formative stages of sort of cloud computing. A lot of those workloads historically had been resident in the U.S. but now what we're seeing is some of those workloads shifting into the region, and we think sort of the bullseye for that is São Paulo. But certainly, Rio, Bogotá, Santiago, Chile is a hot market, Mexico City, and we're seeing increased workload activities. And what that really means is we think that leasing activity will be more pronounced in 2021 and 2022 as the cloud providers look to shift some of those workloads down into the region. Clearly, the work that DLR has done with Ascenty has been -- is a good first start. They've had obviously very good working -- great leasing volumes down there in their Brazilian JV with Brookfield. And we're seeing similar activity with our Brazilian platform as well. So we're excited about what's happening in Brazil. And we're excited with what's happening in Latin America with respect to hyperscale.

Okay. You mentioned Ashburn. For a while, it seemed like there was a lot of nonoperational private money that was building spec in that market and some other places around the country. What have you seen in terms of any shakeout there? Any sort of assets that are coming to market that might be interesting in a little bit of distress in that market or anywhere else?

Yes. We don't see a ton of distress in hyperscale. I would say that's the 1 area where we don't see it. I think in terms of the private capital, Phil, that's flown into hyperscale data centers, a lot of that capital tends to be either infrastructure funds or pension funds, which have a pretty long tolerance for being patient. And so as we see some of these private operators that do compete against Vantage, they've now accessed some of that long-term capital. So they're prepared to be more patient and sit on shall we say, lower occupied workloads or capacity. And so we've seen that, particularly in Ashburn is one of the markets. We've seen that -- a little bit of that in Goodyear, Arizona. We've seen a little bit in Dallas where there was some overbuilding. Dallas has been historically 1 of these boom-bust markets where there's no capacity, then there's a lot of capacity, and then it doesn't absorb, then it does absorb. And I think with Ashburn, we do believe some of the workloads that were put online in late '18 and 2019 are now starting to get leased. And some of those are public companies, and some of those are private companies. But as you know, Ashburn is the largest hyperscale data center market in the world. So there's more than a dozen providers that customers can go to. And there's a lot of inventory. But the key there is finding big contiguous inventory, right? So when you get into these workloads that are greater than 25 megawatts, it's hard to find a perfect shell waiting for you to move into. So there's some pushes and pulls in terms of Ashburn leasing. And I would say for us, Q1 was really strong at Vantage. And the difference for us at Vantage and Vantage Europe is our customers are the same. So for us, it's about making sure we've got inventory that's coming online and where we're anticipating customer workloads. And so right now that anticipation is really in the secondary European markets and continuing to bring on capacity in Ashburn and in Santa Clara and in Quincy and in Québec. Those are kind of the sort of 4 key markets for us in the U.S.

Okay. Let's switch gear to towers. You have assets around the world. Talk about the relative health of the different markets where you play?

Well, certainly, we can start in Europe. We've got 2 tower businesses there. One in the Nordics, which is headquartered in Helsinki and one in the U.K., which is headquartered in London. I would say, with respect to the Nordics, we had a really strong first quarter. Good initiatives in BTS starts, building small cell infrastructure to support IoT networks, where we're working on behalf of enterprises and then, of course, some anecdotal, small M&A and some good -- a fairly small amount of organic leasing, not as strong and pronounced as what we're seeing in the U.K. but good, strong, steady growth, and we like the Nordics. It's just a small -- relatively small market, which we would certainly like to scale. I think in the U.K., we had really good activity in the first quarter, some new build-to-suit assignments. But there, our tower business is coupled with FreshWave Group, which is our small cell operator. We had a very strong quarter. Bookings were up over 100% versus last year. So most of that was in small cells, predominantly in indoor and a couple of new outdoor networks that we lit. But we continue to see the notion of neutral host networks in the U.K. is something that we think customers like. Any chance to help them work through that CapEx spend for 5G, where we can put up the CapEx and provide the network is something that, so far, the U.K. carriers have been pretty responsive to. I would say in the U.S., Vertical Bridge had a great quarter. Sort of positive growth in the high single digits. Most of that fueled by 5G amendments, some new de novo colos as well. But it was a good start and good leasing activity for the team in the U.S. And we think that will continue, Phil, well into 2020 and 2021. I think you heard from some of our domestic brethren today about the leasing levels at AMT and SBA. And I would say, for Vertical Bridge, it's a very similar narrative that Jeff and Tom gave you, I would say. We've posted probably a little faster organic cash flow growth than those guys have. And then down in Latin America, we have 2 tower businesses, 1 in Brazil, which posted 25% organic TCF growth in Q1 and then ATP posted 23% -- sorry, 22% organic growth. And down there, it's more 4G densification. They're beginning to think about 5G. But for right now it's really continuing to fill in the holes and to densify the networks, corridor builds, secondary market builds. And I would say that we continue to be very bullish on LatAm towers.

