DigitalBridge (DBRG) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides the company's unaudited consolidated financial statements and detailed management discussion and analysis for the reporting period Item 1. Financial Statements This section presents unaudited consolidated financial statements and detailed notes for periods ended June 30, 2024 and 2023 Consolidated Balance Sheets This section presents the company's consolidated balance sheets as of June 30, 2024, and December 31, 2023 Key Balance Sheet Items (June 30, 2024 vs. December 31, 2023) | Item | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | Change (in thousands) | | :---------------------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Cash and cash equivalents | $261,173 | $345,335 | $(84,162) | | Investments | $2,517,653 | $2,476,093 | $41,560 | | Total assets | $3,502,420 | $3,562,550 | $(60,130) | | Debt | $295,315 | $371,783 | $(76,468) | | Total liabilities | $1,039,670 | $1,053,387 | $(13,717) | | Total stockholders' equity | $1,972,465 | $1,811,055 | $161,410 | | Noncontrolling interests in investment entities | $389,329 | $605,311 | $(215,982) | | Total equity | $2,442,997 | $2,491,301 | $(48,304) | Consolidated Statements of Operations This section presents the company's consolidated statements of operations for the three and six months ended June 30, 2024 and 2023 Key Revenue and Expense Items (Q2 2024 vs Q2 2023, H1 2024 vs H1 2023) | Item | Q2 2024 (in thousands) | Q2 2023 (in thousands) | Change (QoQ) | H1 2024 (in thousands) | H1 2023 (in thousands) | Change (YoY) | | :-------------------------------------------------- | :--------------------- | :--------------------- | :----------- | :--------------------- | :--------------------- | :----------- | | Total revenues | $390,336 | $189,874 | +105.6% | $464,729 | $208,370 | +123.0% | | Fee revenue | $78,605 | $65,742 | +19.6% | $151,560 | $124,868 | +21.4% | | Carried interest allocation (reversal) | $288,244 | $79,254 | +263.7% | $279,766 | $24,498 | +1042.0% | | Principal investment income | $15,982 | $30,409 | -47.4% | $18,827 | $33,971 | -44.6% | | Total expenses | $268,503 | $132,269 | +103.0% | $352,402 | $186,889 | +88.5% | | Compensation expense—incentive fee and carried interest allocation (reversal) | $178,430 | $36,076 | +394.6% | $171,716 | $(755) | N/A | | Other gain (loss), net | $8,810 | $(11,881) | N/A | $2,916 | $(156,395) | N/A | | Income (loss) from continuing operations | $130,650 | $42,954 | +204.2% | $114,004 | $(138,782) | N/A | | Income (loss) from discontinued operations | $(722) | $(95,470) | +99.2% | $(14,842) | $(206,078) | +92.8% | | Net income (loss) attributable to DigitalBridge Group, Inc. | $91,423 | $(8,663) | N/A | $61,795 | $(206,460) | N/A | | Net income (loss) attributable to common stockholders | $76,763 | $(22,411) | N/A | $32,475 | $(234,884) | N/A | - Basic and diluted EPS from continuing operations improved significantly to $0.44 for Q2 2024 (from $(0.06) in Q2 2023) and $0.27 for H1 2024 (from $(1.25) in H1 2023)[7] Consolidated Statements of Comprehensive Income (Loss) This section presents the company's consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2024 and 2023 Comprehensive Income (Loss) (in thousands) | Period | Net Income (Loss) | Foreign Currency Translation | Other Comprehensive Income (Loss) | Comprehensive Income (Loss) | | :----- | :---------------- | :--------------------------- | :-------------------------------- | :-------------------------- | | Q2 2024 | $129,928 | $45 | $45 | $129,973 | | Q2 2023 | $(52,516) | $3,143 | $3,143 | $(49,373) | | H1 2024 | $99,162 | $(709) | $(709) | $98,453 | | H1 2023 | $(344,860) | $2,912 | $3,230 | $(341,630) | Consolidated Statements of Equity This section presents the company's consolidated statements of equity for the six months ended June 30, 2024 and 2023 Total Equity (in thousands) | Period | Total Stockholders' Equity | Noncontrolling Interests in Investment Entities | Noncontrolling Interests in Operating Company | Total Equity | | :----- | :------------------------- | :---------------------------------------------- | :-------------------------------------------- | :----------- | | Dec 31, 2023 | $1,811,055 | $605,311 | $74,935 | $2,491,301 | | June 30, 2024 | $1,972,465 | $389,329 | $81,203 | $2,442,997 | - Total stockholders' equity increased by $161.4 million from December 31, 2023, to June 30, 2024, driven by net income and additional paid-in capital, partially offset by a decrease in noncontrolling interests in investment entities due to deconsolidation of sponsored funds[12] - Significant activities in H1 2024 included $91.4 million net income attributable to DigitalBridge Group, Inc., $66.8 million from exchange of notes for common stock, and a $263.0 million decrease in noncontrolling interests due to deconsolidation of sponsored funds[12] Consolidated Statements of Cash Flows This section presents the company's consolidated statements of cash flows for the six months ended June 30, 2024 and 2023 Net Cash Generated by (Used in) Activities (in thousands) | Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :----------------------------- | :----------------------------- | :----------------------------- | | Operating activities | $(4,483) | $91,850 | | Investing activities | $(17,227) | $(571,554) | | Financing activities | $(61,920) | $24,106 | | Effect of exchange rates | $(704) | $429 | | Net increase (decrease) | $(84,334) | $(455,169) | | End of period cash, cash equivalents and restricted cash | $265,916 | $581,570 | - Operating activities shifted from a $91.9 million inflow in H1 2023 to a $4.5 million outflow in H1 2024, primarily due to the operating activities of portfolio companies in the former Operating segment in 2023[14][186] - Investing activities outflows significantly decreased from $571.6 million in H1 2023 to $17.2 million in H1 2024, mainly due to the absence of large real estate capital expenditures and the InfraBridge acquisition costs incurred in 2023[14][187] - Financing activities shifted from a $24.1 million inflow in H1 2023 to a $61.9 million outflow in H1 2024, driven by cash settlement of Wafra contingent consideration, senior notes redemption, and investor capital redemptions[14][188] Notes to Consolidated Financial Statements This section provides detailed explanations and disclosures for the consolidated financial statements, covering business, accounting policies, and specific financial items 1. Business and Organization This section describes the company's business as a global digital infrastructure investment manager and its organizational structure - DigitalBridge Group, Inc. is a leading global digital infrastructure investment manager, deploying and managing capital across data centers, cell towers, fiber networks, small cells, and edge infrastructure[21] - The Company operates as a taxable C Corporation and conducts substantially all activities through its operating subsidiary, DigitalBridge Operating Company, LLC (OP), in which it owned 93% as of June 30, 2024[22] 2. Summary of Significant Accounting Policies This section outlines the company's significant accounting policies, including financial statement preparation, consolidation, noncontrolling interests, and discontinued operations - The unaudited interim financial statements are prepared in accordance with Form 10-Q and GAAP, reflecting normal and recurring adjustments, but are not necessarily indicative of full-year results[24] - The Company consolidates entities where it has a controlling financial interest, distinguishing between Variable Interest Entities (VIEs) and Voting Interest Entities, and reassesses consolidation status each reporting period[26][27] - Noncontrolling interests are categorized into Redeemable Noncontrolling Interests (open-end funds), Noncontrolling Interests in Investment Entities (closed-end funds and carried interest), and Noncontrolling Interests in Operating Company (OP Units held by employees)[28] - Discontinued operations include former real estate investments, digital infrastructure portfolio companies (Vantage SDC and DataBank) deconsolidated in December 2023, and the equity method investment in BrightSpire Capital, Inc. (sold March 2023)[30] - Future accounting standards include ASU 2023-07 (Improvements to Reportable Segment Disclosures), effective for fiscal years beginning January 1, 2024, and ASU 