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

All right. If everybody can please go ahead and take their seats. Thanks, everyone, for joining. Just by way of introduction, I'm Matt Niknam, comm infrastructure analyst here at Deutsche Bank. We are very pleased to be joined by DigitalBridge CEO, Marc Ganzi. Marc, welcome back.

Yes. Thanks, Matt. Good to be here. I think it's like my 10th year here.

Good to be down here, in February. So Marc, you've been really busy in the last couple of years. I can't say 2022, busy in the last -- I'd say going back to 2020 when you took over. What are you most focused on as we think about '23, there's been a lot done -- there's more to do. So maybe just to start, if you can talk about some of your top priorities for the organization in '23.

Yes. Look, I think the macro has shifted, and we -- we talked about it last summer a lot internally as a team. And the thing that I sort of push my team on and I push our 40 portfolio company CEOs on is this transition from sort of peace-time CEO to war-time CEO and doing the things that really matter at this point in time that set us up to be strategic and play offense in this environment. I don't think a lot of people talk about this notion of how you operate in a momentum market and against a resistance market. And so what I laid out last Friday was just a couple of clear [ tenets ] that have worked for me as being a CEO for 29 years through good times and bad times. And we really emphasize at this moment, having a light load of leverage. I think that's one of the key things that we've mapped for investors this year. My goal to get to 2x leverage post the deconsolidation of DataBank and Vantage. Having the business levered at 2x is going to be incredibly important for us as we go forward. And imagine I inherited a business that was levered north of 14x 2.5 years ago. So we've made a lot of progress on leverage, and we want to finish that mission this year. So we've mapped out that we're going to pay off the converts, we're going to get Vantage and DataBank be consolidated, and that takes us to 2x leverage, and that's the right place we want to be heading into this environment. Second thing we emphasize was liquidity, got about almost $700 million of cash and cash equivalents today. We have a couple of levers that we can pull on to continue to increase that liquidity. Obviously, the movement of DataBank and Vantage SDC freeze up liquidity for us, which is important, the movement of the BrightSpire shares is important to us. So these are things that we're doing to increase liquidity and ensure the protection of the balance sheet, which is really my primary objective this year. Items sort of 3 and 4 a bit more nuanced. The third thing we talked about the other day was just making sure that we're taking care of customers and making sure that we're driving organic growth. We had a phenomenal year last year. We mapped on our call the organic growth that we were experiencing in our tower companies globally. Our data center businesses, it had to be the best year in data center leasing that we've ever seen, at least for -- once again, for our ecosystem. And then the rebound and fiber that we saw in organic growth, whether it was Mundo or Zayo or Xenith IG, some of the fiber businesses that we own had a nice rebound at the back half of the second part of 2022. And then the last thing is just growing organically. I laid out a path for how we take our FEEUM up 70% year-over-year. That's 30% of organic growth next year. 40% of that other part of that growth comes from the M&A that we did at the end of last year which is feeling the full impact of the Wafra transaction and then feeling the full impact of the AMP transaction. So it takes you from $22 billion of FEEUM plus M&A takes you to $27 billion, $28 billion of FEEUM and then we've talked about a guide of getting the $36 billion of FEEUM plus, which is the organic fundraising that we mapped out. And look, the best way to change the narrative around our share price is go out and grow organically. And that's what we're doing. We're raising capital right now. We're going to raise capital throughout the year. And if we hit our objectives and we hit all 4 of the things that I just mentioned, the share price will follow. So, we've got a very serious agenda this year, and we know this is a management team that knows what it's doing in this environment. And I think shareholders will be pleased with the actions that we've taken to make sure that we grow through this turbulent environment.

Got it. Got it. So you laid out a road map. But you also last Friday, you actually provided some targets for distributable earnings or DE which imply about somewhere between $45 million to $105 million coming up this year ex-M&A, which could maybe be a little bit more additive. And I get the road map is to get to somewhere between $140 million to $200 million by 2025. So just wondering if you can talk about your comfort level of visibility into achieving these targets given the really highly robust growth they imply.

