DigitalBridge Group, Inc.DBRG
DigitalBridge Group, Inc. Debt Disclosure
8. Debt
The Company's debt balance is composed of the following components, excluding debt related to assets held for disposition that is expected to be assumed by the counterparty upon disposition, which is included in liabilities related to assets held for disposition (Note 21).
| (In thousands) | Securitized Financing Facility | Convertible and Exchangeable Senior Notes | Investment-Level Secured Debt | Total Debt | ||||||||||||||||||||||
| December 31, 2022 | ||||||||||||||||||||||||||
| Debt at amortized cost | ||||||||||||||||||||||||||
| Principal | $ | 300,000 | $ | 278,422 | $ | 4,634,235 | $ | 5,212,657 | ||||||||||||||||||
| Premium (discount), net | — | (1,293) | 10,713 | 9,420 | ||||||||||||||||||||||
| Deferred financing costs | (7,829) | (388) | (57,720) | (65,937) | ||||||||||||||||||||||
| $ | 292,171 | $ | 276,741 | $ | 4,587,228 | $ | 5,156,140 | |||||||||||||||||||
| December 31, 2021 | ||||||||||||||||||||||||||
| Debt at amortized cost | ||||||||||||||||||||||||||
| Principal | $ | 300,000 | $ | 338,739 | $ | 4,283,983 | $ | 4,922,722 | ||||||||||||||||||
| Premium (discount), net | — | (3,091) | 17,629 | 14,538 | ||||||||||||||||||||||
| Deferred financing costs | (8,606) | (1,384) | (66,868) | (76,858) | ||||||||||||||||||||||
| $ | 291,394 | $ | 334,264 | $ | 4,234,744 | $ | 4,860,402 | |||||||||||||||||||
The following table summarizes certain key terms of the Company's 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) | ||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recourse | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Fund Fee Revenue Notes (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 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-recourse | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment-Level Secured Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating segment | 3,640,235 | 2.43 | % | 3.1 | 993,500 | 8.41 | % | 2.6 | 4,633,735 | 3.71 | % | 3.0 | |||||||||||||||||||||||||||||||||||||||||
| Other | — | NA | NA | 500 | 5.96 | % | 1.6 | 500 | 5.96 | % | 1.6 | ||||||||||||||||||||||||||||||||||||||||||
| 3,640,235 | 994,000 | 4,634,235 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 4,218,657 | $ | 994,000 | $ | 5,212,657 | ||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recourse | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured Fund Fee Revenue Notes (3) | $ | 300,000 | 3.93 | % | 4.7 | $ | — | NA | 4.7 | $ | 300,000 | 3.93 | % | 4.7 | |||||||||||||||||||||||||||||||||||||||
Convertible and exchangeable senior notes (4) | 338,739 | 5.31 | % | 2.2 | — | NA | NA | 338,739 | 5.31 | % | 2.2 | ||||||||||||||||||||||||||||||||||||||||||
| 638,739 | — | 638,739 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-recourse | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment-Level Secured Debt | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating segment | 3,646,466 | 2.44 | % | 4.1 | 571,017 | 5.74 | % | 4.0 | 4,217,483 | 2.88 | % | 4.1 | |||||||||||||||||||||||||||||||||||||||||
| Other | — | NA | NA | 66,500 | 1.31 | % | 1.6 | 66,500 | 1.31 | % | 1.6 | ||||||||||||||||||||||||||||||||||||||||||
| 3,646,466 | 637,517 | 4,283,983 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 4,285,205 | $ | 637,517 | $ | 4,922,722 | ||||||||||||||||||||||||||||||||||||||||||||||||
__________
(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.
(4) Excludes the 5.375% exchangeable senior notes issued by NRF Holdco that were classified as held for disposition (Note 21) and subsequently assumed by the acquirer in February 2022.
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 had 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 investment management fees earned by subsidiaries of DBRG, equity interests in certain digital portfolio companies and limited partnership interests in certain digital funds managed 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 amounts 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.
Convertible and Exchangeable Senior Notes
Convertible and exchangeable senior notes (collectively, the senior notes) are composed of the following, each representing senior unsecured obligations of DigitalBridge Group, Inc. or a subsidiary as the respective 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 | ||||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issued by DigitalBridge Group, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5.00% Convertible Senior Notes | April 2013 | April 15, 2023 | 5.00 | % | $ | 63.02 | 15.8675 | 3,174 | April 22, 2020 | $ | 200,000 | $ | 200,000 | |||||||||||||||||||||||||||||||||||||||||||
| Issued by DigitalBridge Operating Company, LLC | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5.75% Exchangeable Senior Notes | July 2020 | July 15, 2025 | 5.750 | % | 9.20 | 108.6956 | 8,524 | July 21, 2023 | 78,422 | 138,739 | ||||||||||||||||||||||||||||||||||||||||||||||
| $ | 278,422 | $ | 338,739 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
__________
(1) The conversion or exchange rate 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 respective senior notes. The conversion or exchange ratios are presented in shares of common stock per $1,000 principal of each senior note.
