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

Good morning, everyone, and welcome to Day 4 the Goldman Sachs Communacopia and Technology Conference. I have the privilege of introducing Marc Ganzi, CEO of DigitalBridge. My name is Josh Frantz, and I cover telecom and communications infrastructure here at Goldman. Thanks for being here this morning.

Thank you, Josh. Good to be here.

Marc, you've been in this industry as long as anyone and your portfolio companies touch basically the whole set of infrastructure globally and so, I would imagine you have a pretty good view of what's happening on the ground. And we'll go into each of the different subsegments in a bit. But from your vantage point and looking out for 10 years. How do you see the whole stack of infrastructure evolving? What do Fiber networks look like? What do wireless and tower networks look like? And how does AI change how the data center market looks?

Well, I think, look, the ecosystem has never been more challenged. I think we have 57 companies around the world that go out and compete for business every day. And this will be far and away the biggest year in terms of CapEx deployment across our ecosystem. And as the year has gone on, those numbers have crept up, Josh, as we've gotten more bookings more orders for towers, more orders for redundant dark fiber routes. And then we'll get to data centers. We'll save the best for last. But we're sort of drinking through a firehose. And to do that requires enormous coordination. It requires a lot of supervision. But I would say there are 2 things that you can't live without right now. One is capital and 1 is power. And so that unique combination of being able to raise capital and deploy it in an efficient way and then at the same time, be able to hopefully predict, where you're going to need power and then ultimately, either procuring that power or as we've talked about in our last quarterly conference call, where we're building that power ourselves. And we call that sort of digital power grid independent solutions. Some people call it behind the meter, in front of the meter, I don't know where it is on the meter. But ultimately, you do connect to the meter at some point. So I spent most of my time today. Someone asked me yesterday, like how are -- how am I spending my time? I'd say I'm probably spending 50% of my time on power. I'm spending 40% of my time on raising capital. And then the other 10% of the time I got to run the business, which means I need sort of a clone of me to do that part. But it is important, though. I'm not sort of making light of it. There's a lot to do. And I think the ability to triage between what's real and what's not real, is really important right now because we get a lot of customer inquiries across all the verticals, right, mobile infrastructure, fiber infrastructure and data center infrastructure. And part of our job is also, Josh, discerning which customers are real because you have a lot of window shopping, right? You have customers saying, "Oh, I really like that location because you've got that power." And then that sort of that moment of liking a location to ultimately signing a lease, that takes about 9 months, right? And so, we invest a lot of time and energy with our customers. At the same time, those conversations for sites aren't just a singular site conversation. There's multiple customers looking at the same sites, we have to make decisions. Now thankfully, we've got a powerbank of 22 gigawatts, which allows us to be somewhat discerning and pick who we want to use -- but at that same time, you've got a bunch of other implications, which is how do you keep buying land? How do you keep identifying power? And then how do you pick the right sites to build the power at. So there's just a lot going on there. I'll come back to fiber in a second. But on the tower side, AI is absolutely impacting towers, and it's impacting the demand for towers. I think, if you listen very carefully to the subtext of SBA, Crown and American and then when Vertical Bridge talks publicly, the leasing demand that we're seeing in towers today is probably the best leasing we've seen, since 2013. So sort of unpack that a little bit, what gives us this optimism around tower infrastructure, mobile infrastructure. There's 3 things happening in mobility today that I think are -- that require careful thought. One is mobile data traffic is up materially. And if you were listening in the second quarter to what Jensen said and what Masa said in the first quarter, mobile data traffic will move up somewhere between 3 and 5x. And I think that's interesting because the last time we saw a really big step function in mobile data traffic was when you -- when the public cloud came to mobile devices, and we were starting to put active compute, which is applications on devices you saw mobile data traffic from 2010 to 2016 go up 10x. And so what you also saw at that same time period was a massive investment in network infrastructure. It was the last time you really saw the