2023-09 (Improvements to Income Tax Disclosures), effective January 1, 2025[36][37] 3. Business Combinations This section details the company's business combinations, specifically the InfraBridge acquisition, including purchase price allocation and goodwill - In February 2023, the Company acquired AMP Capital Investors International Holdings Limited's global infrastructure equity investment management business, rebranded as InfraBridge, for $314.3 million cash plus contingent consideration[38] Final Purchase Price Allocation for InfraBridge Acquisition (in thousands) | Item | Amount | | :-------------------------------- | :----- | | Cash Consideration | $365,440 | | Contingent consideration at fair value | $10,874 | | Total Consideration | $376,314 | | Fair value of net assets acquired | $208,960 | | Goodwill | $167,354 | - Intangible assets acquired included management contracts (valued based on net cash flows, 1-4 year term, 8.0% discount) and investor relationships (valued based on future management fees, 12-year useful life, 14.0% discount)[41] - Goodwill primarily represents potential synergies from combining DBRG's capital raising resources with InfraBridge's mid-market infrastructure specialization[41] 4. Investments This section details the composition of the company's investments, including principal investments, carried interest allocation, and marketable equity securities Composition of Investments (in thousands) | Investment Type | June 30, 2024 | December 31, 2023 | | :----------------------------- | :------------ | :---------------- | | Principal investments | $1,342,275 | $1,194,417 | | Carried interest allocation | $956,069 | $676,421 | | Marketable equity securities | $35,013 | $17,487 | | Other equity investments | $35,591 | $53,930 | | CLO subordinated notes | $48,539 | $50,927 | | Equity investments of consolidated funds | $100,166 | $482,911 | | Total Investments | $2,517,653| $2,476,093 | - Carried interest allocation represents a disproportionate allocation of returns to the Company as general partner, recognized when fund appreciation exceeds minimum return hurdles. Unrealized carried interest allocation on the balance sheet was $956.1 million at June 30, 2024[45] - The Company had no liability for clawback obligations on carried interest allocation distributed as of June 30, 2024. However, $181.0 million of distributed carried interest would be subject to clawback if all investments were deemed to have no value, with $120.7 million being the responsibility of employee/former employee recipients and Wafra[47] - Marketable equity securities at June 30, 2024, include $17.8 million in a healthcare REIT that became publicly traded in February 2024, subject to a lock-up until August 2024[48] 5. Goodwill and Intangible Assets This section provides details on the company's goodwill and intangible assets, including their carrying amounts and amortization expense Goodwill (in thousands) | Period | Amount | | :----- | :----- | | Dec 31, 2023 | $465,991 | | June 30, 2024 | $465,602 | | Change | $(389) | Intangible Assets (Net Carrying Amount, in thousands) | Intangible Asset | June 30, 2024 | December 31, 2023 | Change | | :----------------------------- | :------------ | :---------------- | :----- | | Investment management contracts | $53,163 | $66,011 | $(12,848) | | Investor relationships | $31,481 | $34,382 | $(2,901) | | Trade name | $2,178 | $2,393 | $(215) | | Other | $889 | $964 | $(75) | | Total Intangible Assets | $87,711 | $103,750 | $(16,039) | - Amortization expense for finite-lived intangible assets totaled $7.5 million for Q2 2024 (down from $10.9 million in Q2 2023) and $15.8 million for H1 2024 (down from $17.1 million in H1 2023)[54] 6. Restricted Cash, Other Assets and Other Liabilities This section details restricted cash, other assets, and other liabilities, including accrued compensation and contingent consideration Restricted Cash and Other Assets (in thousands) | Item | June 30, 2024 | December 31, 2023 | Change | | :------------------------------------------ | :------------ | :---------------- | :----- | | Restricted cash | $4,743 | $4,915 | $(172) | | Total other assets | $70,212 | $78,953 | $(8,741) | | Prepaid