The senior notes mature on their respective due dates, unless earlier redeemed, repurchased, converted or exchanged, as applicable. The outstanding senior notes are convertible or exchangeable at any time by holders of such notes into shares of the Company’s common stock at the applicable conversion or 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 applicable issuer thereof in whole or in part for cash at any time on or after their respective 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 applicable issuer to purchase all or part of such holder's senior notes for cash in accordance with terms of the governing documents of the respective senior notes.
Exchange of Senior Notes For Common Stock and Cash
DBRG and the OP completed separate privately negotiated exchange transactions with certain noteholders of the 5.75% exchangeable notes, as follows:
Principal of 5.75% Exchangeable Notes Exchanged | Consideration for Exchange | |||||||||||||||||||
| (In thousands) | Class A Common Stock Issued | Cash Paid | ||||||||||||||||||
| March 2022 | $ | 60,317 | 6,389 | $ | 13,887 | |||||||||||||||
| October and November 2021 | 161,261 | 18,341 | — | |||||||||||||||||
| $ | 221,578 | 24,730 | $ | 13,887 | ||||||||||||||||
The March 2022 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. Unlike the exchange transactions in 2021, the March 2022 exchanges did not qualify for debt conversion accounting and were treated as a 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.
The exchange transactions in the fourth quarter of 2021 were treated as debt conversions that resulted in a debt conversion expense of $25.1 million, recorded as interest expense, as the original exchange ratio was adjusted to account for savings on avoided future interest payments otherwise due to the noteholders. The debt conversion expense represents the shares of the Company's class A common stock issued in excess of such shares issuable pursuant to the original exchange ratio, and measured at fair value based upon the closing price of the Company's class A common stock on the date of the respective exchanges.
Investment-Level Secured Debt
These are investment level financing that are non-recourse to the Company and secured by data center portfolios held by subsidiaries in the Operating segment, and at December 31, 2021, also secured by previously warehoused loans receivable. At December 31, 2022, the subsidiaries in the Operating segment were in compliance with the financial covenants underlying their respective investment-level secured debt.
While there were no securitization activities in 2022, in 2021, however, subsidiaries in the Operating segment refinanced or raised additional debt through new securitization transactions, as follows.
In March 2021 and October 2021, DataBank raised $657.9 million and $332 million of 5-year securitized notes at blended fixed rates of 2.32% and 2.43% per annum, respectively. Proceeds from the March securitization were applied principally to refinance $514 million of outstanding debt, which meaningfully reduced DataBank's overall cost of debt and extended its debt maturities, while the October proceeds were used to repay borrowings on its credit facility and to finance future acquisitions.
In November 2021, Vantage SDC issued $530 million of 5-year securitized notes at a blended fixed rate of 2.17% per annum. Proceeds were applied to replace its current bridge financing and fund capital expenditures on the September 2021 add-on acquisition as well as to fund payments for future build-out and lease-up of expansion capacity.
Future Minimum Principal Payments
The following table summarizes future scheduled minimum principal payments of debt at December 31, 2022, excluding debt classified as held for disposition (Note 21). 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 December 31, 2022 for extensions that are at the Company's option.
| Year Ending December 31, | ||||||||||||||||||||||||||||||||||||||
| (In thousands) | 2023 | 2024 | 2025 | 2026 | 2027 | Total | ||||||||||||||||||||||||||||||||
| Secured fund fee revenue notes | $ | — | $ | — | $ | — | $ | 300,000 | $ | — | $ | 300,000 | ||||||||||||||||||||||||||
| Convertible and exchangeable senior notes | 200,000 | — | 78,422 | — | — | 278,422 | ||||||||||||||||||||||||||||||||
| Investment-level secured debt | ||||||||||||||||||||||||||||||||||||||
| Operating segment | 228,792 | 879,003 | 1,175,250 | 1,750,690 | 600,000 | 4,633,735 | ||||||||||||||||||||||||||||||||
| Other | — | 500 | — | — | — | 500 | ||||||||||||||||||||||||||||||||
| Total | $ | 428,792 | $ | 879,503 | $ | 1,253,672 | $ | 2,050,690 | $ | 600,000 | $ | 5,212,657 | ||||||||||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Feb 27, 2023 | Showing above |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 28, 2017 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.