Well, look, I think it's part and parcel of the fact that largely LPs today are under allocated to digital infrastructure. We go around the world. We have a conversation with about 300 global LPs, the biggest LPs in the world. And the common theme that we hear is that in the real asset category, LPs are under allocated to infrastructure. They're under allocated to digital and they're under allocated to renewable energy. And so we happen to be in a swim lane where we walk in the door and immediately LPs, even with the denominator effect are telling us they're under allocated to digital infrastructure. So that gives us an advantage in the discussions. And so look, we've been having these discussions with LPs about where to put capital to work in 2023. That started in October of last year. So now we've touched close to 300 accounts. We know exactly what they're thinking. We know what size checks they're prepared to write. And we know the products they like, whether it's credit core or our flagship product. We know what's on the mind of investors today. I spent the vast part of my last 120 days doing active listening, as I call it, with LPs. So we obviously, I think you heard a very confident management team last Friday, we're very confident around the actions we've taken for fundraising. I think this year feels very good in terms of where we've mapped it. We have a business plan for 2024 in terms of the products that we're going to be out fundraising for in our investment management platform. We've also laid out a map where we're scaling our investment management platform. So the InfraBridge platform is a big part of our future going forward. I've been very clear about the renewable energy and what we need to do in terms of the new infrastructure we're building and how we have to get behind the meter and make sure we have the right renewable sources of energy. I mean look, if there's one thing that the Switch acquisition taught us is customers want to be, Matt, in data centers that have renewable energy. Just the leasing activity at Switch in the fourth quarter and first quarter this year just shows you that if you have that renewable energy and you're not sitting around waiting for a will serve letter from the utility company, that's advantage you. And so we saw that in the results at Switch, and we're seeing that in some of the data centers that we've already pushed to renewable energy. So we think InfraBridge has the opportunity to grow. We've mapped out that -- we brought in [ Jonathan Purcell ] from Oak Hill who's just a fantastic multi-decade private equity pro similar to how we brought in Dean and Mike for credit, how we brought in Peter and Matt for Core. And we're not afraid to put new products into our arsenal, provided that there's adjacencies to what we're doing. And the last sleeve of what we haven't done is really digital private equity. And so that's kind of the next frontier for us. And I think we've been pretty prescriptive the last 2 quarters that, that's an area of growth and opportunity for us. So at the end of the day, we've got InfraBridge, we're developing private equity. We've got credit and core. We've got our flagship strategy. And so we've got the right products that I think address the opportunity set in digital, and that's the street corner that we sit on. We sit on the corner of all things related to digital infrastructure. And so having that last leg of the stool, which is private equity will be really important for us going into '23 and '24 and '25 as we execute that business plan.

And just to clarify, [ DD ] targets, do they assume any carried interest? Or would that be maybe incremental upside?

That's incremental, right? So we actually delivered carried interest last year. We'll deliver some carried interest this year. And there's no doubt as some of the vintages -- the early vintages of DigitalBridge start minting, you'll see in basically '24 and '25 that there'll be a material amount of carry going forward. But look, we're not asking investors to model that. Let that be the good guy, let us go out and create great outcomes. I think we did that last year. We created 3 outcomes that I think investors weren't prepared for, but we did a good job returning capital back to LPs at DataBank and Wildstone and Vantage Towers Europe. So part of our job is also to sell things. I know we've been buying a lot of things, but also part of our job is to create realizations and return capital, and that's something that we're very focused on in the back half of last year. We're also very focused on realizations this year. Investors should not be surprised if we sell a business or 2 this year.

Got it. How do you differentiate in terms of DigitalBridge broadly relative to your -- some of your larger investment manager peers who've been increasingly targeting the communications infrastructure space?