Okay. Help us think about the 5G. And I imagine it's mostly a U.S. phenomenon where things are getting fairly close to driving revenue for 5G. But how do you think about it in your -- in the different businesses, not just towers, but also small cells and fiber?

Yes. I think, listen, in 5G, from my perspective, it's really about providing customers with a converged solution. And so this is where we really can bring the power of the portfolio to work for a customer. And our belief in the discussions we're having with customers is that network topology is changing. How networks are built and architected is going to change. I think this old notion where you've got a core to the network and you're sort of backhauling out to macro sites and out to small cell infrastructure, we've already seen that dynamic change, Phil, and it's really beginning to open up the core of the network, which is the RAN. And so in an environment where you start to distribute the RAN and you're able to build capacity in a series of hubs or small, what I would call, centralized offices or aggregation points, that's really, we think, the step function change in 5G. And so by putting these series of hubs and moving and decentralizing some of the core of that network in a decentralized environment, you have the ability to utilize the full arsenal of your spectrum. And by capitalizing on using software-defined networks and the ability to deploy multiple spectrum bands across that infrastructure in a very efficient way, we think it also creates a phenomenon where you can save CapEx for your customers. So that requires, from our perspective, the ability to understand the interconnectivity between the fiber and the small cells. And so when we think about C-RAN or we think about open RAN and what that ultimately looks like, yes, it's designed for mobility. It's designed to reduce latency. It's designed to improve efficiency in the network and certainly to provide a better user experience. But really, the next sort of phase to that is about applications. And it's about pushing workloads to the perimeter of the network. And that's where we begin to really see the real essence of edge computing. And so as we think about the partnerships between, for example, Verizon and Amazon or Azure and AT&T and you think about where those logos, those cloud providers want to put infrastructure, they clearly want to put it as close to the radio as possible, right? Because you want to reduce the latency and you want to be able to push high-powered applications to the edge of the network. The only way you do that is in a C-RAN environment or an O-RAN environment where you begin to decentralize those workloads. And this is really the essence of what we're doing right now is thinking through these thematics around edge computing like at DataBank or at ExteNet, where we're building C-RAN hubs or in Zayo, where we're providing that fiber. And having the conversations with customers today, it's really exciting because we do have a chance to reduce their total cost of network ownership. If it's built intelligently and they can use those RAN locations, and I think you heard about it today, American Tower was talking about edge computing, a topic they wouldn't even talk about 2 to 3 years ago. But now they own 1 data center and a couple of shelters, and now it's in both. And I'm not picking on Tom Bartlett, but edge computing, we've been at it for 3 or 4 years now and it's hard. These businesses aren't easy. We own and manage and operate close to 600 C-RAN hubs at ExteNet. That's a massive amount of hub rooms. And there's going to be thousands of hub rooms built over the next 5 to 10 years as we build 5G. And so this race for efficiency at the edge of the network, it's just now starting. And I think this is where you're going to see significant differentiation with the tower companies is understanding the edge, understanding how to address customer needs, but also addressing their OpEx needs, too, and thinking of ways that we can, in a cost efficient way, begin to bring down the total cost of the network.

So when you go to talk to big carrier number one, for example, are you sending a DataBank guy, a Vantage guy, a Zayo guy, an ExteNet guy and a Digital Bridge guy? All these different salespeople and relationships all walking into 1 office. So they're literally selling the whole product together and who -- do they know what different conversation?