taxes and deferred tax assets, net | $10,614 | $14,059 | $(3,445) | | Operating lease right-of-use asset | $29,831 | $33,898 | $(4,067) | Other Liabilities (in thousands) | Item | June 30, 2024 | December 31, 2023 | Change | | :-------------------------------------------------- | :------------ | :---------------- | :----- | | Total other liabilities | $744,197 | $681,451 | $62,746 | | Accrued incentive fee and carried interest compensation | $525,808 | $356,316 | $169,492 | | Contingent consideration payable—Wafra | $— | $35,000 | $(35,000) | | Warrants issued to Wafra | $3,200 | $39,200 | $(36,000) | | Accrued compensation | $35,309 | $63,761 | $(28,452) | - The Company has established a full valuation allowance on its deferred tax assets, resulting in no net federal income tax effect for its domestic entities[59] 7. Debt This section outlines the company's corporate debt, including securitized financing facilities and exchangeable senior notes Corporate Debt (Amortized Cost, in thousands) | Item | June 30, 2024 | December 31, 2023 | Change | | :-------------------------- | :------------ | :---------------- | :----- | | Securitized financing facility | $295,315 | $294,267 | $1,048 | | Exchangeable senior notes | $— | $77,516 | $(77,516) | | Total Debt | $295,315 | $371,783 | $(76,468) | - The remaining $78.4 million of 5.75% exchangeable senior notes were extinguished in 2024; $73.4 million was exchanged for 8.2 million Class A common shares, and $5.0 million was redeemed for cash[64] - The securitized financing facility (Class A-2 Notes) has a principal of $300 million at 3.933% interest, with an anticipated repayment date of September 2026. The Variable Funding Notes (VFN) had no outstanding balance as of June 30, 2024, and its anticipated repayment date was extended to September 2025[62][63] 8. Stockholders' Equity This section details the company's stockholders' equity, including common and preferred stock outstanding and changes in accumulated other comprehensive income Common Stock Outstanding (in thousands of shares) | Class | June 30, 2024 | December 31, 2023 | Change | | :---- | :------------ | :---------------- | :----- | | Class A | 173,600 | 163,209 | 10,391 | | Class B | 166 | 166 | — | - The increase in Class A common stock outstanding was primarily due to the exchange of notes for 8.2 million shares and the settlement of contingent consideration (Wafra) for 1.02 million shares in H1 2024[66] Preferred Stock Outstanding (June 30, 2024, in thousands) | Series | Dividend Rate | Shares Outstanding | Liquidation Preference | | :----- | :------------ | :----------------- | :--------------------- | | H | 7.125% | 8,395 | $209,870 | | I | 7.15% | 12,867 | $321,668 | | J | 7.125% | 11,614 | $290,361 | | Total | | 32,876 | $821,899 | - The Company does not currently have an authorized stock repurchase program. A previous $200 million program expired in June 2023, under which 235,223 preferred shares were repurchased for $4.7 million in 2023[71] - Accumulated Other Comprehensive Income (Loss) attributable to stockholders decreased from $1,411 thousand at December 31, 2023, to $755 thousand at June 30, 2024, primarily due to foreign currency translation loss[73] 9. Noncontrolling Interests This section describes noncontrolling interests, including redeemable noncontrolling interests and those in the operating company Redeemable Noncontrolling Interests (in thousands) | Item | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Beginning balance | $17,862 | $100,574 | | Contributions | $1,000 | $300 | | Net income (loss) | $891 | $4,502 | | Ending balance | $19,753 | $31,920 | - Noncontrolling interests in the Operating Company (OP) are held primarily by current and former employees, with OP Units having the right to be redeemed for cash or, at the Company's election, Class A common stock on a one-for-one basis[79] - The Company redeemed 85,074 OP Units in 2024 (vs. 253,084 in 2023) through the issuance of an equal number of Class A common stock shares[79] 10. Fair Value This section provides fair value measurements for various assets and liabilities, including marketable securities and contingent consideration Fair Value Measurements (June 