Yes. Look, I think it's -- it's a big expense, right? You're talking about $13 trillion of investable CapEx out there. So I think they're all swimming naturally to where they see opportunity. There's over $400 billion of CapEx is going to be spent this year. We've been on a $400 billion to $500 billion cadence for the last 5 years. So if you're an investor and you're thinking about where to deploy capital that's in a high-growth and secure environment, naturally, you're going to navigate to digital infrastructure. And so these were asset classes that really were not even acknowledged by KKR, Blackstone, GIP 5 years ago. And now today, they're saying that this is an area of growth for them and an opportunity. The good news is at $70 trillion -- $70 billion of AUM today, we're a very small piece of that sort of $13 trillion TAM. And look, we've never put out an aspiration to have 5% of the market, 10% of the market. I think our bias is we're operators. They're investors, we're operators. There's a big difference. And so we're going to continue to build and operate great businesses, which is our DNA. One of our portfolio company CEOs is in the audience there, Alex Gellman closing a lease, I think, on his cell phone as we speak. But it's a good example. Alex's company is a great example. We bought that business, and we paid a lot of money for that business. But what Alex is doing as he goes out every year, and he builds that business by 8% to 12% organic every year through a combination of amendments, new leases, BTS towers and M&A. Imagine there's 26 other Alex' out there that are running multibillion-dollar businesses focused on servicing customers. So the cadence that he's on is the similar cadence that a [indiscernible], where they're putting to work anywhere from $0.5 billion to $2 billion of CapEx every year to show up for customers. So I think the difference is sponsors buy companies, they put leverage on them. They make some changes at the acquisition. They try to cut some costs out and then they go to sell the business. We don't do that. To be clear, we don't do that. We go build businesses. That's our DNA. That's what we've been doing for 30 years. And so when we bought his business for multiples of billions of dollars, our job is to take Alex's business from $7 billion and grow to $14 billion over a period of 5 years, and that's the cadence that he's on. So it's a different playbook per se. I mean certainly, we don't rely on leveraged loans to go build businesses. I think we laid out to the Street on Friday that actually from the period of 2020 to '21 to '22, we took our broad portfolio of assets, and we were at a 45% loan-to-value in '22. We actually took leverage down in '22 and '21. So we went from 45% to 43% to 41% loan-to-value. So while everyone was levering up in comm infrastructure deals, we were deleveraging. Why? Because we felt like this environment was going to turn in and was going to turn quickly. And so with 78% of our debt fixed at an interest rate below 4%, we get to go play offense in '23 and '24. Our companies are well capitalized. We have a lot of cash. We have a lot of liquidity. And this is a playbook that worked really well in 2002, and it worked really well in 2009, and we're replaying that playbook except instead of doing it with one company which we own, we're now doing it with 27 companies. So there's a force multiplier to scale, and that's really the benefit of owning DigitalBridge shares. As you get exposure to these 27 businesses on a global basis, all growing and all taking advantage of the macro setup.

I want to maybe drill in a little bit into some of the targets you've laid out for the IM business. So I think with the big one is you've talked about reaching nearly $50 billion in FEEUM by 2025. I think the upper end actually eclipses $50 billion. And that's about double where the business is today. So I'm just wondering, as you think about this doubling of FEEUM. Can you talk about your confidence level, which we alluded to a little bit before end, but also just what you're seeing on the ground just given more challenging backdrop, the conversations you're having and effectively the visibility you've got to doubling this number in 2 years?

