DigitalBridge (DBRG) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents DigitalBridge Group's unaudited consolidated financial statements for Q2 2025, covering balance sheets, income, equity, cash flows, and detailed notes Consolidated Balance Sheets Consolidated balance sheets show slight decreases in total assets and liabilities, with increases in stockholders' equity and cash | Metric (in thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------- | :-------------------------- | :------------------ | | Cash and cash equivalents | $340,698 | $302,154 | | Investments | $2,389,801 | $2,492,268 | | Total assets | $3,408,581 | $3,513,318 | | Total liabilities | $957,753 | $1,022,128 | | Total stockholders' equity | $2,018,531 | $1,958,582 | | Total equity | $2,425,796 | $2,466,834 | Consolidated Statements of Operations The company reported a net loss for Q2 and YTD 2025, a shift from prior year net income, primarily due to negative carried interest allocation, despite increased fee revenue | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Fee revenue | $85,262 | $78,605 | $175,401 | $151,560 | | Carried interest allocation | $(115,074) | $288,244 | $(170,538) | $279,766 | | Total revenues | $(3,207) | $390,336 | $42,240 | $464,729 | | Net income (loss) | $(25,684) | $129,928 | $(40,539) | $99,162 | | Net income (loss) attributable to common stockholders | $16,962 | $76,763 | $16,084 | $32,475 | | Net income (loss) attributable to common stockholders per common share—basic | $0.10 | $0.44 | $0.09 | $0.19 | Consolidated Statements of Comprehensive Income (Loss) The company reported a comprehensive loss for Q2 and YTD 2025, influenced by net income (loss) and foreign currency translation changes | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(25,684) | $129,928 | $(40,539) | $99,162 | | Changes in accumulated other comprehensive income (loss) related to foreign currency translation | $4,234 | $45 | $6,463 | $(709) | | Comprehensive income (loss) | $(21,450) | $129,973 | $(34,076) | $98,453 | | Comprehensive income (loss) attributable to stockholders | $35,602 | $91,465 | $51,471 | $61,137 | Consolidated Statements of Equity Total stockholders' equity increased from December 2024 to June 2025, driven by additional paid-in capital, despite a net loss | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :------------------------------------ | :---------------- | :-------------- | | Total Stockholders' Equity | $1,958,582 | $2,018,531 | | Noncontrolling Interests in Investment Entities | $430,528 | $357,216 | | Noncontrolling Interests in Operating Company | $77,724 | $50,049 | | Total Equity | $2,466,834 | $2,425,796 | Consolidated Statements of Cash Flows The company generated significant net cash from operating activities in H1 2025, a reversal from prior year outflow, while investing and financing activities resulted in net cash outflows | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash generated by (used in) operating activities | $127,271 | $(4,483) | | Net cash generated by (used in) investing activities | $(68,506) | $(17,227) | | Net cash generated by (used in) financing activities | $(25,064) | $(61,920) | | Cash, cash equivalents and restricted cash—end of period | $345,021 | $265,916 | Notes to Consolidated Financial Statements These notes provide detailed explanations and disclosures supporting the consolidated financial statements, covering business, accounting policies, and financial details 1. Business and Organization DigitalBridge Group, Inc. is a global investment manager focused on digital infrastructure, with a 96% ownership in its operating subsidiary as of June 30, 2025 - DigitalBridge Group, Inc. is a leading global investment manager in digital infrastructure, including data centers, cell towers, fiber networks, small cells, and edge infrastructure[30] - The Company owned 96% of its operating subsidiary, DigitalBridge Operating Company, LLC (OP), at June 30, 2025, which increased to 97% as of July 31, 2025, following redemption of additional OP units[31] 2. Summary of Significant Accounting Policies This section outlines the company's basis of presentation, consolidation principles, noncontrolling interest accounting, and recently adopted and future accounting pronouncements - The Company adopted ASU 2023-09, 'Improvements to Income Tax Disclosures,' effective January 1, 2025, with no material impact expected on annual income tax disclosures[49][50] - The FASB issued ASU 2025-05, 'Measurement of Credit Losses for Accounts Receivable and Contract Assets,' effective January 1, 2026, which the Company intends to early adopt and elect the practical expedient, with no material impact expected[51][52] - ASU 