30, 2024, in thousands) | Item | Level 1 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :---- | | Assets: | | | | | Marketable equity securities | $35,013 | $— | $35,013 | | CLO subordinated notes | $— | $48,539 | $48,539 | | Equity investments of consolidated funds | $77,166 | $23,000 | $100,166 | | Equity method investment (Fair Value Option) | $— | $132,952| $132,952 | | Liabilities: | | | | | InfraBridge contingent consideration | $— | $9,500 | $9,500 | | Warrants issued to Wafra | $— | $3,200 | $3,200 | | Securities of consolidated funds sold short | $46,260 | $— | $46,260 | - In April 2024, two single asset funds were deconsolidated, removing approximately $263.0 million of net assets attributed to limited partners. The Company's co-investment was restructured as an equity method investment under the fair value option[82] - In March 2024, three warrants issued to Wafra were reclassified to equity from liability following the removal of a net cash settlement feature, reducing the liability-classified warrants from $39.2 million (Dec 31, 2023) to $3.2 million (June 30, 2024)[85] 11. Earnings per Share This section presents the company's basic and diluted earnings per share from continuing operations and net income (loss) attributable to common stockholders Net Income (Loss) Attributable to Common Stockholders (in thousands) | Period | Amount | | :----- | :----- | | Q2 2024 | $76,763 | | Q2 2023 | $(22,411) | | H1 2024 | $32,475 | | H1 2023 | $(234,884) | Income (Loss) from Continuing Operations per Common Share (Basic & Diluted) | Period | Amount | | :----- | :----- | | Q2 2024 | $0.44 | | Q2 2023 | $(0.06) | | H1 2024 | $0.27 | | H1 2023 | $(1.25) | Net Income (Loss) Attributable to Common Stockholders per Common Share (Basic & Diluted) | Period | Amount | | :----- | :----- | | Q2 2024 | $0.44 | | Q2 2023 | $(0.14) | | H1 2024 | $0.19 | | H1 2023 | $(1.48) | 12. Fee Revenue This section details the company's fee revenue, including management fees and incentive fees, and their drivers Total Fee Revenue (in thousands) | Period | Amount | | :----- | :----- | | Q2 2024 | $78,605 | | Q2 2023 | $65,742 | | H1 2024 | $151,560 | | H1 2023 | $124,868 | - Total fee revenue increased by 19.6% QoQ and 21.4% YoY, driven by higher management fees from the third flagship fund ($13.6 million in Q2 2024, $22.9 million in H1 2024) and additional deployments in DBP I and the credit fund[93][137] - Incentive fees increased significantly to $1,651 thousand in Q2 2024 (from $171 thousand in Q2 2023) and $2,532 thousand in H1 2024 (from $1,040 thousand in H1 2023), attributed to the liquid securities strategy[93][137] - One fund accounted for approximately 72.5% of total revenues in Q2 2024 and 58.4% in H1 2024[96] 13. Equity-Based Compensation This section outlines the company's equity-based compensation expense, including details on the 2024 Omnibus Stock Incentive Plan Equity-Based Compensation Expense (in thousands) | Period | Amount | | :----- | :----- | | Q2 2024 | $17,641 | | Q2 2023 | $20,691 | | H1 2024 | $26,855 | | H1 2023 | $31,461 | - Equity-based compensation expense decreased in both periods compared to 2023, as 2023 included higher expenses associated with performance-based awards achieving target metrics[143] - The 2024 Omnibus Stock Incentive Plan was approved in April 2024, reserving 5.5 million shares of Class A common stock for various equity awards[97] - Aggregate unrecognized compensation cost for all unvested equity awards was $48.3 million at June 30, 2024, expected to be recognized over a weighted average period of 2.1 years[105] 14. Variable Interest Entities This section describes the company's involvement with Variable Interest Entities (VIEs), including its operating subsidiary and sponsored funds - The Company's operating subsidiary, OP, is consolidated as a VIE, with DBRG as the primary beneficiary due to its majority interest and managing member role[107] - The Company consolidates sponsored funds where it has more than an insignificant equity interest as general partner, with exposure limited to its capital account balance ($62.8 million at June 30, 2024)[108] Assets and Liabilities of Consolidated Funds (in thousands) | Item | June 30, 2024 | December 31, 2023 | | :-------------------------- | :------------ | :---------------- | | Total Assets | $157,070 | $553,141 | | Total Liabilities | $55,533 | $64,210 | - Unconsolidated Company-Sponsored Funds are accounted for under the equity method, with maximum exposure to loss limited to $2.17 billion at June 30, 2024, and unfunded equity commitments totaling $261.1 million[110] 15. Transactions with Affiliates This section details transactions with affiliates, including amounts due from and to affiliates, cost reimbursements, and carried interest allocation Amounts Due From and To Affiliates (in thousands) | Item | June 30, 2024 | December 31, 2023 | | :------------------------------------------ | :------------ | :---------------- | | Due from Affiliates | $94,805 | $85,815 | | Fee revenue | $75,549 | $71,427 | | Cost reimbursements and recoverable expenses | $18,740 | $14,388 | | Due to Affiliates | $12,130 | $10,664 | | Investment vehicles—InfraBridge | $10,123 | $10,123 | - Cost reimbursements and recoverable expenses included in other income totaled $3.3 million for Q2 2024 and $5.8 million for H1 2024, when the Company acts as principal[113] - Carried interest allocation to Messrs. Ganzi and Jenkins (former owners of DBH) totaled $119.4 million at June 30, 2024, included in noncontrolling interests, representing their pre-merger equity and general partner interests[113] - The Company reimbursed Mr. Ganzi $2.0 million for Q2 2024 and $3.1 million for H1 2024 for variable and fixed costs of business and personal travel on private aircraft[113] 16. Segment Reporting This section outlines the company's segment reporting, transitioning to a single reportable segment in 2024 - Beginning in 2024, the Company reports its entire business as a single reportable segment, aligning with how its chief operating decision makers assess resource allocation and performance[114] - Prior to 2024, the Company operated with two reportable segments: Investment Management and Operating. The Operating segment was discontinued on December 31, 2023[114] Segment Results of Operations (H1 2024 vs H1 2023, in thousands) | Item | H1 2024 | H1 2023 | Change (YoY) | | :-------------------------------------------------- | :------ | :------ | :----------- | | Total revenues | $464,729| $208,370| +123.0% | | Total expenses | $352,402| $186,889| +88.5% | | Income (loss) from continuing operations attributable to DigitalBridge Group, Inc. | $75,599 | $(170,676)| N/A | 17. Commitments and Contingencies This section addresses the company's commitments and contingencies, including legal proceedings - As of June 30, 2024, the Company was not involved in any legal proceedings expected to have a material adverse effect on its results of operations, financial position, or liquidity[118] 18. Subsequent Events This section discloses any significant events that occurred after the reporting period - No other subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the accompanying notes[119] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes financial condition and results, highlighting revenue and net income improvements, business model, fund performance, non-GAAP measures, liquidity, and capital resources - The Company is a leading global digital infrastructure investment manager with $32.7 billion of fee earning equity under management (FEEUM) as of June 30, 2024[124][155] - In the year-to-date period through July 2024, the Company raised $3.4 billion of capital, primarily for its third flagship value-add strategy[128] - The Company reduced leverage by fully exchanging/redeeming its remaining $78.4 million of 5.75% senior notes in 2024, resulting in annual interest savings of approximately $4.5 million[129] Key Fund Performance Metrics (Inception through June 30, 2024) | Fund | Gross MOIC | Net MOIC | Gross IRR | Net IRR | | :----- | :--------- | :------- | :-------- | :------ | | DBP I | 1.6x | 1.4x | 15.1% | 10.7% | | DBP II | 1.3x | 1.2x | 13.1% | 8.4% | | SAF | 1.1x | 1.1x | 7.0% | 4.3% | | GIF I | 1.6x | 1.4x | 9.8% | 7.3% | | GIF II | 0.8x | 0.7x | <0% | <0% | | Credit I | 1.1x | 1.1x | 14.0% | 9.0% | - Total revenues increased by 105.6% QoQ to $390.3 