Yes. So there's 2 things that you need to focus on there. One is, do you believe we can raise money? And then two, do you believe we can deploy capital, right, and high-value opportunities? Let me address the former and then I'll get to the latter. So on the ability to raise capital, as I said before, pro forma today, we're at about 20 -- call it, $23 billion, $28 billion of FEEUM today, post the InfraBridge acquisition and plus a little bit of fundraising here in the first quarter, which we'll update in the next quarter. Then if you take the guidance that we put out earlier on Friday, we said, look, we're going to raise $8 billion plus of new capital. Where does that come from? Once again, we're very prescriptive. We said there's another $2 billion raise in terms of credit and core. There's another $2 billion in co-invest, which we've already raised some of that this year. We've had a rich history of exceeding co-invest capital and then in our sort of what we call our core strategy, the launch of a third strategy in our flagship line. So all of those products have been -- have left the dock. They left the dock actually months ago. And so -- that was the hard work we put in last year in the fourth quarter to set us up for this $8-plus billion target that we put out there. So we're being pretty heads up that [ 36 to 38 ] guide is kind of where we think we can be. The question is, do we push through that this year? I don't know. There is some uncertainty around timing of when commitments come in. There's no uncertainty in my mind as to whether we get the commitment. It's just a function of the timing of whether it comes in the second quarter, third quarter, fourth quarter and did some of those commitments flop into Q1 next year, which was why we had that sort of -- we gave ourselves a little more of a cushion in terms of the guidance. I think for 2024, we feel like, again, we can go out and do the same thing. We can raise another $8 billion. And that gets us to, generally speaking, in the low [ 40s ] range. and then we're back in the market in '25 with a couple of interesting and repeat strategies, right? It's natural to assume InfraBridge could be back with something. We could be on to our second credit fund. We could be on our second core fund and certainly, we could be out with the new strategy. So there is a cadence now of our fundraising. And I think if investors are smart, they should go back and look at what we did in 2020, what we did in '21, what we did in '22 and what we're doing in '23. There's now kind of 4 years of history of fundraising at DigitalBridge and there is a pattern to how we raise capital. And so I can only give investors that much because it's hard for us to sit here with a high degree of specificity other than I've just given you the road map on how we get to $50 billion, now we've got a lot of hard work to do between now and then. And we got to continue to put capital to work, which is the second piece. So where are we putting capital to work right now? I look at putting capital to work really in sort of 4 distinct buckets as an asset allocator today. One, we're backing new management teams. That's always been really our calling card at DigitalBridge. We really, we think the -- when good management teams want to find a place to go build a business, they come to DigitalBridge and digital infrastructure, and we're doing that. We have a couple of really good new ideas that we're working on with a couple of management teams. So I like that. That's fun for us, and it's also where we create a ton of value. The second thing we're looking at is buying what we call best-in-class platforms. So for example, the asset of buying GD Towers with our friends at Deutsche Telekom, that is the highest quality asset in European towers. So sometimes we go to the right and we go buy the best asset. And that's what we did there in European towers. There's a third area, which introduces itself now on the battlefield, which is go play in dislocation. Similar to what we did in 2002 and 2003 and what we did in '08 and '09, which is really going to what we think are fundamentally good businesses with good assets that have broken balance sheet and balance sheets are going to break. It's just the nature of the business. Nobody thought that 7%, 8% interest rates would be the norm for some of these businesses. And you do have [ generalized ] GPs that went out and paid 20 -- mid-20s for residential fiber and other types of assets -- those capital structures just don't work anymore. So we saw this play out in a one. I mean the CLEC space was a great example of that, right? Everybody thought if you went out and you wired up an office building, customers would just fall to the ground. Everyone believed in residential fiber. If you just pass a home, magically, you'd get a connection. It hasn't happened. And it hasn't happened at the velocity that folks have now. There are resi fiber businesses that are working and doing well and there's some that just aren't performing. And so we're looking at those nonperforming assets that actually have good physical plant, and there's dislocation here in the U.S., and there's dislocation in Europe and there'll be more dislocation. You're going to see, for example, an older legacy colocation data centers, you're going to see dislocation. I won't pick on any names here publicly, but I think most of the people in the room know the ones that are having challenges with their capital structure. So that's an area where I feel very comfortable. It's a playbook I ran in '02 and '03, and it's something that we have a lot of [ confidence. ] So we're tracking anywhere from 25 to 30 companies where we think the secondary level of the bonds are telling us something. That's usually a place where we start. I'm pretty excited about dislocation. And then the fourth area where we're putting capital to work is behind our best management teams. So we're actually out raising more capital to support our high-growth businesses. Vertical Bridge is a great example of that. I was on the road with Alex, raising capital him last week, seeing a lot of our American U.S. pension funds, and they're excited. They want to put more money behind the best tower company in the United States, which is Vertical Bridge. So when you have good high-quality companies that are growing and are exceeding their guidance and exceeding their business plan like Alex's, it's actually easy to go raise money because investors want to be in towers. They want to be in the U.S., and they want to be with a great management team, actually really easy to go raise money with him. So we're going to continue to raise money and co-invest and we're going to put that money to work behind our best businesses. And so whether it's Vantage doing public cloud data centers, whether it's Switch building out the private cloud or whether it's Alex building out 5G in the U.S. or DataBank building out edge computing here in the U.S. We have some of the best logos. We have some of the best CEOs. And so our fourth investable opportunity is look internal, invest in us.

So we hit on FEEUM and the doubling there. I think the other big metric here is FRE. And if we think about FRE, I think the target for this coming year is $120 million, the '25 target is $250 million to $300 million, so more than doubling FRE. And so naturally, the question here for me is, can you talk about the incremental margins and the growth -- that the growth brings along? And then is there any additional investment, the scalability in terms of incremental revenue?

