DigitalBridge (formerly Colony Capital) today announced its Q2 2021 earnings and provided updates on the fundraising efforts of its Digital Colony Partners II (DCP II) private equity fund, its “buy vs. build” approach, balance sheet investments in DataBank and Vantage SDC, and its perspective on the deployment pacing of small cells and distributed antenna systems (DAS) in the United States.

Digital Colony Partners II (DCP II) – Fundraising Update – Q2 2021

Digital Colony Partners II (DCP II), the second flagship private equity fund of DigitalBridge, has reached equity capital commitments of $6.6bn, exceeding its $6.0bn target. Presently, the fund is continuing to raise capital from limited partners (LPs), given that it is below its “hard cap” of $7.8bn. Importantly, 4 of the 5 largest global infrastructure investors are now LPs within DigitalBridge’s DCP private equity funds.

Digital Colony Partners II Capital Commitments Q2 2021

Notably, of the total equity raised of $6.6bn, only $5.5bn+ (as of quarter-end) represents Fee Earning Equity Under Management (FEEUM). Indeed, this implies that $900m+ (as of quarter-end) of the equity within DigitalBridge’s Digital Colony Partners II (DCP II) is non-fee bearing.

DigitalBridge states that the fund is set for a final close prior to year-end 2021. Presently, DigitalBridge has committed $4.0bn+ to new acquisitions through Digital Colony Partners II (DCP II).

DigitalBridge’s “Buy vs. Build” Approach

DigitalBridge frames their “buy vs. build” decision for digital infrastructure by evaluating replacement cost for assets, market cycles, and the uniqueness of a platform – meaning whether it has the ability to scale rapidly. Below is DigitalBridge’s “buy vs. build” framework, which indicates that it would:

  • Buy: on an opportunistic basis, when market prices are at, near, or below a 1x replacement cost
  • Build: achieving superior build economics when market prices are above 3x replacement cost
DigitalBridge Buy vs Build Decision

Build Decision – Superior Economics

DigitalBridge views market prices as currently being at the high-end of the “buy vs. build” range, driven by aggressive private equity funds competing in auction processes. Thus, the firm presently favors building digital infrastructure assets. Recent examples where DigitalBridge is building digital infrastructure across its portfolio companies include:

  • Vertical Bridge: on-track to build 360+ tower sites in 2021
  • DataBank: Salt Lake City (SLC5) data center. DataBank highlights its build multiple on stabilized EBITDA as being below 10x. Indeed, this is well-below recent precedent M&A transaction multiples of 21.7x and take-private deals at 26x (see below)
  • Vantage Data Centers: Santa Clara (V6) data center
  • Beanfield Metroconnect: building its own fiber infrastructure

Buy Decision – Elevated Market Multiples

As a reference point, public and private digital infrastructure valuation multiples are presently elevated. Below DigitalBridge shows that recent M&A transactions have secured valuations for U.S. data centers (e.g., Blackstone / QTS) of ~26x EBITDA, Nordic data centers (e.g., Azrieli Group / Green Mountain) of ~33x NOI, and European towers (e.g., Brookfield, Alecta / Telia Towers) of ~28x EBITDA.

Additionally, below are the forward EBITDA multiples of American Tower, Crown Castle, SBA Communications, Equinix, Digital Realty, and CoreSite from 2016 to 2021.

Recent Precedent M&A Transactions

Digital Infrastructure Recent M&A Transactions

In turn, this elevated valuation dynamic improves the relative value proposition towards building digital infrastructure.

DigitalBridge Balance Sheet – Q2 2021

DigitalBridge’s Digital Operating Balance Sheet has $1.1bn of AUM comprised of minority interests in Vantage SDC (13%) and DataBank (20%). As of Q2 2021, DigitalBridge, through Vantage SDC and DataBank owned 76 data centers, with 280+ megawatts of power capacity, which were 79.5% utilized. Overall, this portfolio produces $750m of annual revenue.

In Q2 2021, these data centers secured $16.4m of annualized bookings, a 29% decrease from $23.0m, in the prior quarter. However, DigitalBridge notes that both companies currently have their largest total leasing pipelines in their respective histories.


For the first 6-months of 2021, DataBank recorded 2.5% organic growth, which was impacted by churn from zColo. However, once zColo is fully-integrated, DigitalBridge expects DataBank to have organic growth of 6% to 9% annually.

Additionally, during 2021, DataBank will require more capital for data center developments in Salt Lake City, Utah and Atlanta, Georgia.

Vantage SDC (including other Vantage entities)

For the first 6-months of 2021, Vantage SDC has achieved 6.3% organic growth, which was driven by leasing success in the Santa Clara, California market. Globally, Vantage Data Centers (North America) and Vantage Europe have 400+ megawatts of power capacity in their aggregate leasing pipeline.

In 2021, DigitalBridge intends to acquire one more data center for Vantage SDC in Santa Clara, California, through the forward contract it has in-place with Vantage Data Centers (North America).

Small Cells & DAS – Deployment Pacing Debate

DigitalBridge discussed its insight into the deployment pacing of Small Cells & DAS in the United States, a hotly debated topic following Crown Castle’s Q2 2021 earnings release. Within the Small Cells & DAS sub-sector of digital infrastructure, DigitalBridge’s portfolio companies include: ExteNet Systems, Freshwave Group, and Boingo Wireless – providing it with unique insight into the industry.

A Tale of Three Sub-Sectors

DigitalBridge views the Small Cells & DAS sub-sector as three distinct opportunities: outdoor, indoor, and C-RAN.

Outdoor (Small Cells)

Recently, outdoor has been less busy than it has historically been – but it is picking up. For example, DigitalBridge’s portfolio companies have had an increase in backlog driven by Verizon, T-Mobile, and AT&T. Importantly, DigitalBridge notes that DISH Network will not be a significant small cell customer for another 18 months (i.e., until Q1 2023).

In the United States, DigitalBridge anticipates posting organic growth of 5% to 7% for 2021. While in Europe, via Freshwave Group in the UK, DigitalBridge anticipates growing EBITDA by 20% to 30% during 2021.

DigitalBridge also points-out that, for the first 6-months of 2021, new small cell node activations in the United States were up 12%+ year-over-year.

Indoor (DAS)

The indoor opportunity involves CBRS spectrum, enterprise private 5G networks, and Wi-Fi offload. DigitalBridge is ‘bullish’ that business will pick-up in 2022 and beyond. Presently, a lot of DigitalBridge’s portfolio company activity within indoor involves upgrading 4G networks to 5G networks at venues such as stadiums and airports.

Additionally, Boingo Wireless is driving the deployment of Wi-Fi 6 networks, particularly at major airports globally (e.g., John Wayne Airport in California and São Paulo/Guarulhos International Airport in Brazil). Wi-Fi 6 networks increase bandwidth, enable more devices to connect, and lower latency. In turn, these networks provide a quicker response time when accessing online applications.

DigitalBridge anticipates that Wi-Fi 6 will be a “step-function” change in technology. Indeed, wireless carriers will increasingly use Boingo’s capabilities to securely offload cellular traffic onto its Wi-Fi networks.


DigitalBridge’s ExteNet Systems is incredibly active deploying C-RAN hubs – a point of product differentiation for the company, from its competitors. Over the past 3 years, ExteNet has built 850+ C-RAN hubs. Indeed, DigitalBridge anticipates these C-RAN hubs will become progressively more important between 2022 and 2025.

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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