tower companies growing at double-digit organic growth. We're seeing that same type of cycle occur again, except instead of sort of cloud-based applications, we're seeing inferencing. And so, as AI moves from LLMs to generative Ai to inferencing, where do we think inferencing happens? It happens here. 80% of AI is going to happen in a mobile environment. Now I'm not saying that 80% is all here on a mobile device. But what I would -- I would offer to people listening today is that we're at 30 billion connected wireless devices today. By 2033, we go to 60 billion wireless devices. Now what's a wireless device. It could be a wireless meter reading, it could be your fitness band, it could be a mobile device, it could be a phone, it could be a car. Think about all the connections that are happening and then compound that in an environment, where 90% of those connections are machine to machine. So the fastest-growing area of data consumption in AI is not enterprise. It's not data sovereignty, it's not consumer, it's machine to machine learning. That's where you're going to see most of the activity. And all of that machine-to-machine activity is going to happen, predominantly 90% will be wireless. Look at a factory. So you go to a General Motors factory today, how many wireless devices, how many wireless sensors are along that production line at GM. And so, if you go to their Lansing production plan, which we actually had a very interesting deployment by ExteNet there, which is one of our mobile infrastructure companies, where we're doing private 5G networks for GM. Along that production line, they have over 300 different wireless devices, communicating to each other without a human being involved. And so that requires a node or an antenna or some form of connection. And all of that is running in a private 5G environment. This is just 1 example of machine-to-machine connectivity and how wireless is being used to proliferate that activity. So I'm pretty bullish on mobile infrastructure right now. And so 1 is machine-to-machine connectivity that's driving that growth. 2 is inferencing to the wireless device. And then the 3 things you probably picked your head up this week is you saw satellite spectrum being bought by wireless companies. Why? We don't have spectrum. The FCC doesn't have a plan to issue new spectrum right now. And so what are the carriers doing? They're looking at what's available, which is the [ Sat ] spectrum. So that introduction of spectrum and inferencing and the amount of devices that are coming online, 30 billion new devices, what are we going to do? Well, what do we do is we build infill. The carriers hate it when you say densification. So we'll call it infill for the time being. But the reality is what you did see in this quarter from all of the tower companies is that it wasn't amendment traffic that was leading leasing. It was Colos. Colos are back. And so for the first time, since 2013, at least in our private business, we saw de novo Colo applications and de novo leases, which are Colos, outpace amendments. And that's important because, as you know, a Colo today is anywhere from 2,000 to 2,500 a month. An amendment is on average between $250 and $500 a month. You got to do 5 amendments to equal 1 colo. I'd rather do 1 colo than 5 amendments, right? And at the same time, new construction is way up. So our domestic U.S. REIT vertical bridge has a pipeline of about 5,000 build-to-suit towers. And so last year, we delivered about 800 towers. This year, we'll deliver 1,000. Last year, American Crown and SBA combined delivered 180 towers. So our private little tower company is delivering 4x more BTS than the public guys. So we're pretty bullish about what's happening in towers. And I think towers are going to come back in a material way, I think, if interest rates get cut, I guess what happens to tower stocks. It's pretty easy to figure it out. So -- and it's not just at Vertical Bridge, we own 10 other tower companies around the world in Asia and in Europe and in Latin America. So and we're seeing this across all of our tower businesses. We're seeing a surge in demand. So that's kind of the first category. And look, across ExteNet, Boingo and FreshWave, we own 3 small cell providers. FreshWave serves the U.K. Boingo serves WiFi and private networking and ExteNet serves the carriers. And all 3 of those companies are recording a massive uptick in their pipelines and bookings. So I think mobile infrastructure, which generally has been falling out of favor because of what's happening in data center land. I think, if investors are paying attention, they'll see the towers and small cell infrastructure is a good place to go right now. Fiber, it's been a great year for Fiber so far. We look at fiber potentially from a different prism than the rest of other people do. I think the Fiber business today is 4 different businesses, and I think you have to decide where you're going to put your capital. We think there's 2 businesses that focus on resi and 2 businesses that focus on