DigitalBridge today announced its Q3 2021 earnings, with the company providing updates on its balance sheet data center investments in DataBank and Vantage SDC, fundraising progress of its Digital Colony Partners II (DCP II) private equity fund, and developments at the portfolio companies held through its investment management business.
DigitalBridge Balance Sheet – Q3 2021
DigitalBridge’s Digital Operating Balance Sheet has $1.16bn of AUM comprised of minority interests in Vantage SDC (13%) and DataBank (20%). As of Q3 2021, DigitalBridge, through Vantage SDC and DataBank owned 76 data centers, with 300+ megawatts of power capacity, which were 80.6% utilized.
Overall, this portfolio produces $773m of annual revenue (MRR). In Q3 2021, these data centers secured $16.6m of annualized bookings, a 1.2% increase from $16.4m, in the prior quarter.
DataBank
During Q3 2021 and subsequent to quarter-end, DataBank announced new data center openings and expansion projects in the following markets:
- Openings: Minneapolis, Minnesota (MSP3); Salt Lake City, Utah (SLC5)
- Expansions: Dallas-Fort Worth, Texas (DFW3); Denver, Colorado (DEN5); Salt Lake City, Utah (SLC6); Orangeburg, New York; Kansas City/Overland Park, Kansas (KC3); Ashburn, Virginia (IAD3)
Additionally, in October 2021, DataBank completed its second securitization of 2021, issuing $332m primarily A-notes at a 2.43% all-in rate.
Vantage SDC (Stabilized Data Centers)
Vantage SDC operates 13 data centers, representing 177 megawatts of power capacity. Overall, these data centers comprise 1.5 million sqft, with a portfolio utilization of ~95%.
Acquisition of CA22 (Santa Clara, California)
In October 2021, Vantage SDC acquired CA22, a 24-megawatt hyperscale data center serving the Santa Clara, California market. Specifically, Vantage SDC purchased this facility, in a $539m transaction, from Vantage Data Centers (North America), another DigitalBridge-backed company.
The CA22 facility offers 95.7k sqft (max) and currently has 71.8k sqft leased, which implies 75% utilization. As shown below, Vantage SDC also fully-owns the CA21 facility, which is adjacent to the CA22 building on the Santa Clara campus.
Finally, as Vantage Data Centers (North America) continues to develop and lease the campus, Vantage SDC could ultimately purchase the CA23 data center in the future. Notably, Vantage SDC has a forward contract in-place with Vantage Data Centers (North America) to acquire stabilized hyperscale data centers at a ~5% cap rate.
Digital Colony Partners II (DCP II) – Fundraising Update – Q3 2021
Digital Colony Partners II (DCP II), the second flagship private equity fund of DigitalBridge, has reached equity capital commitments of $8.1bn, exceeding its $6.0bn target. Presently, the fund is continuing to raise capital from limited partners (LPs), because it raised its “hard cap” to $8.6bn.
Of the total equity raised of $8.1bn, DCP II has committed 50%+ to-date, equating to $4.5bn+ of equity capital commitments. DigitalBridge has previously stated that the DCP II fund is set for a final close prior to year-end 2021.
DigitalBridge Portfolio Companies – Activity Updates – Q3 2021
Below we highlight the various portfolio company updates from DigitalBridge’s investment management business (i.e., non-balance sheet) during Q3 2021. Specifically, these DigitalBridge portfolio companies are held through Digital Colony Partners I, Digital Colony Partners II, separately capitalized vehicles (legacy Digital Bridge Holdings), and co-investments.
Towers
Vertical Bridge
Vertical Bridge owns and master leases 8.0k+ towers across the United States, making it the fourth largest independent tower company in the country. In October 2021, Digital Colony Partners II (DCP II) closed it acquisition of a controlling stake in Vertical Bridge.
As part of the transaction, DCP II provided an equity commitment of up to $650m. Additionally, DigitalBridge notes a net increase of ~$2bn to its AUM as a result of the Vertical Bridge acquisition – highlighting a much larger total equity commitment to the company. Indeed, a significant portion of the equity funding for the Vertical Bridge acquisition was syndicated to select DigitalBridge LPs.