million and 123.0% YoY to $464.7 million, primarily driven by significant variability in unrealized carried interest allocation[134][136] - Net income attributable to DigitalBridge Group, Inc. improved significantly to $91.4 million in Q2 2024 (from a loss of $8.7 million in Q2 2023) and $61.8 million in H1 2024 (from a loss of $206.5 million in H1 2023)[134] - Fee-Related Earnings (FRE) increased by 20% to $26.0 million in Q2 2024, reflecting continued growth in the investment management business and a 12% increase in FEEUM[163] - Distributable Earnings (DE) increased by $14.1 million to $19.6 million in Q2 2024, benefiting from improved FRE, final proceeds from the DataBank sale, lower interest expense, and the absence of placement fee expense[164] - The Company's liquidity position was approximately $427 million at June 30, 2024, including the full $300 million availability under its Variable Funding Notes (VFN)[170] - Unfunded commitments to sponsored funds totaled $281.1 million at June 30, 2024[175] - The Company monetized marketable equity securities for $9.8 million in July 2024, with $25.1 million remaining for future monetization[183] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the company's exposure to market risks from interest rates, foreign currency, and equity prices, and strategies for managing these impacts - The Company's primary market risks are interest rates, foreign currency rates, and equity prices[193] - A hypothetical 10% decline in the fair value of fund investments at June 30, 2024, would decrease the OP's share of principal investment income by approximately $121 million and carried interest by approximately $140 million[194] - Most management fee revenue (95% of FEEUM) is not directly affected by changes in investment fair values, as it is based on committed or invested capital[194] - Foreign currency exposure is limited, primarily from the InfraBridge advisor subsidiary's operating costs in Pound Sterling, with an immaterial effect from a 100 basis point AUD/USD rate decline on a AUD 35 million equity investment[195][196] - Interest rate risk is limited to the VFN revolver, which had no outstanding balance as of June 30, 2024[197] - Equity price risk from $112 million long positions and $46 million short positions in marketable equity securities is managed through portfolio rebalancing and a long/short equity strategy[198] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2024, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2024[199] - There have been no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2024[200] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1. Legal Proceedings The company reported no involvement in any material legal proceedings as of June 30, 2024 - As of June 30, 2024, the Company was not involved in any material legal proceedings[202] Item 1A. Risk Factors No material changes to risk factors were reported from the Annual Report on Form 10-K for December 31, 2023 - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[203] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2024, the company issued 74 Class A common shares to a former employee for an OP Unit redemption, relying on Section 4(a)(2) of the Securities Act - In Q2 2024, 74 shares of Class A common stock were issued to a former employee OP Unit holder in satisfaction of a redemption request[205] - The issuance was made in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended[204] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No defaults upon senior securities were reported[205] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable to the Company[205] Item 5. Other Information No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during Q2 2024 - None of the Company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2024[206] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including organizational documents, stock incentive plans, and certifications - Key exhibits include the Restated Charter, Amended and Restated Bylaws, Articles Supplementary for Preferred Stock, the DigitalBridge Group, Inc. 2024 Omnibus Stock Incentive Plan, and certifications from the CEO, CFO, and Chief Accounting Officer[207]