2025-03, 'Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,' issued in May 2025, modifies the framework for identifying accounting acquirers in VIE business combinations, effective January 1, 2027, with early adoption permitted[53][55] - ASU 2024-03, 'Disaggregation of Income Statement Expenses,' issued in November 2024, requires tabular footnote disclosure of certain natural expenses, effective January 1, 2027, with the Company currently evaluating its effects[56][57] 3. Investments The company's investments primarily consist of equity method and debt investments, with carried interest allocation seeing a significant decrease from December 2024 to June 2025 | (In thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Equity method investments | | | | Principal investments | $1,427,692 | $1,391,316 | | Carried interest allocation | $721,545 | $894,553 | | Other equity investments | $27,737 | $24,854 | | Debt investment | $32,697 | $35,122 | | Equity investments of consolidated funds | | | | Marketable equity securities | $99,516 | $83,269 | | Other investments | $80,614 | $63,154 | | Total Investments | $2,389,801 | $2,492,268 | - In 2025, carried interest of $2.5 million was distributed during Q1, with $1.6 million allocated to current and former employees[64] - The Company did not have a liability for clawback obligations on carried interest distributed as of June 30, 2025, and December 31, 2024[65] 4. Intangible Assets The company's intangible assets, primarily investment management contracts, investor relationships, and trade names, decreased due to amortization from December 2024 to June 2025 | (In thousands) | June 30, 2025 Net Carrying Amount | December 31, 2024 Net Carrying Amount | | :----------------------------- | :-------------------------------- | :------------------------------------ | | Investment management contracts | $31,646 | $41,123 | | Investor relationships | $26,970 | $28,561 | | Trade name | $1,746 | $1,963 | | Other | $737 | $813 | | Total Intangible Assets | $61,099 | $72,460 | - Amortization expense for finite-lived intangible assets totaled $6.6 million for Q2 2025, and $13.2 million for H1 2025[76] 5. Restricted Cash, Other Assets and Other Liabilities This section details restricted cash, other assets (including operating lease ROU assets and fixed assets), and other liabilities (such as deferred fees and accrued compensation), also addressing deferred income taxes and new U.S. tax legislation | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :-------------- | :---------------- | | Other Assets | | | | Operating lease right-of-use asset for corporate offices | $24,651 | $28,901 | | Fixed assets, net | $7,847 | $9,712 | | Total other assets | $47,048 | $52,504 | | Other Liabilities | | | | Deferred investment management fees | $26,038 | $9,306 | | Accrued compensation | $36,030 | $54,644 | | Accrued incentive fee and carried interest compensation | $417,261 | $497,288 | | Total other liabilities | $659,761 | $725,766 | - The Company has significant deferred tax assets, primarily related to capital loss carryforwards, but a full valuation allowance has been established as their realizability did not meet the more-likely-than-not threshold[82] - New U.S. tax legislation, 'An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14' (One Big Beautiful Bill Act), enacted on July 4, 2025, could affect the Company's effective tax rate and deferred tax assets/liabilities, with effects recognized beginning Q3 2025[83][84] 6. Debt The company's corporate debt primarily consists of a securitized financing facility, with its Variable Funding Notes (VFN) capacity reduced in June 2025, and all exchangeable senior notes extinguished in H1 2024 | (In thousands) | June 30, 2025 Amortized Cost | December 31, 2024 Amortized Cost | | :----------------------------- | :--------------------------- | :------------------------------- | | Securitized financing facility | $297,992 | $296,362 | | ($ in thousands) | Outstanding Principal | Interest Rate (Per Annum) | Anticipated Repayment Date | Years Remaining to Maturity | | :----------------- | :-------------------- | :------------------------ | :------------------------- | :-------------------------- | | Class A-2 Notes | $300,000 | 3.93% | September 2026 | 1.2 | | Variable Funding Notes | — | Adjusted 1-month Term SOFR + 3% | September 2026 | NA | - In H1 2024, the remaining $78.4 million of 5.75% exchangeable senior notes were extinguished, with $73.4 million exchanged for Class A common stock and $5.0 million redeemed for cash[93] 7. Stockholders' Equity This section details changes in preferred and common stock, including Class B to Class A conversions, OP unit redemptions, equity award activities, and changes in accumulated