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Debt | 6 Months Ended
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Jun. 30, 2023
Debt Disclosure [Abstract] |
Debt | 8. Debt Corporate Debt—This is composed of a securitized financing facility and senior notes issued by DigitalBridge Group, Inc. or its OP subsidiary and are recourse to the Company, as discussed further below. Corporate debt is presented within Corporate and Other, except that a portion of the securitized financing facility is allocated to the Investment Management and Operating segments consistent with the cash flows that service the debt and the underlying collateral that resides across the Company's various lines of business.
|  | June 30, 2023 |  | December 31, 2022
(In thousands) | Investment Management |  | Operating |  | Corporate and Other |  | Total |  | Investment Management |  | Operating |  | Corporate and Other |  | Total
Corporate debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securitized financing facility |  | $ | 199,389 |  |  | $ | 70,372 |  |  | $ | 23,458 |  |  | $ | 293,219 |  |  | $ | 198,677 |  |  | $ | 70,120 |  |  | $ | 23,374 |  |  | $ | 292,171 |
Convertible and exchangeable senior notes |  | — |  |  | — |  |  | 77,242 |  |  | 77,242 |  |  | — |  |  | — |  |  | 276,741 |  |  | 276,741 |
|  | $ | 199,389 |  |  | $ | 70,372 |  |  | $ | 100,700 |  |  | $ | 370,461 |  |  | $ | 198,677 |  |  | $ | 70,120 |  |  | $ | 300,115 |  |  | $ | 568,912 |
Investment-level Debt—This represents non-recourse debt, including: (i) investment level financing in the Operating segment, and (ii) debt within consolidated funds and debt on warehoused investments, if any, in Corporate and Other. The components that make up the carrying value of corporate and investment-level debt are as follows.
|  | Corporate Debt |  |
(In thousands) |  | Securitized Financing Facility |  | Convertible and Exchangeable Senior Notes |  | Total |  | Non-Recourse Investment-Level Debt
June 30, 2023 |  |  |  |  |  |  |  |
Debt at amortized cost |  |  |  |  |  |  |  |
Principal |  | $ | 300,000 |  |  | $ | 78,422 |  |  | $ | 378,422 |  |  | $ | 5,149,000 |
Premium (discount), net |  | — |  |  | (1,055) |  |  | (1,055) |  |  | (49,020) |
Deferred financing costs |  | (6,781) |  |  | (125) |  |  | (6,906) |  |  | (74,135) |
|  | $ | 293,219 |  |  | $ | 77,242 |  |  | $ | 370,461 |  |  | $ | 5,025,845 |
December 31, 2022 |  |  |  |  |  |  |  |
Debt at amortized cost |  |  |  |  |  |  |  |
Principal |  | $ | 300,000 |  |  | $ | 278,422 |  |  | $ | 578,422 |  |  | $ | 4,634,235 |
Premium (discount), net |  | — |  |  | (1,293) |  |  | (1,293) |  |  | 10,713 |
Deferred financing costs |  | (7,829) |  |  | (388) |  |  | (8,217) |  |  | (57,720) |
|  | $ | 292,171 |  |  | $ | 276,741 |  |  | $ | 568,912 |  |  | $ | 4,587,228 |
The following table summarizes certain key terms of corporate and investment-level debt.