We actually try to not do that. What we try to do is we try to have global coverage with the big carriers at a C-suite level, where we can have a sort of intellectual conversation about what are their needs, how can we serve them. And then we have a great network of 15 CEOs that have direct relationships as well. And then what eventually happens is in some of these meetings, whether it's with Verizon or T-Mobile or AT&T, they may say, look, we really want to talk about what's happening with our Zayo relationship. But at the same time, we do have a specific need for a roaming overbuild project where we're going to need towers and fiber. And there we can show up with Vertical Bridge, we can show up with Zayo, and we can serve the customer in a quick and more efficient way. So at the top, at sort of the Colony level, we're sort of air traffic controlling the sort of broader relationship but giving our CEOs the opportunity to continue to build their businesses and when it makes sense, bringing those resources together in a converged network or a converged solution. And it's worked extremely well so far.

Okay. Okay. We're running out of time. A couple of other things I wanted to hit. One, you bought back shares in the first quarter at what looks like a sort of second half of March price. Are you still buying stock today, given the liquidity in the overall business?

Look, we're always evaluating whether or not we want to buy our own shares. And there are windows where it does make sense, Phil, for us to buy our shares. There's moments where it makes sense for us to delever the balance sheet. So you've seen fourth quarter last year, we paid down some debt. Dealing with our corporate liabilities is a key priority for our team. That is something that we're in the midst of addressing. And my goal is very simple. You've known me a long time. I'm not a big leverage guy. So one of the key corporate objectives for us over the next 12 months will be to delever Colony and delever the parent. We'll constantly reevaluate that decision against buying shares. And at the same time, we're deploying new capital into new opportunities. So it's a delicate balance, right? Because at the same time, we've announced a suspension of the dividend as we look to harvest our liquidity. We've got very strong liquidity right now at Colony, close to about $1.2 billion of total liquidity, another $3.5 billion of liquidity down at the digital companies. And so for right now in this pandemic, in this crisis, liquidity is king. We want to maintain maximum liquidity. We ultimately want to deal with our long-term liabilities. And when unique windows open up to buy shares where it's accretive and where it's a better return on invested capital than other ideas like what we're doing in digital, we'll make those decisions to repurchase shares.

Okay. And that sort of leads to the last question where Tom talked about on the call that solvency is not an issue for you, but the liquidity is. How should we think about your solvency? And how do you mark -- view credit dynamics in the next few quarters in terms of liquidity overall?

Yes. So from a total liquidity perspective, can you hear me, Phil?

I can hear you, Marc.

Okay. Perfect. So from a liquidity perspective, we obviously have very strong liquidity. As I mentioned before, about $1.2 billion of liquidity. We've got certain short-range liabilities, certain long-term liabilities, but the reality is our pivot to digital gives us the ability to think about the future. We've got significant assets on our balance sheet in digital. We've got a significant investment in DataBank. We have a massive investment in our first fund. We've launched new co-investment products. We announced that on our quarterly call. We had a very successful quarter in launching co-investment products. We had a 9.1% in-quarter organic growth rate as it relates to FEEUM. So that was a byproduct of us successfully closing the Zayo co-invest and Vantage Europe. And so we keep bringing new ideas to our investors. We're putting our balance sheet side-by-side with our capital partners. And that digital business continues to grow. And that gives us the ability to grow the balance sheet, and it gives us our ability to grow our AFFO. And that, combined with our strong liquidity position on the corporate balance sheet and the strong liquidity down in digital, leads us to believe that we absolutely do not have a solvency problem. We are completely solvent, and we will absolutely meet our current short-term obligations and our long-term obligations and continue to rotate to digital. We're very confident in our ability to execute this pivot and this transformation. I know it's hard. It's hard for investors to understand it. We've got to do a better job making it simpler for them to understand, make it more transparent. But I can assure you, we're going to complete the journey.

Good. That's a good place to stop. Thanks, Marc. And thanks, everyone, for joining us.

Thanks, Phil. Appreciate the time. Pleasure to be here.