commercial. And on the residential side, consumer-facing businesses, where we are connecting homes, those businesses or businesses we're investing in. We announced an investment in a while, WideOpenWest. We're going to put a bunch of capital in that business. We're going to refresh the network. We're going to groom the network and give it the necessary capital to go grow it. We're excited to close that, work with Crestview on that. And there we just -- we were opportunistic. We bought it at the right price. We like it when we can buy business as a percentage of replacement cost. That's how we think about it. So I'm constantly thinking about what am I buying that business per home pass per home connection and then per route mile. Those are sort of 3 metrics we look at in resi Fiber. At the beginning of the year, we bought an MDU business. That's the second vertical inside the Fiber business. So an MDU business is where you're a wholesale provider. There, we have a business called FiberNow that operates in the Southeast U.S. All we do is supply Internet and cable service to multi-dwelling units. So high-rise condos, HOAs, planned communities. We enter into a 10-year contract with that HOA and then we provide the Internet service, the broadband connectivity to those communities. So what I like about that business, you probably saw Brookfield bought Hotwire, which was like a 40x multiple, which was fantastic. We get excited about those multiples and Brookfield pays that. But what I think Hotwire, what Brookfield saw in Hotwire is they saw thousands of communities, where they had a 10-year exclusive. And so when you light up a community or you light up a high-rise building, you have a 100% penetration day 1. because the broadband fee is included in the HOA fee. So if you're in a Hotwire building, you don't have a choice, you have hot wire. You literally plug in your router and you're active. The same thing in Fibernow, which is the sort of challenger brand, the Hotwire in the Southeast. So we bought a really good business called OpticalTel, put a bunch of capital in, refresh the management, put some growth CapEx in and now we're growing that business and competing in the MDU space. And we also do that down in Latin America. We've got a business called Mundo Pacifico that also provides wholesale broadband fiber for the carriers and for MDUs. So it's a good space. It's a space I think that telcos value because it's really hard to run around and sign up those HOAs. But what I think you're seeing in the multiple differentiation you see a business like WOW trading for 5x, then you see a business like Hotwire trading for 40 times, you say, that's 35 turns of value. What am I missing? And I think it's not what you're missing. I think people believe that Hotwire and FiberNow have long-term contracts and you don't have to run around signing up the homes. You get that 100% penetration day 1. On the wholesale, on the commercial side of fiber, we have Zayo performing really well for us. It's been a great turnaround story we sat here 5 years ago at this conference and said there's 5 things we got to do to fix Zayo, when we took it private. And we've now completed all 5 of those things. Now the next phase is how do we keep that double-digit organic growth going at Zayo. It took a long time to get the sales engine going and get the growth going. And really, today, Zayo is the Tele2 cities, right? It's 2 businesses. 1 is an enterprise business. We're connected to close to 60,000 buildings -- we're excited to close Crown and integrate all those buildings. And then the other side of the business is our wholesale transport business. So that's a great business. Our average contract there is over 20 years in duration. That's really our long-haul network. Our transport network, sub Oceana cables, our metro rings and the laterals that connect data centers and the laterals that connect small cells and towers. So that business, really good business, greater than 80% investment grade. Long-term contracts, and that's infrastructure. And I think, if you're thinking about fiber in the commercial sense, you really need to think about how you divide it. So on the enterprise side, we compete with Cogent. And on the long-haul transport side, we compete against Level 3, which is embedded inside [ illumin ]. And we really like that long-haul transport business. If I could sort of -- if you had to rank fiber from sort of 1 to 4 I would go that business, which is transport. I would take residential MDU, then I would go enterprise fiber in a commercial sense and then I'll go residential fiber. That's how I rank those. And look, we're investing across all 4 we think broadband connectivity and providing that -- those capillaries that connect data centers and towers and small cells is still a great business, and we'll see how the rest of the year turns out for Zayo. But that's mobile infrastructure, that's broadband infrastructure, and that leaves the last 20 minutes for what you really want to talk about, which is data centers.