| Fixed Rate |  | Variable Rate |  | Total
($ in thousands) | Outstanding Principal |  | Weighted Average Interest Rate (Per Annum)(1) |  | Weighted Average Years Remaining to Maturity(2) |  | Outstanding Principal |  | Weighted Average Interest Rate (Per Annum)(1) |  | Weighted Average Years Remaining to Maturity(2) |  | Outstanding Principal |  | Weighted Average Interest Rate (Per Annum)(1) |  | Weighted Average Years Remaining to Maturity(2)
June 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recourse |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securitized financing facility(3) | $ | 300,000 |  |  | 3.93 | % |  | 3.2 |  | $ | — |  |  | NA |  | 3.2 |  | $ | 300,000 |  |  | 3.93 | % |  | 3.2
Exchangeable senior notes | 78,422 |  |  | 5.75 | % |  | 2.0 |  | — |  |  | NA |  | NA |  | 78,422 |  |  | 5.75 | % |  | 2.0
| $ | 378,422 |  |  |  |  |  |  | $ | — |  |  |  |  |  |  | $ | 378,422 |  |  |  |  |
Investment-Level Secured Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-recourse |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating segment | $ | 4,628,433 |  |  | 3.25 | % |  | 3.2 |  | $ | 494,767 |  |  | 8.68 | % |  | 2.6 |  | $ | 5,123,200 |  |  | 3.77 | % |  | 3.2
Corporate and Other—Consolidated fund | — |  |  | NA |  | NA |  | 25,800 |  |  | 6.23 | % |  | 1.1 |  | 25,800 |  |  | 6.23 | % |  | 1.1
| $ | 4,628,433 |  |  |  |  |  |  | $ | 520,567 |  |  |  |  |  |  | $ | 5,149,000 |  |  |  |  |
| Fixed Rate |  | Variable Rate |  | Total
($ in thousands) | Outstanding Principal |  | Weighted Average Interest Rate (Per Annum)(1) |  | Weighted Average Years Remaining to Maturity(2) |  | Outstanding Principal |  | Weighted Average Interest Rate (Per Annum)(1) |  | Weighted Average Years Remaining to Maturity(2) |  | Outstanding Principal |  | Weighted Average Interest Rate (Per Annum)(1) |  | Weighted Average Years Remaining to Maturity(2)
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Recourse |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securitized financing facility(3) | $ | 300,000 |  |  | 3.93 | % |  | 3.7 |  | $ | — |  |  | NA |  | 3.7 |  | $ | 300,000 |  |  | 3.93 | % |  | 3.7
Convertible and exchangeable senior notes | 278,422 |  |  | 5.21 | % |  | 0.9 |  | — |  |  | NA |  | NA |  | 278,422 |  |  | 5.21 | % |  | 0.9
| $ | 578,422 |  |  |  |  |  |  | $ | — |  |  |  |  |  |  | $ | 578,422 |  |  |  |  |
Investment-Level Secured Debt |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Non-recourse |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating segment | $ | 3,640,235 |  |  | 2.43 | % |  | 3.1 |  | $ | 993,500 |  |  | 8.41 | % |  | 2.6 |  | $ | 4,633,735 |  |  | 3.71 | % |  | 3.0
Corporate and Other—Consolidated fund | — |  |  | NA |  | NA |  | 500 |  |  | 5.96 | % |  | 1.6 |  | 500 |  |  | 5.96 | % |  | 1.6
| $ | 3,640,235 |  |  |  |  |  |  | $ | 994,000 |  |  |  |  |  |  | $ | 4,634,235 |  |  |  |  |
__________ (1) Calculated based upon outstanding debt principal at balance sheet date. For variable rate debt, weighted average interest rate is calculated based upon the applicable index plus spread at balance sheet date. (2) Calculated based upon anticipated repayment dates for notes issued under securitization financing; otherwise based upon initial maturity dates, or extended maturity dates if extension criteria are met for extensions that are at the Company's option. (3) Represent obligations of special-purpose subsidiaries of the OP as co-issuers and certain other special-purpose subsidiaries of DBRG, and secured by assets of these special-purpose subsidiaries, as further described below. DBRG and the OP are not guarantors to the debt. Corporate Debt—Securitized Financing Facility In July 2021, special-purpose subsidiaries of the OP (the "Co-Issuers") issued Series 2021-1 Secured Fund Fee Revenue Notes, composed of: (i) $300 million aggregate principal amount of 3.933% Secured Fund Fee Revenue Notes, Series 2021-1, Class A-2 (the “Class A-2 Notes”); and (ii) up to $300 million (following a $100 million increase in April 2022) Secured Fund Fee Revenue Variable Funding Notes, Series 2021-1, Class A-1 (the “VFN” and, together with the Class A-2 Notes, the “Series 2021-1 Notes”). The VFN allow the Co-Issuers to borrow on a revolving basis. The Series 2021-1 Notes were issued under an Indenture dated July 2021, as amended in April 2022, that allows the Co-Issuers to issue additional series of notes in the future, subject to certain conditions. The Series 2021-1 Notes replaced the Company's previous corporate credit facility. The Series 2021-1 Notes represent obligations