DigitalBridge (DBRG)2024-11-01 20:05Financial Performance - Total revenues for Q3 2024 were $76.1 million, a decrease of $186.6 million compared to $262.7 million in Q3 2023, while year-to-date revenues increased by $69.8 million to $540.9 million from $471.1 million [143]. - Fee revenue increased by $11.3 million (17%) in Q3 2024 and $38.0 million (20%) year-to-date, driven by management fees from the third flagship fund [144]. - Carried interest allocation showed a reversal of $15.8 million in Q3 2024 compared to an allocation of $168.9 million in Q3 2023, reflecting significant variability in performance [145]. - Principal investment income decreased by $7.99 million in Q3 2024 to $9.96 million, with unrealized income significantly lower due to fair value decreases in underlying investments [147]. - Net income for Q3 2024 was $48.3 million, a decrease of $230.4 million from $278.8 million in Q3 2023, with significant impacts from carried interest reversals [143]. - The company reported a net loss attributable to common stockholders of $883,000 in Q3 2024, compared to a profit of $261.8 million in Q3 2023 [143]. - Distributable Earnings (DE) decreased by $21.9 million to $10.7 million in Q3 2024, primarily due to a lack of realized carried interest, which was $27.9 million in Q3 2023 [179]. Assets Under Management - As of September 30, 2024, DigitalBridge Group, Inc. had $34.1 billion of fee earning equity under management (FEEUM) [130]. - The year-to-date fee-earning assets under management (FEEUM) increased by $4.2 billion (14%) to $34.1 billion as of September 30, 2024 [144]. - Assets Under Management (AUM) increased to $88.0 billion as of September 30, 2024, up from $80.1 billion as of December 31, 2023 [167]. - Fee Earning Equity Under Management (FEEUM) rose to $34.1 billion at September 30, 2024, an increase of $1.3 billion driven by capital raises and deployments [168]. Capital Raising and Investments - In the year-to-date period through October 2024, the company raised $6.1 billion of capital, primarily for its flagship value-add strategy [134]. - DigitalBridge monetized a substantial portion of marketable equity securities for total net proceeds of $35.0 million [136]. - The company settled $35 million in contingent consideration related to a previous investment redemption, with 50% paid in shares and 50% in cash [184]. - The company monetized non-core marketable equity securities for total net proceeds of $35 million [184]. Expenses and Compensation - Total expenses for Q3 2024 were $76.3 million, down from $159.5 million in Q3 2023, primarily due to variability in unrealized carried interest compensation [149]. - Administrative and other expenses increased by $9.5 million in Q3 2024 compared to Q3 2023, reflecting higher operational costs [149]. - Cash compensation decreased by $4.2 million in the quarter-to-date comparison and $0.8 million in the year-to-date comparison, attributed to lower estimated bonus, severance, and retention costs [152]. - Equity-based compensation was lower by $5.5 million in the quarter-to-date comparison and $10.1 million in the year-to-date comparison due to reduced performance-based award expenses [153]. - Administrative and other expenses increased by $9.5 million in the quarter-to-date comparison and $18.3 million in the year-to-date comparison, primarily due to higher third-party professional service costs [154]. Debt and Interest - The company reduced its leverage by fully exchanging/redempting $78.4 million of 5.75% senior notes, resulting in annual interest savings of approximately $4.5 million [135]. - Interest expense decreased by $1.4 million in the quarter-to-date comparison and $6.9 million in the year-to-date comparison, resulting from the redemption of senior notes and convertible notes [155]. - Preferred stock outstanding totals $822 million with a weighted average dividend rate of 7.135%, resulting in quarterly dividend payments of $14.7 million [185]. Future Outlook and Risks - The company anticipates continued variability in carried interest and investment performance impacting future revenues and income [146]. - A hypothetical 10% decline in the fair value of fund investments would decrease the company's share of principal investment income by approximately $124 million [204]. - A similar decline would reduce carried interest by approximately $168 million, net of allocations to employees and partners [205]. - The company continues to evaluate its liquidity needs and sources, including cash flow from operations and external financing options [182]. Legal and Compliance - As of September 30, 2024, the company was not involved in any material legal proceedings [213]. - There have been no material changes from the previously disclosed risk factors in the Annual Report for the year ended December 31, 2023 [214]. - The company maintains effective disclosure controls and procedures as evaluated by management, including the Chief Executive Officer and Chief Financial Officer, as of September 30, 2024 [210]. - There have been no changes in internal control over financial reporting during the quarter ended September 30, 2024, that materially affected the internal control [211]. Fund Performance Metrics - The performance metrics for DBP I show a total commitment of $4,059 million and a gross MOIC of 1.6x with a gross IRR of 14.4% [138]. - DBP II has total commitments of $8,286 million, with a gross MOIC of 1.3x and a gross IRR of 12.6% [138]. - The SAF fund, with total commitments of $1,110 million, has a gross MOIC of 1.1x and a gross IRR of 7.0% [138]. - InfraBridge's GIF I fund has total commitments of $1,411 million, achieving a gross MOIC of 1.6x and a gross IRR of 9.8% [138]. - GIF II has total commitments of $3,382 million, but shows a gross MOIC of 0.8% and a gross IRR of less than 0% [138]. - Credit I fund has total commitments of $697 million, with a gross MOIC of 1.1x and a gross IRR of 13.8% [138].