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Acquisitions | 6 Months Ended
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Jun. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | 3. Acquisitions Business Combination InfraBridge In February 2023, the Company acquired the global infrastructure equity investment management business of AMP Capital Investors International Holdings Limited, which was rebranded as InfraBridge at closing. Consideration for the acquisition consisted of $314.3 million cash consideration (net of cash assumed), subject to customary post-closing working capital adjustments, plus a contingent amount based upon achievement of future fundraising targets for InfraBridge's new global infrastructure funds. The estimated fair value of the contingent consideration is subject to remeasurement each reporting period, as discussed in Note 11. The following table summarizes the total consideration and allocation to assets acquired and liabilities assumed. The initial cash consideration was determined, in part, based upon estimated net working capital of the acquired entities at closing. The purchase price allocation is provisional and will be finalized through the one year measurement period. In the second quarter of 2023, certain adjustments were identified that affected the provisional accounting, as presented below. These were adjustments to net working capital and to the value of acquired interest in an InfraBridge fund based upon a revised net asset value ("NAV") of the fund, applying new information about facts and circumstances that existed at the time of acquisition.
(In thousands) |  | As Reported At March 31, 2023 |  | Measurement Period Adjustments |  | As Revised At June 30, 2023
Consideration |  |  |  |  |  |
Cash |  | $ | 364,338 |  |  | $ | 1,102 |  |  | $ | 365,440 |
Estimated fair value of contingent consideration |  | 10,874 |  |  | — |  |  | 10,874 |
|  | $ | 375,212 |  |  |  |  | $ | 376,314 |
Assets acquired and liabilities assumed |  |  |  |  |  |
Cash |  | 51,174 |  |  | — |  |  | 51,174 |
Principal investments |  | 130,810 |  |  | (12,400) |  |  | 118,410 |
Intangible assets |  | 50,800 |  |  | — |  |  | 50,800 |
Other assets |  | 27,682 |  |  | 8,517 |  |  | 36,199 |
Deferred tax liabilities |  | (10,198) |  |  | — |  |  | (10,198) |
Other liabilities |  | (21,625) |  |  | (10,190) |  |  | (31,815) |
Fair value of net assets acquired |  | 228,643 |  |  |  |  | 214,570 |
Goodwill |  | 146,569 |  |  | 15,175 |  |  | 161,744 |
|  | $ | 375,212 |  |  |  |  | $ | 376,314 |
•Principal investments represent acquired interests in InfraBridge funds, valued at their most recent NAV at closing. •The investment management intangible assets of InfraBridge were composed of the following: •Management contracts are valued based upon estimated net cash flows expected to be generated from the contracts, with remaining term of the contracts ranging between 1 and 4 years, discounted at 8.0%. •Investor relationships represent the fair value of potential investment management fees, net of operating costs, to be generated from repeat InfraBridge investors in future sponsored vehicles, with a weighted average estimated useful life of 12 years, discounted at 14.0%. •Deferred tax liabilities were recognized for the book-to-tax basis difference of identifiable intangible assets acquired, net of deferred tax asset assumed. •Other assets acquired and liabilities assumed include management fee receivable and compensation payable associated with the pre-acquisition period, amounts due to InfraBridge funds and receivable from seller. •Goodwill is the value of the business acquired that is not already captured in identifiable assets, largely represented by the synergies from combining the capital raising resources of DBRG and the mid-market infrastructure specialization of the InfraBridge team. Asset Acquisitions DataBank Acquisitions by DataBank were as follows: 2023 •A building in Dallas, Texas in May 2023, for purchase price of $151.0 million, funded by a combination of $121.0 million of debt and $40.8 million of equity, of which the Company's share was $8.2 million. In addition to the purchase price, the capital called was used to fund transaction costs, financing costs, and as working capital. A substantial portion of the acquired building was previously leased by DataBank as a co-location data center and corporate office. Upon termination of the DataBank lease concurrent with the acquisition, the associated ROU asset and lease liability were derecognized. 2022 •Four colocation data centers in Houston, Texas in March 2022 for $678 million, funded by a combination of $262.5 million of debt and $415.5 million of equity, of which the Company's share was $88.7 million. •A data center each in Atlanta, Georgia in May 2022 for $10.9 million, and in Denver, Colorado in February 2022 that was previously leased by its zColo subsidiary for $17.6 million. Vantage SDC Hyperscale Data Centers In connection with the Company's acquisition of Vantage SDC in July 2020 and an additional data center in September 2021, the Company and its co-investors committed to acquire the future build-out of expansion capacity, along with lease-up of the expanded capacity and existing inventory, the costs of which are borne by the previous owners of Vantage SDC. As of June 30, 2023, the remaining consideration for the incremental lease-up acquisitions is estimated to be approximately $185 million, of which $122 million is due by September 2024. Most, if not all, of the cost of the expansion capacity has been or is expected to be funded by Vantage SDC from borrowings under its credit facilities and/or cash from operations. Pursuant to this arrangement, Vantage SDC had 15 new tenant leases related to a portion of the expansion capacity that commenced during 2022, respectively, for aggregate consideration of $161.3 million. All of these payments were made to the previous owners of Vantage SDC and are treated as asset acquisitions. There were no new tenant leases that commenced in 2023. Tower Assets In June 2022, the Company acquired the mobile telecommunications tower business (“TowerCo”) of Telenet Group Holding NV (Euronext Brussels: TNET) for €740.1 million or $791.3 million (including transaction costs). In December 2022, our interest in the temporarily warehoused TowerCo investment was transferred to the Company's new core equity fund and TowerCo was deconsolidated. The TowerCo assets acquired had included owned tower sites, tower sites subject to third party leases that gave rise to right-of-use lease assets and corresponding lease liabilities, equipment, as well as customer relationships related primarily to a master lease agreement with Telenet as lessee. The acquisition had been funded through $326.1 million of debt, $278.1 million of equity from the Company, and $213.8 million in third party equity. In addition to the purchase price, the funds had been used to finance transaction costs, debt issuance costs, working capital and as operating cash. Prior to transfer, TowerCo was presented within Corporate and Other. The following table summarizes the allocation of cash consideration to assets acquired, which includes capitalized transaction costs.