So there's 3 things happening there that I think are interesting. One, on FRE in particular, as I said on the call, we invested a lot in new strategies last year. So we put a lot into SG&A. And we had a lot of products come late in the year. So the back end of those earnings look distorted. If we go on a run rate basis and we really look at what we're doing for '23, it's not really hard to get there. Once again, using the math before, which is you go raise $8 billion, you raise it at a 90 bps or a 1% fee, you've got an incremental $80 million of revenue coming in. At the same time, what we told investors last week is we're taking $10 million of costs out of the business. We're not putting more cost into the business to bring in this $80 million of new revenues. We're actually taking another $10 million of cost out. So this is the year where we really think we go pretty far in FRE and the easiest thing to do on FRE is we can manage the bodies. We can manage bonuses. We can manage comp. We can manage our travel and entertainment. There's a bunch of things that we can manage, and we're doing that. We're managing the business very tightly. [ Jacky ] has done a good job there. So we see that this is actually the year that we grow margins. We grow FRE. We cut cost, and we invest in places where we think we can grow. So where are we investing in terms of people. We've invested in our sales team. We talked about that on the call. We went from 7 full-time salespeople. Now we've got 17 people out marketing and raising capital. That was a huge push for us to expand our team there. We talked about the entrance in the private equity and the hiring of [ Jonathan Purcell. ] And so there are areas where we will invest in. There's areas where we're taking a little off and also, we're just asking the team to share in the pain a little bit. Comp is going to be down a little bit year-over-year, but that's the right message. We got to go get it done. We got to get the share price fixed and we got to go to work for shareholders. That's the message I send to the troops. 98% of my employees get that. They're in the fight with us. And so -- and we got to go out there and we got to fight for shareholders. So those are the 3 ways we get there, right? We cut cost, we go raise the capital and then the last nuance to that is there's an opportunity for us to raise fees a little bit. We've -- historically, we've priced our fees in a certain zone. We haven't touched fees since the inception of the company. But certainly, inflation and protecting our people and protecting the quality of our team is important. So we're moving fees up a little bit this year as well. So that's how you get to the -- to the print and that's how you get to beating your margins.

And that latter point around higher fees, was that embedded in the guide...

No, that's not in the guidance.

Okay. Got it. So maybe if we think about how that trickles down, one other element I just wanted to hit on is leverage, just in terms of where you sit today, where you'd like to get to? And I think that maybe could clear a lot of the cloudiness around -- where the business is?

Yes. Look, I think if people do the work, they'll find out that the debt that's related to Vantage SDC and DataBank are not pledged to the parentco. There's no cross default there. So -- but some investors include that in our leverage and some don't. What we did in our earnings presentation last week as Jacky included that debt into our net leverage profile and also included in that is the convert as well. So we're paying off the convert April 1. We've been pretty -- we've telegraphed that to the Street. So that takes $200 million of debt off our stack. What that leaves us with is about $300-plus million securitized debt and ultimately, on our growth profile and our EBITDA profile, we believe we can get to 2x leverage. That's the target leverage. Now what's the key piece to that? The key piece to that is moving DataBank and Vantage and deconsolidating them, and we -- once again, we've given a clear path for deconsolidating DataBank at the end of the second quarter, Vantage SDC by the end of this year. Hopefully, it goes faster. But both of those fundraising processes are in flight. And once again, they are high-quality assets and investors do -- private investors are navigating to high-quality assets in this environment. So we feel really good about that guidance we've given the Street.

In the 2x, where does that sit relative to some of your investment management peers?

That's in line. I think most IM businesses are typically levered at about 1x to -- high leverage would be somewhere in the 3x zone. But where that puts us is right in the middle of the fairway. And ultimately, as we grow earnings throughout 2023 and '24, we actually delever over time. And there's a path that gets us into the low 1s by next year as we're not taking on any more incremental debt.

I'm going to pause just to open it up. If anybody has any questions, just raise your hand. We have somebody with a mic. Okay. I want to drill in now to some of the maybe key themes across digital infrastructure. I've always sort of appreciated your insights that you provided at our conference. So as we sit here today, what do you see as the top teams in the space that are maybe guiding your investment process from a cap allocation perspective?