Sure. Before we get there, the 1 thing that I think investors in DigitalBridge stock kind of think about is you have this strategic vision, you have the underlying trends that you talked about and all these different subsegments -- so when does AI work at the portfolio level and when does that manifest into kind of DigitalBridge's earnings?

Well, I think the direct flow-through for the DigitalBridge investors is a really simple algorithm, which is we said it in our last earnings deck, which is for every megawatt that we're lighting and building we're on average, we're spending about $10 million per megawatt. And I would say those costs have crept up into $11 million to $12 million per megawatt. And the way we think about that is in a normalized world, we're generally spotting 60% leverage and 40% equity. And so again, if I take that $10 million, I've got to go raise $4 million of equity to go build that 1 megawatt of power. Now historically, over the last 12 years, since the inception of DigitalBridge, if you look at our realizations in data centers, whether it was DataBank or Vantage or any of the $9 billion of DPI we've returned to investors, we're generally returning that capital north of a 2x MOIC. Now why is 2x MOIC important? 2x MOIC is important because every dollar I raise, I generally have a performance hurdle around that 2 point MOIC range. And so if I'm raising $4 billion of equity capital to build 1 megawatt, what's really interesting about that is I can turn that $4 million of equity into at least $8 million. And if I turn it into $8 million on that $4 million what's really interesting is we're earning a 20% performance fee on that $4 million of profit that we create. And so that sets up really nicely because if you're really thinking about that $4 million of profit, that's $800,000 of carry that's being generated back to DigitalBridge. And so that's the flow-through, right? And ultimately, if you looked at our last earnings deck, 28% of our carry goes to our public shareholders. We send that back to our shareholders. And so we think it's really interesting because our portfolio has been growing. We highlighted that we'll be close to 6 gigawatts of capacity shortly. And we've got a power bank of 22 gigawatts. We'll lease through that 22 gigawatts in the next 3 years. And so again, that's 22 gigawatts, which is 2,200 megawatts. And if you start running the carry math on that, what's happening at DigitalBridge is we're accruing a massive amount of carry. And on that $40 billion of equity we've raised that's going to work for our investors, what's the missing link in the DigitalBridge story for investors of going from a $12 share price back to '23 is fully valuing the embedded nature of what's in the portfolio. And so we have to go out and make that argument. We have to sort of spoon feed it. We got to show investors what we're doing. And then at the same time, right now, we're deploying $50 billion of CapEx. It's the most amount of CapEx we've ever deployed. We announced this morning, we raised another $1.6 billion of equity at Vantage Asia. We announced a couple of weeks ago, a huge project we're doing in Lancaster. We raised effectively another $1.7 billion of equity, we announced a couple of months ago, Yonder, where we raised $1.6 billion of co-invest on top of our fund commitment. So we keep raising equity, we keep putting it to work. But most importantly, when you put capital to work, we're tethering it to a lease which is a megawatt. And the faster that investors can correlate that 1 megawatt to, whether it's Microsoft, Amazon, Oracle, Google, Meta, whoever it is, [ Korev ], NVIDIA, we do business with the top 12 hyperscalers in the world. And just on a sheer volume, if you took all 10 of our portfolio companies that 22 gigawatts, just look at the Power Bank of Digital Realty and Equinix, right? Equinix is about 6 gigawatts, DLRs at 8, we're at 22. So 14 gigawatts with the 2 biggest digital REITs in the world that own data centers against our 22. So we think we're playing at scale. We've been we've had this plan in place for 8 years. It's all starting to manifest itself now. And so we find ourselves in a really lucky position because, as you know, people are struggling for power and people are struggling for real estate. And so we're sitting back saying, well, look, we don't come to the fight with 1 company. I don't just own QTS, right? I own 10 QTSs. And so -- and I'm fighting the fights locally. And further to that, we're also saying, 1 data center company doesn't address the opportunity. You have to have an edge business, you have to have a hyperscale business, and you cannot go to sleep on private cloud as we've shown a switch. What we've done with Switch in the last 2.5 years has been incredible. And so we're segmenting the market by geography, by workload, and we're showing up with a lot of capital, a lot of capabilities and a lot of power. We're doing it in a way that nobody else is doing it yet. The market is starting to appreciate it. It will appreciate it when we start