other comprehensive income (loss) | (In thousands) | Preferred Stock | Class A Common Stock | Class B Common Stock | | :------------------------------------------ | :-------------- | :------------------- | :------------------- | | Shares outstanding at December 31, 2024 | 32,876 | 174,202 | 150 | | Shares issued upon redemption of OP units | — | 4,363 | — | | Conversion of class B to class A common stock | — | 150 | (150) | | Equity awards issued, net of forfeitures | — | 2,730 | — | | Shares canceled for tax withholding on vested equity awards | — | (558) | — | | Shares outstanding at June 30, 2025 | 32,876 | 180,887 | — | | Description | Dividend Rate Per Annum | Shares Outstanding (in thousands) | Liquidation Preference (in thousands) | | :---------- | :---------------------- | :-------------------------------- | :------------------------------------ | | Series H | 7.125 % | 8,395 | $209,870 | | Series I | 7.15 % | 12,867 | $321,668 | | Series J | 7.125 % | 11,614 | $290,361 | | Total | | 32,876 | $821,899 | - In 2025, all 149,571 shares of Class B common stock were converted into an equivalent number of Class A common stock shares and subsequently cancelled[101] 8. Noncontrolling Interests This section outlines activities in redeemable noncontrolling interests in open-end funds and noncontrolling interests in the Operating Company (OP), detailing contributions, distributions, net income (loss) allocations, and OP unit redemptions | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :----------------------------- | :----------------------------- | | Redeemable noncontrolling interests | | | | Beginning balance | $24,356 | $17,862 | | Contributions | $1,300 | $1,000 | | Distributions paid and payable, including redemptions | $(1,273) | — | | Net income (loss) | $649 | $891 | | Ending balance | $25,032 | $19,753 | - The Company redeemed 5,622,793 OP units in 2025 (including 1,259,793 in July 2025) and 452,418 in 2024, through the issuance of an equal number of Class A common stock shares[111] 9. Fair Value This section describes the company's fair value measurements, categorized into a three-tier hierarchy, detailing the valuation of various financial instruments and highlighting changes in Level 3 assets and liabilities | (In thousands) | Level 1 | Level 2 | Level 3 | Total | | :------------------------------------------ | :------ | :------ | :------ | :------ | | June 30, 2025 Assets | | | | | | Other equity investments—Marketable equity securities | $313 | $— | $— | $313 | | CLO subordinated notes | $— | $— | $32,697 | $32,697 | | Equity investments of consolidated funds | $99,516 | $— | $80,614 | $180,130 | | Fair Value Option: Equity method investment | $— | $— | $140,645 | $140,645 | | June 30, 2025 Liabilities | | | | | | InfraBridge contingent consideration | $— | $— | $2,300 | $2,300 | | DBRG stock warrants | $— | $— | $500 | $500 | | Securities of consolidated funds sold short | $61,667 | $— | $— | $61,667 | | (In thousands) | Fair Value Option - Equity Method Investments | Equity Investment of Consolidated Funds | DBRG Stock Warrants | InfraBridge Contingent Consideration | | :------------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------ | :----------------------------------- | | Fair value at December 31, 2024 | $137,154 | $63,154 | $(700) | $(6,100) | | Contributions | — | $17,333 | — | — | | Unrealized gain (loss) in earnings, net | $3,491 | $127 | $200 | $3,800 | | Fair value at June 30, 2025 | $140,645 | $80,614 | $(500) | $(2,300) | - In March 2024, three of the five DBRG stock warrants were reclassified from liability to equity due to the removal of the cash settlement feature, eliminating fair value remeasurement for those warrants[121] 10. Earnings per Share This section presents basic and diluted earnings per common share computations, showing a decrease in both for Q2 and YTD 2025 compared to the prior year | Metric (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to common stockholders—basic | $16,561 | $75,146 | $15,733 | $31,851 | | Weighted average number of common shares outstanding—basic | 173,059 | 170,358 | 172,373 | 165,748 | | Net income (loss) attributable to common stockholders per common share—basic | $0.10 | $0.44 | $0.09 | $0.19 | | Net income (loss) attributable to common stockholders per common share—diluted | $0.10 | $0.44 | $0.09 | $0.19 | 11. Fee Revenue The company's fee revenue, primarily management and incentive fees, increased, with three funds accounting for a significant concentration of total management fees | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Management fees | $84,373 | $75,687 | $174,233 | $147,531 | | Incentive fees | $600 | $1,651 | $606 | $2,532 | | Other fees | $289 | $1,267 | $562 | $1,497 | | Total fee revenue | $85,262 | $78,605 | $175,401 | $151,560 | - Three funds met the revenue concentration criteria, aggregating to 62.3% and 64.5% of total management fees for Q2 and H1 2025, respectively[137] 12. Equity-Based Compensation This section details the company's equity-based compensation plans, including restricted stock, RSUs, PSUs, LTIP units, and DSUs, outlining vesting conditions, valuation, and recognized compensation expense - The 2024 Omnibus Stock Incentive Plan, approved in April 2024, reserved 5.5 million shares of Class A common stock for awards to officers, directors, employees, consultants, or advisors[139] | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Compensation expense | $10,725 | $17,641 | $18,345 | $26,855 | | Administrative expense | $148 | — | $239 | — | | Total | $10,873 | $17,641 | $18,584 | $26,855 | - At June 30, 2025, aggregate unrecognized compensation cost for all unvested equity awards was $47.1 million, expected to be recognized over a weighted average period of 1.8 years[158] 13. Variable Interest Entities This section discusses the company's involvement with VIEs, including its operating subsidiary and company-sponsored funds, explaining consolidation criteria, presenting consolidated fund assets/liabilities, and maximum exposure to loss from unconsolidated funds - The Company consolidates its operating subsidiary (OP) as it is deemed the primary beneficiary, holding a majority interest and exercising full control over its activities[161] | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------- | :-------------- | :---------------- | | Assets | | | | Cash and cash equivalents | $65,326 | $62,630 | | Investments | $180,130 | $146,423 | | Other assets | $860 | $724 | | Total Assets | $246,316 | $209,777 | | Liabilities | | | | Securities sold short | $61,667 | $47,930 | | Due to custodian | $10,833 | $9,121 | | Other | $192 | $697 | | Total Liabilities | $72,692 | $57,748 | - The Company's maximum exposure to loss from unconsolidated funds is limited to its outstanding investment balance of $2.0 billion at June 30, 2025, and it has unfunded commitments of $187.3 million to these funds[164][165] 14. Transactions with Affiliates This section details transactions with affiliates, including investment vehicles, portfolio companies, directors, and employees, covering amounts due from/to affiliates, fee revenue, cost reimbursements, and CEO private aircraft expenses | (In thousands) | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :-------------- | :---------------- | | Due from Affiliates | | | | Investment vehicles and portfolio companies | | | | Fee revenue | $86,016 | $103,402 | | Cost reimbursements and recoverable expenses | $12,958 | $19,111 | | Employees and other affiliates | $1,036 | $1,673 | | Total Due from Affiliates | $100,010 | $124,186 | | Due to Affiliates | | | | Employees and other affiliates | $1,254 | $1,675 | | Total Due to Affiliates | $1,254 | $1,675 | - Expenses incurred for Mr. Ganzi's private aircraft use (business and personal) totaled $1.0 million for Q2 2025, and $2.7 million for H1 2025[175] 15. Segment Reporting Effective 2024, the company reports its entire business as a single reportable segment, with segment earnings measured as net income (loss) from continuing operations attributable to common stockholders - Effective 2024, the Company operates and reports as a single reportable segment, aligning with the CODM's assessment of the entire business[176] | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income (loss) from continuing operations attributable to common stockholders | $15,415 | $77,437 | $18,455 | $46,279 | 16. Commitments and Contingencies As of June 30, 2025, the company is not involved in any legal proceedings expected to have a material adverse effect on its financial results - As of June 30, 2025, the Company was not involved in any legal proceedings expected to have a material adverse effect on its financial results[184] 17. Subsequent Events No subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the accompanying notes - No material subsequent events requiring recognition or disclosure have occurred[185] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes DigitalBridge Group, Inc.'s financial condition and results, covering business overview, investment platform, significant developments, revenue/expense analysis, operating metrics, non-GAAP measures, liquidity, and critical accounting policies Our Business DigitalBridge Group, Inc. is a leading global investment manager in digital infrastructure, with $39.7 billion in fee-earning equity under management (FEEUM) and 96% ownership of its Operating Company as of June 30, 2025 - DigitalBridge