Well, I think things that are working right now is we tipped on the private cloud situation. This notion of CIOs moving some of their workloads off of public cloud to private cloud is something that we've seen strong evidence at Switch, their leasing results were really pretty surprising to us. What it shows us is that there is room in an enterprise spend for both private cloud and public cloud. And I think that's ultimately where we get to hybrid cloud. And so we do think that -- those Tier 5 highly secure environments are going to be very appealing for big enterprise users and for governments. So the relationship that Switch has developed with the federal government is really strong. The relationship that they've developed with certain enterprise is really strong. And what we're finding is in our survey of those customers, that brand loyalty is growing. It's not shrinking. In the meantime, we do see that confidence is a bit rattled in public cloud. And so CIOs are looking for this hybrid IT stack. So we're naturally navigating to that. We're looking to see if whether there's an environment for a Switch like product in Europe, where there's is a Switch like product in Asia. That's pretty interesting to us. We're certainly spending a lot of time thematically in and across software-defined networking. So a lot of where the growth is today, if you're looking across the ecosystem is whether it's open ran stack or whether it's D-RAN deployments, this notion where the radio access network is virtualized implies that there's a huge level of infrastructure that is software-defined where people are being rewarded with long-term contracts working either with the carriers or the OEMs or somewhere in between. And so sitting in that metaphysical piece of the infrastructure is a big part of what we need to own. That's a real high priority for us over the next 3 to 5 years is building out the strength to make sure that we know how to invest in software-defined networking and the ecosystem that surrounds that because that's changing radio topology forever, as you know. And so as you talk to some of the wireless carriers here over the next 2 days, they'll tell you that a big part of their network infrastructure spend is now virtualized. And the same thing is happening in fiber, right? So we go to software defined SD-WAN products are now dominating a big chunk of our sales in our enterprise fiber businesses. this was less than 5% of revenues today. And now you go into new bookings, and it's close to 25% to 30% of new bookings. So SD-WAN is on the rise. Network, ultimately, again, back to CIOs and CTOs, what do they want, Matt. They want flexibility in their network. They want a nimble network. They can go anywhere where they can dial up capacity quickly. So that software-defined piece of the ecosystem is something we're spending a lot of time on. As I said earlier, we're looking hard at the fiber-to-the-home space and just looking at residential broadband in general. And how does DigitalBridge play in that sector over the next 10 years, if you take a view that, that industry is largely going to be restructured or there's going to be a new paradigm there, which I believe there will be. So we've got a lot of resources on that. Obviously, we're still in our same traditional swim lanes like Towers, hyperscale data centers. We're investing in the portfolio of companies. A private 5G networks, we're putting a lot of attention into that. Certainly, Boingo has done quite well there. That was a Fund II investment. But we're looking at other areas, whether it's in Europe or Asia, where we can deploy that playbook and be a market leader in private 5G networks or using WiFi 6. So -- we've never been busier. There's a lot to do. We're saying no a lot right now. I think there's a lot of deal flow that's coming through investment committee and the bar has been risen. We've taken returns up. We're a lot more selective about where we're writing checks right now. And we've risen that bar down at the 40 portfolio companies that we own and operate, which is the risk-adjusted rate of returns has to come up as interest rates have risen, so have our return hurdles. So what was formerly a high-teens return is -- mid-teens return is now a high teens return, what was high teens is now low 20s. And our underwriting has gotten a lot tougher which you would expect. You've got to be rewarded for the risk that you're taking.

Good segue into the next question. What are you seeing broadly just in terms of like M&A opportunity valuations? And then have you seen private market valuations may be more reflective of higher rates than the new backdrop? Or are they still maybe a little more stubbornly elevated?