of the Co-Issuers and certain other special-purpose subsidiaries of DBRG, and neither DBRG, the OP nor any of its other subsidiaries are liable for the obligations of the Co-Issuers. The Series 2021-1 Notes are secured by net investment management fees earned by subsidiaries of DBRG, equity interests in portfolio companies in the Operating segment and limited partnership interests in certain sponsored funds held by subsidiaries of DBRG, as collateral. The Class A-2 Notes bear interest at a rate of 3.933% per annum, payable quarterly. The VFN bear interest generally based upon 1-month Adjusted Term Secured Overnight Financing Rate or SOFR (prior to April 2022, 3-month LIBOR) or an alternate benchmark as set forth in the purchase agreement of the VFN plus 3%. Unused capacity under the VFN facility is subject to a commitment fee of 0.5% per annum. The final maturity date of the Class A-2 Notes is in September 2051, with an anticipated repayment date in September 2026. The anticipated repayment date of the VFN is in September 2024, subject to two one-year extensions at the option of the Co-Issuers. If the Series 2021-1 Notes are not repaid or refinanced prior to their anticipated repayment date, or such date is not extended for the VFN, interest will accrue at a higher rate and the Series 2021-1 Notes will begin to amortize quarterly. The Series 2021-1 Notes may be optionally prepaid, in whole or in part, prior to their anticipated repayment dates. There is no prepayment penalty on the VFN. However, prepayment of the Class A-2 Notes will be subject to additional consideration based upon the difference between the present value of future payments of principal and interest and the outstanding principal of such Class A-2 Note that is being prepaid; or 1% of the outstanding principal of such Class A-2 Note that is being prepaid in connection with a disposition of collateral. The Indenture of the Series 2021-1 Notes contains various covenants, including financial covenants that require the maintenance of minimum thresholds for debt service coverage ratio and maximum loan-to-value ratio, as defined. As of the date of this filing, the Co-Issuers are in compliance with all of the financial covenants, and the full $300 million under the VFN is available to be drawn. Corporate Debt—Convertible and Exchangeable Senior Notes Convertible and exchangeable senior notes (collectively, the senior notes) are composed of the following, representing senior unsecured obligations of DigitalBridge Group, Inc. or the OP as issuers of the senior notes:
Description |  | Issuance Date |  | Due Date |  | Interest Rate (per annum) |  | Conversion or Exchange Price (per share of common stock) |  | Conversion or Exchange Ratio (in shares)(1) |  | Conversion or Exchange Shares (in thousands) |  | Earliest Redemption Date |  | Outstanding Principal
|  |  |  |  |  |  |  | June 30, 2023 |  | December 31, 2022
Issued by DigitalBridge Group, Inc. |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
5.00% Convertible Senior Notes (2) |  | April 2013 |  | April 15, 2023 |  | 5.00 | % |  | $ | 63.02 |  |  | 15.8675 |  |  | 3,174 |  |  | April 22, 2020 |  | $ | — |  |  | $ | 200,000 |
Issued by DigitalBridge Operating Company, LLC |  |  |  |  |  |  |  |  |  |  |  |  |  |
5.75% Exchangeable Senior Notes |  | July 2020 |  | July 15, 2025 |  | 5.75 | % |  | 9.20 |  |  | 108.6956 |  |  | 8,524 |  |  | July 21, 2023 |  | 78,422 |  |  | 78,422 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 78,422 |  |  | $ | 278,422 |
__________ (1) The conversion or exchange ratio for the senior notes is subject to periodic adjustments to reflect certain carried-forward adjustments relating to common stock splits, reverse stock splits, common stock adjustments in connection with spin-offs and cumulative cash dividends paid on the Company's common stock since the issuances of the senior notes. The ratios are presented in shares of common stock per $1,000 principal of each senior note. (2) Fully repaid in April 2023. The senior notes mature on their due dates, unless earlier redeemed, repurchased, or exchanged. The outstanding senior notes are exchangeable at any time by holders of such notes into shares of the Company’s common stock at the applicable exchange rate, which is subject to adjustment upon occurrence of certain events. To the extent certain trading conditions of the Company’s common stock are met, the senior notes are redeemable by the issuer in whole or in part for cash at any time on or after their earliest redemption dates at a redemption price equal to 100% of the principal