DigitalBridge today announced that it plans to issue $500m of Secured Fund Fee Revenue Notes Series 2021-1 (Notes) with a five-year revolving term. Specifically, the asset-backed securities (ABS) will be issued by DigitalBridge Issuer, LLC and DigitalBridge Co-Issuer, LLC in two classes:

  • Class A-1 Variable Funding Notes (VFN): $200m
  • Class A-2 Secured Fund Fee Revenue Notes: $300m

The Notes will be secured by digital investment management fees and carried interest from current and future investment vehicles managed by DigitalBridge, as well as all existing digital balance sheet investments of the firm (e.g., Vantage SDC and DataBank).

Kroll Bond Rating Agency (KBRA) has assigned preliminary ratings of BBB to both DigitalBridge ABS classes.

Collateral of the Notes – DigitalBridge

While the $500m of ABS Notes have a five-year revolving term, DigitalBridge intends to keep them as a permanent source of capital.

Therefore, the collateral supporting these Notes is of paramount importance. Notably, the company has contributed two distinct sources of collateral: i) management fees, which are cash flow and ii) balance sheet investments, which provide additional security.

As outlined below, DigitalBridge’s proposed $500m securitization is supported by ~$148m of management fee collateral per year. Additionally, the firm’s balance sheet contributes another $739m in digital net carrying value as collateral.

Management Fees – DigitalBridge

Overall, DigitalBridge’s management fee collateral will rise to ~$148m per year, pro forma for the closing of ongoing fundraisings. Below we decompose this figure by separating in-place fees from anticipated fees:

Digital Investment Management – Q1 2021

DigitalBridge’s Digital Fee Earning Equity Under Management (FEEUM) will form a portion of the collateral for the DigitalBridge Notes. As of Q1 2021, third-party digital FEEUM was $12.9bn, comprised of the following five sources of capital:

  • Digital Colony Partners I: $3.2bn of FEEUM generating management fees of 1.2% per year
  • Digital Colony Partners II: $4.0bn of FEEUM producing management fees of 1.2% per year
  • Separately Capitalized (Digital Bridge Holdings): $2.5bn of FEEUM creating management fees of 0.9% per year
  • Co-Investment Capital: $2.8bn of FEEUM generating management fees of 0.5% per year
  • Liquid Strategies: $0.4bn of FEEUM producing management fees of 0.5% per year

During Q1 2021, the company earned $31.1m of gross fee income for managing this equity. Indeed, on an annualized basis, this figure equates to $124.3m of gross fee income.

Digital Investment Management – Pro Forma

Assuming Digital Colony Partners II reaches its hard cap of $6.0bn, the management fees for the incremental $2.0bn of FEEUM would add to the pool of collateral. Therefore, applying the same fee rate of 1.2% per year, the incremental equity from Digital Colony Partners II would produce management fees of ~$24m per year.

Balance Sheet Investments – DigitalBridge

DigitalBridge’s balance sheet offers a total of $739.1m in digital net carrying value as secured collateral for the DigitalBridge Notes. Below is a breakdown of the sources of this collateral, which are Vantage SDC and DataBank ($545.8m) and GP Co-Investments ($193.2m).

Vantage SDC and DataBank

As of Q1 2021, DigitalBridge’s net carrying value for its 13% stake in Vantage SDC and 20% interest in DataBank, which includes zColo, amounts to $545.8m.

General Partner (GP) Co-Investment

DigitalBridge’s GP co-investment in Digital Colony Partners I had a valuation of $160.3m at the end of Q1 2021. However, Wafra, an investment firm backed by Kuwait sovereign wealth funds, owns 31.5% of DigitalBridge’s investment management business. Therefore, DigitalBridge’s net carrying value for its 68.5% GP co-investment stake is $109.8m.

Finally, DigitalBridge has GP co-investments in future digital investment vehicles such as credit and liquid strategies. In aggregate, DigitalBridge valued its share of these equity interests at $83.4m as of Q1 2021.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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