returning capital, and we turn those megawatts into carried interest, and then that turns into EPS. And so that's our architecture. And maybe it requires a little patience because we've been building this for 8 years. And I think the real sort of -- this year, it's starting to turn for us. You're seeing it in our earnings. We've had 3 very consistent quarters, where we beat our FRE metrics. We plan to do that for the rest of the year. We plan to do it next year. And ultimately, the metric that we're going to be measured by is really 2 things: 1, our fee-related earnings. And so as we raise capital like we did today for Vantage Asia, like we did for Vantage North America and for Yonder, investors are looking at, okay, I like the carry. I got to wait 4 or 5 years to get to the carry, but what's going to feed me in the time being, FRE fee-related earnings. So when we do raise that capital and we put that capital to work, it has a fee associated to it. So we get fee and we get carried interest. And I've always said this when we did the merger with Colony, when we became a REIT and then we de-rated I said, look, the only way you're going to play this game and the way that we're going to be at American Tower, Digital Realty and Equinix and Crown is you've got to go asset-light. If you're going to be in the digital infrastructure business, capital is everything. And we couldn't stay a REIT. We tried to stay REIT, but ultimately, to go build 1 gigawatt of capacity is hard, right? You got to show up with a lot of money and you got to show up with a lot of capabilities. And the reason DLR and Equinix have missed all these big bookings is because they don't have the capital, they don't have 10 different platforms, 10 different CEOs, a big land bank and a big power bank. And so the way that we have surpassed these guys is that we made the decision 6 years ago, whether it was popular or unpopular, we dereadit, we win asset light. We had a series of silos and funds, where we could raise capital very quickly and ultimately, we felt the free cash flow conversion in fee and carry was a better bet than just only being able to deploy, I mean, Andy is going to have a great year at Digital Realty. I love Andy, and I love what he's doing, but he's going to deploy a couple of billion dollars of capital. I'm deploying $50 million, so the quantum at which we're playing and the level which we're playing is just a step function higher than the other digital REITs. So we've really created some differentiation. The only problem is I went from this sandbox, which was competing against my friends that run DLR and American Tower and now we're in the alt space. And so now people look at us and say, okay, you're essentially the Blackstone of digital infrastructure, right? And so I'm like, okay, fine, I'll accept that. The only problem is they manage $1 trillion in assets, and we manage $106 billion of assets. So -- now my competition isn't so much whether I can win the bookings or I can win the power. We're winning the bookings. We're winning the power battle. Now the real challenge is how do we match up against Blackstone, Brookfield, Ares, Apollo, KKR -- and there, we've got to go out and we've got to compete for capital, and we're doing a great job. I think for our size, we punch way above our weight class. I was just with an investor, and they said, well, how do you do it? How can you show up and beat someone like Blackstone on a site like Lancaster. And I said it's really simple. I think investors, private capital investors really appreciate specialization. And I think when we sit with an LP, whether it's the government of Singapore, whether it's Abu Dhabi's investment authority, the ability at which we speak about this asset class is at a very, very intrinsic level. We understand land use, we understand zoning. We understand will serve letters. We understand how to build a microgrid. I can negotiate a master lease agreement against Oracle, Microsoft and Amazon. These are the things that candidly, Blackstone can't do. They can outsource it to a portfolio company and then go do it, but we do this at a very, very fundamental ground level. Now at the same time, I don't have private wealth distribution. I don't have a BREIT. I don't have 200 salespeople running around selling the 30-year track record to Blackstone, which is great. So we got to earn that. And so we're -- the stock is in transition because we move from being a digital REIT into this world of the financial alt world and I went from being the biggest and digital infrastructure to the smallest in alts. So it's a real challenge, and I think I'll wake up every day, and we're tackling that, and we've done a good job, I think, conveying our value proposition to people that own financials. And as much as I love coming to conferences like this, which is really what I've been doing for 30 years, I now have to spend half my time going to financial conference and explaining FRE and carried interest in EPS and all the things that we're doing. It's a challenge, but it's fun.