EdgePoint Infrastructure
EdgePoint Infrastructure owns a portfolio of 10.0k+ tower and DAS sites across Indonesia and Malaysia. DigitalBridge’s DCP II and Abu Dhabi Investment Authority (ADIA), a sovereign wealth fund, own EdgePoint Infrastructure.
During Q3 2021, EdgePoint Infrastructure advanced its take-private of Centratama in Indonesia and was positioning itself to acquire U Mobile’s 1.6k towers in Malaysia.
Data Centers
Vantage Data Centers
Vantage Data Centers operates or is constructing facilities in 18 markets and 5 continents (pro forma for pending acquisitions). DigitalBridge is Vantage’s lead investor through its legacy Digital Bridge Holdings vehicles, alongside significant co-investor capital. During Q3 2021, Vantage Data Centers entered two new regions, namely Asia-Pacific and Africa, as detailed below:
Asia-Pacific
Vantage Data Centers entered into five markets in the Asia-Pacific region through two acquisitions: i) Agile Data Centers (AgileDC) and ii) PCCW Ltd’s data center business. Specifically, Vantage Data Centers is gaining 268 megawatts of potential critical IT load in five markets including Tokyo, Japan; Osaka, Japan; Melbourne, Australia; Hong Kong, SAR; and Kuala Lumpur, Malaysia.
Africa
Vantage Data Centers entered into Africa by beginning construction of a $1bn+, 80-megawatt campus, known as JNB1, at Attacq’s Waterfall City in Johannesburg, South Africa.
AtlasEdge Data Centres
AtlasEdge’s data center portfolio comprises 100+ carrier-neutral colocation facilities across 11 European countries. Particularly, these countries are Belgium, Denmark, France, Germany, Ireland, Italy, the Netherlands, Poland, Spain, Switzerland, and the United Kingdom.
Formation
In September 2021, Liberty Global contributed technical real estate / colocation facilities to form a 50%/50% joint venture with DigitalBridge’s DCP II. As part of the transaction, Liberty Global received cash of $130.0m and recognized a gain of $213.7m for contributing the assets. As of September 30, 2021, Liberty Global valued its 50% equity interest in the business at $119.7m. Subsequently, Digital Realty became a minority equity investor in AtlasEdge Data Centres.
Bolt-On Acquisition
In November 2021, AtlasEdge closed the acquisition of 12 colocation data centers in Europe from Colt Data Centre Services (DCS). Through this bolt-on transaction, AtlasEdge is gaining facilities which comprise 53.6 MVA of power capacity across 239k sqft (22.2k sqm) of space.
Scala Data Centers
Scala Data Centers, a hyperscale data center developer and operator in Brazil, outlined its plan to bring its portfolio up to 650+ megawatts of power capacity by 2023. This plan includes further projects in Brazil, particularly São Paulo, as well as campuses in Querétaro, Mexico; Santiago, Chile; and Bogotá, Colombia.
Scala Data Centers is owned by DigitalBridge’s Digital Colony Partners I private equity fund.
Fiber / Other
Superloop – Hong Kong and Singapore Fiber
In October 2021, DigitalBridge’s DCP II alongside Columbia Capital, agreed to acquire Superloop’s Hong Kong fiber operations and select Singapore fiber assets for ~$104m USD. Superloop’s Hong Kong fiber assets comprise 158 miles (255 kilometers) of fiber, connecting to 34 buildings. While the company’s Singapore fiber assets comprise 161 miles (259 kilometers) of fiber, connecting to 69 buildings.
Landmark Dividend
Landmark Dividend currently manages over 5.0k digital infrastructure assets including tower ground leases, data centers, outdoor advertising, and renewable power generation. DCP II owns 100% of Landmark Dividend.
In October 2021, DigitalBridge’s Landmark Dividend acquired a portfolio of assets comprising 1.2 million sqft of data center space, within the Quantum Park campus in Ashburn, Virginia.
Landmark Infrastructure Partners
Landmark Infrastructure Partners (NASDAQ: LMRK) is the owner of the digital infrastructure that Landmark Dividend manages. Notably, DCP II has amassed a 19.9% stake in Landmark Infrastructure. Furthermore, DigitalBridge’s DCP II is seeking to acquire the remainder of Landmark Infrastructure for $16.50 per common unit. A vote to approve DigitalBridge’s proposal is scheduled to take place at a unitholder meeting on December 9, 2021.