amount of such senior notes being redeemed, plus accrued and unpaid interest (if any) up to, but excluding, the redemption date. In the event of certain change in control transactions, holders of the senior notes have the right to require the issuer to purchase all or part of such holder's senior notes for cash in accordance with terms of the governing documents of the senior notes. Exchange of Senior Notes For Common Stock and Cash There were no exchange transactions in 2023. In March 2022, DBRG and the OP completed separate privately negotiated exchange transactions with certain noteholders of the 5.75% exchangeable notes. The Company exchanged in aggregate $60.3 million of outstanding principal of the 5.75% exchangeable notes into 6,389,366 shares of the Company's class A common stock and paid $13.9 million of cash. The exchanges resulted in a debt extinguishment loss of $133.2 million, calculated as the excess of consideration paid over the carrying value of the notes exchanged, and recorded in other loss on the consolidated statement of operations. Consideration was measured at fair value based upon the closing price of the Company's class A common stock on the date of the respective exchanges, and cash paid, net of transaction costs. The exchanges did not qualify as debt conversion and were treated as debt extinguishment as the Company issued less than the number of shares issuable under the stated exchange ratio of 108.696 shares per $1,000 of note principal exchanged. Non-Recourse Investment-Level Secured Debt These are investment level financing that are non-recourse to DBRG and are primarily secured by data center portfolios held by subsidiaries in the Operating segment. At June 30, 2023, subsidiaries in the Operating segment were in compliance with the financial covenants underlying their respective investment-level secured debt. In 2023, subsidiaries in the Operating segment refinanced or raised additional debt, primarily through new securitization transactions, as follows. There were no securitization activities in 2022. In February 2023, DataBank issued $715 million of securitized notes at fixed rate coupon of 5.12% per annum (7.07% per annum effective rate as the notes were issued at a discount) with a 5-year anticipated repayment date. Separately, DataBank secured a $350 million credit facility that may be drawn over time and obtained $121.0 million financing for a data center acquisition (Note 3). Proceeds were also applied principally to refinance the data center assets of its zColo subsidiary and to repay the outstanding balance of its variable funding notes. In March 2023, Vantage SDC issued $370 million of securitized notes at a fixed rate coupon of 6.32% per annum with a 5-year anticipated repayment date. Proceeds were applied principally to repay previously issued securitized notes which had an anticipated repayment date in November 2023 and the outstanding balance of its variable funding notes. These refinancing transactions resulted in a net loss from debt extinguishment totaling $12.0 million, representing prepayment penalty and accelerated amortization of deferred financing costs, debt discount and premium, recorded in interest expense Future Minimum Principal Payments The following table summarizes future scheduled minimum principal payments of debt at June 30, 2023. Future debt principal payments are presented based upon anticipated repayment dates for notes issued under securitization financing, or based upon initial maturity dates or extended maturity dates if extension criteria are met at June 30, 2023 for extensions that are at the option of the respective borrower entities.
(In thousands) |  | Remaining 2023 |  | 2024 |  | 2025 |  | 2026 |  | 2027 |  | 2028 and thereafter |  | Total
Corporate debt |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securitized financing facility |  | $ | — |  | $ | — |  | $ | — |  | $ | 300,000 |  | $ | — |  | $ | — |  | $ | 300,000
Exchangeable senior notes |  | — |  | — |  | 78,422 |  | — |  | — |  | — |  | 78,422
|  | $ | — |  | $ | — |  | $ | 78,422 |  | $ | 300,000 |  | $ | — |  | $ | — |  | $ | 378,422
Non-recourse investment-level secured debt
Operating segment |  | $ | 1,990 |  | $ | 863,253 |  | $ | 708,476 |  | $ | 1,530,990 |  | $ | 619,776 |  | $ | 1,398,715 |  | $ | 5,123,200
Corporate and Other—Consolidated fund |  | — |  | 25,800 |  | — |  | — |  | — |  | — |  | 25,800
|  | $ | 1,990 |  | $ | 889,053 |  | $ | 708,476 |  | $ | 1,530,990 |  | $ | 619,776 |  | $ | 1,398,715 |  | $ | 5,149,000

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