is a leading global investment manager in digital infrastructure, with $39.7 billion of fee earning equity under management (FEEUM) as of June 30, 2025[193] - The Company owns 96% of its Operating Company as of June 30, 2025, increasing to 97% by July 31, 2025[194] Our Investment Management Platform The company's investment management platform offers diverse strategies, including value-add digital infrastructure, core equity, private credit, liquid securities, and mid-market infrastructure, with varying performance metrics for key funds - The investment management platform includes DBP series (value-add digital infrastructure), Core Equity (Strategic Assets Fund), DigitalBridge Credit (private credit), Liquid Strategies (public equities), and InfraBridge (mid-market infrastructure)[195][197][203] | Fund | Inception Date | Total Commitments ($ in millions) | Invested Capital ($ in millions) | Total Investment Value ($ in millions) | Gross MOIC | Net MOIC | Gross IRR | Net IRR | | :-------- | :------------- | :-------------------------------- | :------------------------------- | :------------------------------------- | :--------- | :------- | :-------- | :------ | | DBP I | Mar-2018 | $4,059 | $4,825 | $7,540 | 1.6x | 1.4x | 12.0% | 9.0% | | DBP II | Nov-2020 | $8,286 | $8,057 | $10,928 | 1.4x | 1.2x | 11.0% | 8.0% | | SAF | Nov-2022 | $1,110 | $994 | $1,130 | 1.1x | 1.1x | 6.8% | 4.7% | | GIF I | Mar-2015 | $1,411 | $1,504 | $2,438 | 1.6x | 1.4x | 9.3% | 6.6% | | GIF II | Jun-2018 | $3,382 | $3,160 | $2,611 | 0.8x | 0.7x | <0% | <0% | | Credit I | Dec-2022 | $697 | $635 | $699 | 1.1x | 1.1x | 9.7% | 6.5% | Significant Developments In 2025, the company raised $2.5 billion in capital, primarily for its third flagship value-add strategy, and realized $59.7 million from a DataBank secondary sale - In 2025, through Q2, the Company raised $2.5 billion of capital, primarily for its third flagship value-add strategy and co-investment vehicles[199] - The Company received approximately $59.7 million in proceeds from a secondary sale of equity by its DataBank portfolio company in February 2025, including $34.0 million in realized principal investment income[200] Results of Operations The company experienced a significant decline in total revenues and net income (loss) in Q2 and YTD 2025 due to a large reversal in carried interest allocation, despite increased fee revenue and decreased expenses | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $(3,207) | $390,336 | $42,240 | $464,729 | | Total expenses | $32,433 | $268,503 | $87,730 | $352,402 | | Net income (loss) | $(25,684) | $129,928 | $(40,539) | $99,162 | | Net income (loss) attributable to common stockholders | $16,962 | $76,763 | $16,084 | $32,475 | | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Management fees | $84,373 | $75,687 | $174,233 | $147,531 | | Incentive fees | $600 | $1,651 | $606 | $2,532 | | Other fee revenue | $289 | $1,267 | $562 | $1,497 | | Total fee revenue | $85,262 | $78,605 | $175,401 | $151,560 | - Fee revenue increased by $6.7 million (8%) quarter-over-quarter and $23.8 million (16%) year-over-year, driven by additional capital raised for the third flagship fund and deployment of capital by various funds[210][211] | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Distributed | $— | $118 | $2,470 | $118 | | Unrealized | $(115,074) | $288,126 | $(173,008) | $279,648 | | Carried interest allocation | $(115,074) | $288,244 | $(170,538) | $279,766 | - Carried interest allocation experienced a significant net reversal of $(115.1) million in Q2 2025 and $(170.5) million YTD 2025, compared to net positive allocations in 2024, primarily due to continuing accrual of preferred returns outpacing changes in investment fair values[213][214] | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Realized | $(33,819) | $8,169 | $1,219 | $10,546 | | Unrealized | $54,256 | $7,813 | $24,525 | $8,281 | | Principal investment income | $20,437 | $15,982 | $25,744 | $18,827 | - Realized principal investment loss in Q2 2025 was driven by a $40.3 million loss from an InfraBridge fund portfolio company, partially offset by $34.0 million income from a DataBank secondary sale in the YTD period[218] | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cash and equity-based compensation | $47,002 | $51,661 | $93,112 | $102,845 | | Incentive fee and carried interest compensation allocation (reversal) | $(43,372) | $178,430 | $(65,676) | $171,716 | | Administrative and other expenses | $11,440 | $26,508 | $27,386 | $50,818 | | Interest expense | $4,570 | $3,136 | $8,468 | $8,328 | | Transaction-related costs | $4,208 | $671 | $8,629 | $1,431 | | Depreciation and amortization | $8,585 | $8,097 | $15,811 | $17,264 | | Total expenses | $32,433 | $268,503 | $87,730 | $352,402 | - Administrative and other expenses decreased by $15.1 million (QoQ) and $23.4 million (YoY), largely due to insurance recoveries related to prior litigation costs and lower third-party professional service costs[224] - Transaction-related costs increased significantly by $3.5 million (QoQ) and $7.2 million (YoY) due to higher deal activity[226] - Other gain, net, was $9.1 million (QoQ) and $8.5 million (YoY) in 2025, driven by unrealized gains in marketable equity securities of consolidated funds and InfraBridge contingent consideration liability[228][229] - Income tax expense was immaterial in all periods due to operating losses and capital loss carryforwards, with a full valuation allowance on deferred tax assets for domestic entities[230] - Discontinued operations reported net income of $1.6 million in Q2 2025, contrasting with net losses in prior periods, including a significant loss in YTD 2024 from a guarantee related to former real estate investments[231] Operating Metrics The company's Assets Under Management (AUM) increased to $105.6 billion, and Fee Earning Equity Under Management (FEEUM) grew to $39.7 billion at June 30, 2025, driven by capital raises and deployment | (In billions) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Assets Under Management | $105.6 | $95.6 | | Fee Earning Equity Under Management | | | | DBP Series | $17.3 | $15.9 | | Co-Investment Vehicles | $14.8 | $11.5 | | InfraBridge | $3.7 | $3.7 | | Core, Credit and Liquid Strategies | $2.7 | $3.2 | | Separately Capitalized Portfolio Companies | $1.2 | $1.2 | | Total FEEUM | $39.7 | $35.5 | | (In billions) | Six Months Ended June 30, 2025 | | :------------ | :----------------------------- | | Balance at January 1 | $35.5 | | Inflows | $5.4 | | Outflows | $(1.2) | | Market activity | — | | Balance at June 30 | $39.7 | - FEEUM increased by $4.2 billion (12%) to $39.7 billion at June 30, 2025, primarily due to capital raised for the third flagship fund and deployment of co-invest capital[237] Non-GAAP Supplemental Financial Measures This section defines and presents non-GAAP financial measures, Fee-Related Earnings (FRE) and Distributable Earnings (DE), used to assess underlying financial performance, with FRE increasing and DE turning negative in Q2 2025 - Fee-Related Earnings (FRE) is a pre-tax measure reflecting recurring fee revenue net of compensation and administrative expenses, excluding non-cash equity-based compensation and carried interest compensation[243][245] - Distributable Earnings (DE) is an after-tax measure representing net realized earnings, used to assess ongoing operating performance and guide distribution and reinvestment decisions[247][248] | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | | Fee-Related Earnings—attributable to Operating Company | $31,975 | $25,968 | | Distributable Earnings, after tax—attributable to Operating Company | $(18,618) | $19,629 | - FRE increased by $6.0 million (23%) to $32.0 million in Q2 2025, with FRE margin improving to 37% from 33% a year ago, driven by higher fee revenue[255][257] - DE was negative $18.6 million in Q2 2025, compared to positive $19.6 million in Q2 2024, primarily due to a $40 million realized principal investment loss from an InfraBridge fund portfolio company[258] Liquidity and Capital Resources The company evaluates its liquidity and cash needs, with primary sources including cash on hand, fees, and available financing; as of June 30, 2025, it had $158 million in corporate cash and $100 million available under its VFN facility - At June 30, 2025, the Company had $158 million of available corporate cash and the full $100 million available under its Variable Funding Notes (VFN) facility[262] - The Company's primary liquidity needs include funding operations, general partner commitments, debt payments, dividends, acquisitions, and lease obligations[266] - Significant liquidity activities in 2025 included $59.7 million proceeds from a DataBank secondary sale, $13.3 million from an InfraBridge fund liquidation, and a reduction of VFN borrowing capacity from $300 million to $100 million, saving $1.0 million annually in unused fees[267] | ($ in thousands) | Outstanding Principal | Interest Rate (Per Annum) | Anticipated Repayment Date | Years Remaining to Maturity | | :--------------- | :-------------------- | :------------------------ | :------------------------- | :-------------------------- | | Class A-2 Notes | $300,000 | 3.93% | September 2026 | 1.2 | - As of June 30, 2025, the Company had unfunded equity commitments of $187 million to its unconsolidated funds as general partner and general partner affiliate[271] - The estimated fair value of contingent