Got it. To the AI point, training has been what's been driving a lot of the leasing in the past few years. It feels like inferencing is starting to take over a bit and I think there's still a lot of companies that are trying to figure out what these enterprise applications are and how this actually manifests at the end of the day. From your seat, what are you seeing? Where do you think we are in the transition from training to inference and -- and as you have discussions with enterprises, like how do you think this all kind of shakes out?

I think we're really nascent in inferencing. I think, if we were playing kind of a 9-inning baseball game, we'd be in the top of the first. And I think from a training perspective and from an LLM perspective, we're kind of in the third inning. And if you track the CapEx and you track the amount of power that's been lit, -- we're -- today, the industry is at about 68 gigawatts. That's up from 54 gigawatts last year. There's a couple of different curves and growth in terms of how you look at it. Some people think we'll get to about 137 gigawatts. Our forecast is 196. The Jensen forecast and Masa forecast is like anyone is like 300, of course. Somewhere in between is probably the truth, which I think hopefully is our forecast, which is 200 gigawatts I was in L.A. yesterday speaking at the McKinsey Global initiative, which is, candidly, the whole conference was took over by the talk of power. So for 2 days, top CEOs in the U.S. from the power industry, from the infrastructure industry, all came together, and I think it just turned into a power conference for 2 days, where everyone just talked about power. And 4 or 5 really good CEOs in the room that have been in the power industry a really long time. And I think the consensus is that the United States has to basically build 200 gigawatts of new power. And that's daunting because -- the United States has been on a cadence, since 2005, we've been lighting 4 gigawatts of new capacity pretty consistently. If you look at that chart, it's like -- it's literally like this, like somewhere between 3.8% and 4.2%, but it never deviates. And so, the utility industry in the U.S. has been on this very cozy and comfortable kind of 4 gigawatt ride. And then you see this curve, you see what's happening in terms of consumption, then you see where the grid is. And so base load is kind of clipping along like this and then up here is actually what's needed to keep the country running. And it's daunting. I mean, the gap just keeps widening and widening and widening. So you have a supply and trade imbalance -- and the supply side essentially is in the next decade, we're going to be at somewhere around 120 to 130 gigawatts of base load available for data centers. And again, we need probably 200 to 300 gigawatts, so there's this big gap. Now I look at -- whenever I see a chart that shows a big gap in a supply and trade amounts, I get excited because it's opportunity. And so we made the decision 3 years ago to start thinking about how do we build power how do we think about building grid independent power to our portfolios, to our 10 captive companies that own over 430 data centers, and we have over 30,000 customers. That really struck me as opportunity because I own the real estate, I own the building, I own the customer. And so why not take the approach that we go customer first. And we think about places where we have excess land, where we can build microgrids and we can source power and bring it into our microgrid and start selling power to our customers, create backup battery sets, interconnect to the grid and then actively trade to the grid where we put power back into baseload. That's how we've approached the problem. So we've been so far successful, it's early. I'm not going to claim any sort of victory because we've had some challenges along the way, but we've built now 3 distinct microgrids. We've got another call it, another 20 projects on the drawing board tethered to our data centers and tethered to our customers. That's the key. And the approach we took to power was kind of the same approach I've taken to serving digital infrastructure for 30 years, which is let's start with the concept that you have to have a contract with a customer. Let's just start there. And any project we get involved in power, we have an anchor customer, just like I have an anchor customer on a tower, a fiber network or a data center. And I don't think the power industry has really looked at it. I think the power industry has always thought, okay, I'm going to go build the power -- and then I'm going to eventually just sign a PPA with somebody and I'm going to offtake it, whether it's to Microsoft, whether it's to NextEra, Constellation, whoever it is, there's always an offtake. And by the way, that's correct. If you go build a really good solar farm or you go build a great wind farm, there's always somebody waiting to take because the grid again, that 4 gigawatts and you got this chart that's going like this. So there's always offtake. Now offtake is interesting. What we learned in the last 2 years is that offtake is an 8% to 9% IRR business. A little sleepy for us. We generally like returns kind of in that 14% to 22% range. And we said, well, wait a second, if you just do an offtake agreement and you print that 8% to 9% IRR, that's essentially a yieldco. And by the way, it's not too dissimilar from when towers get mature data centers get mature, but someone is making money on the development piece. And so that's what we've kind of cracked the code on a little bit is how can we buy power or build power adjacent either through leasing a transmission line or building our own private wire, we bring it into the microgrid. And that microgrid serves as essentially as a massive substation that serves our data center. But the key differentiator in microgrids is you don't have to have a single source of power. You actually, in some microgrids, we have 2 to 3 or 4 different sources of power. So take, for example, what we've done in Reno -- we've got solar, we've got wind, we've got hydro and we've got LNG, and we have grid connectivity. I have 5 sources of power at the SUPERNAP for Switch. That's unique. I'm not going to tell you every micro grid has 5 sources of power. It's really hard. But most of the microgrids have 2 to 3 different sources of power. So we've involved in a project, for example, in the U.K. for 1 of our big data centers there, and we're using TCG and wind and grid connectivity. So 120 megawatts of wind, 200 megawatts of coal and about 58 to 60 megawatts of grid connectivity. Combining that all together, optimizing it, reducing intermodulation, by the way at the end of the day, we have an excess 100 megawatts that we can sell back to National Grid so that we can trade power with National Grid, peak and off-peak. I'm going fast because I'm looking at the clock, we've got 3 minutes left. But this is where we're spending our time. It's capital formation, and it's how do we crack the power problem. And again, we don't have all the solutions. But what we are doing in terms of building grid independent power is working, and it's allowing us actually to go faster. And if you think about some of the big wins that we've recently booked at Yonder and Vantage and Switch, how are we differentiating ourselves, power. And not like we have power in 2 years, we have power today. And that's the big differentiator.