Well, I think this is -- in the good times, what I've found over the last 30 years is that all digital infrastructure comes up, right? And then when we have these crescendos and we ride the downslope, you begin to see differentiation in the swim lanes of digital infrastructure. So tower multiples really haven't retreated in private markets. In the U.S., it's still low 30s; and Europe, it's still high 20s as was reflected in the Vodafone sale. And so we haven't seen really a return to anything resembling low 20s or high teens yet in towers. And I don't think that's going to happen. I think there's a scarcity in high-quality tower assets. And what we learned and certainly in 2009 and '10 is that tower valuations are -- can hang in even in a higher interest rate or a difficult financing environment. Data centers is now divided into 5 swim lanes. So each of these is moving through different points of inflection. Certainly, managed services is down. Those multiples are down probably 4 to 6 turns, enterprise colo, I couldn't even put a bid on it right now because some of the legacy enterprise colo stuff is going through its own growing pains. We mentioned 3 businesses earlier. And then I think as you migrate to edge and private cloud and public cloud, those are growing in different verticals. I think businesses that are truly -- infrastructure that's focused on the edge, like a DataBank or an Equinix, those are going to price in the mid high 20s, they have to because the uniqueness and the elasticity of that network is hard to replicate. When you own that many network access points like Equinix and DataBank does, those are indelible locations, and they're hard to repeat. So we've actually seen very little contraction in the multiples on the edge side. I would say on the hyperscale side, probably a degradation deals were getting done in the -- again, in the high 20s, like an air trunk or some of these other or edge connects. Now those deals would probably get done in the mid to lower 20s. So maybe there's been a couple of turns of compression there. And then I think in private cloud, there's so few people that do what Switch does, that there's really not a bid for that. But data centers, you have to remember, it's -- that business has grown so much and there's so many different business models in data centers that you can't take it with one paint brush, Matt. You just can't paint it and say that's what it is. I think you're seeing that with DLR and Equinix today. Those stories have diverged. In the good times, both of those stories rose. And now as we moved into a down cycle, DLR has kind of gone left and Equinix has gone right because I think Equinix has been able to describe their value proposition from a network access perspective and DLR has less of that. So that's why you see a divergence and public investors are smart. I mean I think they're smart. They're here today. So they're smart. On the fiber side is where you see the biggest dislocation today. I think there was this euphoria in 2020 and '21 and doing resi fiber deals. That hit a crescendo in Europe where you saw deals trade in the high 20s and then enterprise fiber, of course, actually, what was interesting is a lot of the enterprise fiber deals didn't trade up in the high 20s. So if you saw a lot of the private big fiber deals, whether it was Segra or GlobalConnect in Europe or Colt and Lumen, all those deals are getting done in a pretty tight band. They're getting done between 16x and 20x. So really good enterprise fiber, I think, is held in. I don't think it's 16x to 20x. It's probably somewhere between 14x and 18x today. But residential fiber has moved from, you could say, mid- to high 20s all the way down to low teens pretty quickly. And in fact, in some of these restructurings, you're going to see the equity get wiped out. So whatever the debt is, that's the bid, right? So some of these businesses wind up being worth 6 to 8x. So it's the tale of 2 cities in fiber, you can't sort of again, take it with the same paint brush and different resi fiber businesses are having different levels of success. You saw the print on Frontier, good management team that's executing not only getting the homes passed, but they're getting the connections. I think a lot of people get lost in this metric of homes passed versus homes connected. The metric that matter is homes connected and ARPU. That's what matters at the end of the day. So we'll keep an eye on that. And cable obviously got beat up pretty good as well. I think cable probably rebounds in the back half of this year. So -- it's the ecosystem is more complex than it's ever been, but I think we all have to agree that there's nuances to these business models. You can't just take digital infrastructure and say, Oh, it's a high 20s multiple and all digital infrastructure is great. Not all great. We have to be discerning. We have to understand the assets. You have to understand the contracted cash flows. You have to understand the quality of the physical plant. There's so many attributes, as you know, that goes into defining what's good digital infrastructure and what's perhaps less good digital infrastructure.

You mentioned some of the dislocations that we're starting to see now in resi fiber, and I think some maybe legacy colo. Are we sort of in the early innings? Do you anticipate more? How should we just think about that maybe becoming a little bit more shaken out through this process?