consideration payable for the InfraBridge acquisition is $2.3 million, based on achieving prescribed fundraising targets[273] - The Company had no liability for carried interest clawback obligations at June 30, 2025[276] - Operating lease obligations totaled $37 million for current offices and $58 million for a future office lease commencing in 2026[277] | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Cash, cash equivalents and restricted cash—beginning of period | $306,298 | $350,250 | | Net cash generated by (used in): | | | | Operating activities | $127,271 | $(4,483) | | Investing activities | $(68,506) | $(17,227) | | Financing activities | $(25,064) | $(61,920) | | Effect of exchange rates on cash, cash equivalents and restricted cash | $5,022 | $(704) | | Cash, cash equivalents and restricted cash—end of period | $345,021 | $265,916 | Critical Accounting Policies and Estimates The company's financial statements rely on critical accounting policies and estimates involving significant management judgment, with no changes since the December 31, 2024, Annual Report on Form 10-K - The Company's financial statements are prepared using critical accounting policies and estimates that require subjective judgment due to inherent uncertainties[296] - There have been no changes to the Company's critical accounting policies since the filing of its Annual Report on Form 10-K for the year ended December 31, 2024[297] Recent Accounting Updates Information regarding accounting standards adopted in 2025 and potential future adoptions is detailed in Note 2 to the consolidated financial statements - Recent accounting updates are described in Note 2 to the consolidated financial statements[299] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rates, foreign currency, and equity prices, which can affect fee revenue, principal investment income, and carried interest, with a hypothetical 10% decline in fund investments significantly impacting income - The Company's business is exposed to market risks from interest rates, foreign currency rates, and equity prices, affecting fee revenue, principal investment income, and net carried interest allocation[301] - A hypothetical 10% decline in the fair value of fund investments at June 30, 2025, would decrease the OP's share of principal investment income by approximately $84 million and carried interest by approximately $166 million[303][305] - Foreign currency risk is limited, primarily affecting the InfraBridge advisor subsidiary's operating costs in Pound Sterling[308] - Interest rate risk is limited to the undrawn VFN revolver[309] - Equity price risk from marketable equity securities held by consolidated liquid funds is managed through portfolio rebalancing and a long/short equity strategy, with third-party capital reducing the impact on stockholders[310] Item 4. Controls and Procedures Management evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[312] - There have been no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[313] PART II. OTHER INFORMATION Item 1. Legal Proceedings As of June 30, 2025, the company is not involved in any material legal proceedings - As of June 30, 2025, the Company was not involved in any material legal proceedings[315] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[316] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered sales of equity securities, including the conversion of Class B common stock to Class A and the issuance of Class A common stock for OP unit redemptions in Q2 2025 - In Q2 2025, 149,571 shares of Class B common stock were converted into an equal number of Class A common stock shares[318] - In Q2 2025, 4,350,000 shares of Class A common stock were issued to satisfy redemption requests by an OP unit holder[319] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the reported period - None[320] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[321] Item 5. Other Information During the quarter ended June 30, 2025, none of the company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the quarter ended June 30, 2025[322] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including organizational documents, certifications, and XBRL-related files - The report includes exhibits such as the Restated Charter, Amended and Restated Bylaws, Articles Supplementary for preferred stock, and certifications from the CEO and CFO[324] SIGNATURES The Quarterly Report on Form 10-Q was duly signed on August 8, 2025, by Marc C. Ganzi (Chief Executive Officer), Thomas Mayrhofer (Chief Financial Officer), and Tracey Teh (Chief Accounting Officer) - The report was signed by Marc C. Ganzi (CEO), Thomas Mayrhofer (CFO), and Tracey Teh (Chief Accounting Officer) on August 8, 2025[328]