In the last 2 minutes that we have, 2 questions for you.

We don't get to go another 20?

When does power get fixed? When do we close that gap. And secondly, what are the 1 to 2 things that people are underestimating or overlooking in your company?

So just on Power quickly, I think by 2033 to 2035 we should bring online about 60 to 80 gigawatts of NUCs. That will really help not the data center industry, but it will help baseload. And that's what we need to do. And so the U.S. has really 2 problems right now. We have a baseload problem. And then we have really antiquated transmission infrastructure. That was 1 of the thematics coming out of the McKinsey conference yesterday with most of the utility CEOs is like, hey, yes, we can go build a bunch of NUCs and build a lot of generation capabilities, but if we don't fix our aging transmission infrastructure that was built in the '50s and '60s, how can we stay ahead or stay competitive with China in terms of our ability to produce power. So it's a 6- to 10-year journey. It's going to transcend this White House. It will transcend the next White House. So we really have to take the long view. I've been pushing all of our relationships in Washington to think longer to think more holistically. A lot of conversations with FERC and the DOE and those conversations are going to continue. The 2 things that I think people are missing on Digital Bridge is pay very close attention to this conversion of our Power Bank into active megawatts into active carried interest. Everyone can do that math. I give our Head of Public IR Severin White, a lot of street credit for this. He created a very simple algorithm that allows you to convert megawatt and to carry. Once you start doing that, you begin to see this accrued amount of carry that starts to build, and it becomes a very, very big part of our NAV. It comes -- becomes bigger than 1/3 of our NAV actually over time. That's a lot of value. And again, we've got to come back we're coming back, right? We were at north of $20 in terms of share price bottomed out in the high-5s and low-6s. And so now we're building our way back through consistent earnings, building the carried interest, growing our portfolio, raising capital and most importantly, just doing what we told the street we would do. The second thing I would say is we put a big emphasis this year on focusing on co-investment because I think when you have great ideas and great portfolio companies, private capital will come to you. And so we've done a great job of increasing our margins in co-invest, which in turn has a direct flow through to the margin or our FRE. We've generally been kind of in the low-30s. Our goal is to get to a 40% margin on a run rate basis by the end of this year. We've instituted our first 2 levels of cost cut a third level of cost cuts is coming. And then on top of that, we're forming new capital, which we think has a 100% margin straight through. So keep your eye on FRE. Our FRE is growing, and we're trying to put little crumbs on the trail to give people the sort of the ammunition to build that model. But I think between the growth in FRE, the growth in margins and most importantly, the growth in carried interest. We've -- we've got the ship now turned in a direction for a lot of growth in the next 24 months.

Great. Great place to that. Thanks so much for being here.

Thank you. Appreciate it.