|  |  |  | 2023 |  | 2022 |  |  |  |  |  |  |  |  |  |
(In thousands) |  |  |  | Acquisition by DataBank |  |  |  | TowerCo |  | Acquisitions by DataBank |  | Vantage SDC Expansion Capacity |  |  |  |  |  |  |  |  |  |
Purchase price allocation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate |  |  |  | $ | 153,944 |  |  |  |  | $ | 363,121 |  |  | $ | 627,474 |  |  | $ | 140,140 |  |  |  |  |  |  |  |  |  |  |
Intangible assets |  |  |  | 1,993 |  |  |  |  | 673,218 |  |  | 77,885 |  |  | 21,162 |  |  |  |  |  |  |  |  |  |  |
ROU and other assets |  |  |  | — |  |  |  |  | 234,462 |  |  | 3,994 |  |  | — |  |  |  |  |  |  |  |  |  |  |
Deferred tax liabilities |  |  |  | — |  |  |  |  | (243,223) |  |  | — |  |  | — |  |  |  |  |  |  |  |  |  |  |
Intangible, lease and other liabilities |  |  |  | (1,334) |  |  |  |  | (236,324) |  |  | (2,839) |  |  | — |  |  |  |  |  |  |  |  |  |  |
|  |  |  | $ | 154,603 |  |  |  |  | $ | 791,254 |  |  | $ | 706,514 |  |  | $ | 161,302 |  |  |  |  |  |  |  |  |  |  |
•Real estate was valued based upon (i) current replacement cost for buildings (in an as-vacant state) and improvements, estimated using construction cost guidelines, or the income approach for a substantially leased building by discounting estimated future net operating income with terminal value determined using a terminal capitalization rate of 6.5% and applying a discount rate of 7.25%; (ii) current replacement cost for data center infrastructure by applying an estimated cost per kilowatt based upon current capacity of each location and also considering the associated indirect costs such as design, engineering, construction and installation; (iii) current replacement cost for towers in consideration of their remaining economic life; and (iv) recent comparable sales or current listings for land. Useful lives of real estate acquired range from 35 to 55 years for buildings and improvements, 1 to 15 years for site improvements, 1 to 4 years for tenant improvements, 11 to 71 years for towers and related equipment, and 11 to 30 years for data center infrastructure. •Lease-related intangibles for real estate acquisitions were composed of the following: •In-place leases reflect the value of rental income forgone if the properties had been acquired vacant, and the leasing commissions, legal and marketing costs that would have been incurred to lease up the properties, discounted at rates between 4.75% and 7.25%, with remaining lease terms ranging between 1 and 15 years. •Above- and below-market leases represent the rent differential for the remaining lease term between contractual rents of acquired leases and market rents at the time of acquisition, discounted at rates between 6.0% and 11.25% with remaining lease terms ranging between 1 and 4 years. •Tenant relationships represent the estimated net cash flows attributable to the likelihood of lease renewal by an existing tenant relative to the cost of obtaining a new lease, taking into consideration the estimated time it would require to execute a new lease or backfill a vacant space, discounted at rates between 4.75% and 11.25%, with estimated useful lives between 5 and 15 years. •Customer service contracts were valued based upon estimated net cash flows generated from the zColo customer service contracts that would have been forgone if such contracts were not in place, taking into consideration the time it would require to execute a new contract, with remaining term of the contracts ranging between 1 and 6 years. •Customer relationships for towers were valued as the estimated future cash flows to be generated over the life of the tenant relationships based upon rental rates, operating costs, expected renewal terms and attrition, discounted at 6.8%, with estimated useful lives between 19 and 45 years. •Deferred tax liabilities were recognized for the book-to-tax basis differences associated with the acquisition of TowerCo. •Other assets acquired and liabilities assumed include primarily lease ROU assets associated with leasehold ground space hosting tower communication sites, along with corresponding lease liabilities. Lease liabilities were measured based upon the present value of future lease payments over the lease term, discounted at the incremental borrowing rate of the respective acquiree entities.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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