Well, I think it's the debt maturity stack in resi fiber. So we're just watching that. And so a lot of these debt maturities are '24, '25 and '26 Vantages. But there's -- in the private markets, there's probably about 20 private fiber companies that mature in the next 3 years. So we're looking at that. I think on the older enterprise colo side, there's not a lot of folks that -- we're cycling through that old enterprise colo, right? Some of those facilities are functionally obsolescent, some of them don't have functional obsolescence but need CapEx. I think one of the challenges you see with Cyxtera is they need CapEx. So for that business to move forward and for Nelson to succeed, he's got to put capital in. He's got to invest to keep up with the likes of DataBank and Cologix and Equinix who all have new modern facilities that are on average 10 years younger than what Cyxtera had acquired from a telco. And so that's the challenge there. The challenge there bringing that portfolio up into this decade where it was built 20 years ago. Aging infrastructure is always going to be an issue. The only sector where aging infrastructure doesn't hurt you is towers. Towers has an accounting life of 25 years, but I know we've owned some towers that were built in the '60s and '70s, and they're perfectly fine from a structural integrity perspective. The data center that was built in the early 1990s is not going to be cloud capable for today. So if an engineer from Amazon walks into a data center that was built in 1994 that has 2 megawatts of power and these guys want power density 8 megawatts, they're going to walk in and say this doesn't work for me. They won't even go to the site, right? Because they know they can go to somebody like Vantage, who has a campus that has 60 megawatts and the chance for them to locate their 8 megawatts and grow. It's the same thing with DataBank like in Silicon Slope in Salt Lake, where we're on to building our seventh data center in one campus. Why? Because we found that that's a good place for cloud to grow. And so if you give the customer the chance to grow with you, they lease with you, they stay with you and they grow with you. A lot like the tower business. We get amendments in our cloud deployments, and that's where DataBank has really excelled as they're building new infrastructure that's tethered to NAP, either the primary NAP or the second NAP in the city. So in Salt Lake City, we own the NAP of Salt Lake City. We own the biggest interconnection data center. And so we've got our own fiber connectivity that goes out to Bluffdale where we have the 7 expanded data centers and campuses. And that's a strategy that's worked. It's the same thing you've heard Cyxtera saying, Flexential, and all these guys say they wanted you tethering. Well, the only thing you can tether off of is a highly interconnected data center. And if you don't own that interconnection, you can't even play that game.

So just in the time we have left, if we sort of put this together, I want to make sure we sort of get this out there, how would you sort of frame the investment case for DigitalBridge shares today to potential shareholders? And maybe we can sort of weave in what you think is most misunderstood by the investment community?

Well, I think, look, it's -- investors that have historically invested in the down cycle of digital infrastructure have done really well. So if you turn back the clock to investors that had conviction in SBA and American Tower in June 2003, and they've made returns up 300% if you go back in time. Same thing in 2008 and 2009, if you bet on digital infrastructure, you've been on DLR, Equinix, again, American Tower, CCI in the last financial crisis, you did incredibly well. What we've presented to the investment community is an asset-light way to own digital infrastructure. It's not perhaps presented in the same gift with the same gift card in the ribbon but what we do is primarily the same thing, except we do it on a global basis. And we're not exposed just to towers. We're not exposed just to data centers or fiber. We bring a diversified approach to investing in the sector. The overlay on top of that is we happen to do it, we sort of juice that model with other people's capital. And I think that's the part that's largely misunderstood is that we're able to go out and raise billions of dollars of capital where we get fee and carry. So imagine you are American Tower or you are Digital Realty and you can go raise capital and get paid for that. That's how we want investors to think about us. And at the same time, we have to go out and compete for capital. And so we do that. We effectively go out and compete against KKR, Blackstone, Stonepeak and Brookfield and those are worthy adversaries, but we're very focused in one very specific area, which is digital infrastructure and the digital -- the ecosystem more broadly. So -- that gives us an advantage. It gives us an advantage to basically on a global basis show up for customers. So we're not turning opportunity away because we can operate in Asia, we can operate in Europe, the U.S. and Latin America. And we do it very effectively with a series of companies that diversifies the investor. So instead of being exposed to one logo and one management team, you're exposed to at least in digital infrastructure, the 27 best CEOs in the space that are investing on a global basis. I think the one thing that's mostly misunderstood about us today is just this notion of growth and leverage profile, right? And so this is the year where we get our leverage profile in line with where investors are going to be happy. We think it's in a good place today. We've done a lot of hard work for 3 years, deleveraging the business and making sure that we have adequate cash to play offense in this environment. And then ultimately, at the end of the day, putting up that growth profile that we talked about, where we deliver 30% organic growth this year and what is our conviction level around fundraising and our conviction level is quite high. Our conviction level is high because we've put up good returns. We work hard for investors and mostly, we're delivering in a swim lane that few others can deliver in. And I think that gives us comparative advantage. So those are the strengths we're playing to, and we anticipate having a good year. It's a tough environment, but I -- as you've known me for a long time, I like the tough environment. I like it when things get a little fussy. So we're in a good place.

A great place to end it. Marc. Thank you.

Thanks, Matt.