DigitalBridge Group, Inc. (NYSE:DBRG) Q3 2023 Earnings Call Transcript

DigitalBridge Group, Inc. (NYSE:DBRG) Q3 2023 Earnings Call Transcript November 1, 2023

DigitalBridge Group, Inc. beats earnings expectations. Reported EPS is $1.39, expectations were $0.11.

Operator: Greetings, and welcome to the DigitalBridge Group Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Severin White. Please go ahead.

Severin White: Good morning, everyone, and welcome to DigitalBridge’s third quarter 2023 earnings conference call. Speaking on the call today from the Company is Marc Ganzi, our CEO; and Jacky Wu, our CFO. I’ll quickly cover the safe harbor, and then we can get started. Some of the statements that we make today regarding our business operations and financial performance may be considered forward-looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. All information discussed on the call is as of today, November 1, 2023, and DigitalBridge does not intend and undertakes no duty to update it for future events or circumstances. For more information, please refer to the risk factors discussed in our most recent Form 10-K filed with the SEC for the year ending December 31, 2022, and our Form 10-Q to be filed with the SEC for the quarter ending September 30, 2023.

Great. Let’s get started with Marc providing an update on our key objectives for 2023. Jacky will outline our financial results and turn it back over to Marc to talk about the opportunities we are capitalizing on DigitalBridge Credit. With that, I’ll turn the call over to Marc Ganzi, our CEO. Marc?

Marc Ganzi: Thanks, Severin. I’m pleased to share our results for 3Q 2023 as we posted some very strong financial performance that was a function of both the steady progress we’ve made building a predictable fee income earning stream and the one-time benefits we realized from our simplification initiatives. So first, let’s start by covering our top 3 priorities for 2023, beginning with fundraising. In Q3 we generated strong year-over-year growth in our investment management platform, with fee income up 57% and segment level FRE up 36%, both slightly higher than last quarter’s already strong growth, powered by higher FEEUM from core, credit and co-investment along with our second full quarter of contribution from InfraBridge.

New capital formation came in at 2 billion with our flagship DigitalBridge Partners Series leading the way and the balance from new strategies including credit, which I’ll cover in Section 3 today. LP interest in digital infrastructure is robust. On the back of AI-driven demand, I’m pleased to confirm we are on track to achieve our fundraising goals for the year. On the simplification front, we completed the DataBank recap in September, which resulted in another $50 million back to you, DigitalBridge shareholders, bringing our total proceeds to $471 million and generating a 32% internal rate of return to DigitalBridge shareholders. Our balance sheet also got a lot simpler, with $2.3 billion of debt deconsolidated in connection with the DataBank closing as we brought our ownership in that asset under 10%.

We’re also advancing our simplification objective by rolling out additional disclosures on fund performance, consistent with our alternative asset management peers. Investors have consistently asked for this and we’re delivering. On that point, portfolio performance, our third key priority. We demonstrated strong results, particularly in the datacenter vertical with monthly recurring revenue up 20% and the other three verticals all delivering mid to high single-digit growth. Let’s detail fundraising and our simplification progress before we get into the financials. Next slide please. On new capital formation, I’m pleased to report we raised $2 billion since last quarter’s earnings, bringing us to a total of $5.4 billion year-to-date. The majority of that, around $1 billion came from continuing commitments to our flagship DigitalBridge Partner Series, which will start generating fee income today, triggered by the strategy’s first closing.

We’ve also completed additional co-invest indications and brought in more capital in our liquid and credit strategies during Q3. We believe this progress puts us on track to hit our fundraising targets as we come into the fourth quarter, which has been seasonally very strong for us given our fundraising cadence. Look, it’s been a tough year for capital formation. It’s been one of the toughest that I can remember, but the key here is perseverance, perseverance of the team and persistent interest in datacenter infrastructure, spurred by advances in generative AI has put us in a good position to deliver on our goals. Again, I want to reaffirm our guidance and our belief that we’ll hit our fundraising goals for 2023. Next page please. So, as you can see here, we continue to generate solid year-over-year growth in both FEEUM and AUM.

We ended last quarter with about $30 billion in FEEUM, up almost $10 billion over the prior year. That’s 46% annual growth driven by equal measures of organic capital formation and contribution from the InfraBridge acquisition we closed earlier this year. On the right, assets under management which tracks the NAV of the assets that we manage, was up to $75 billion last quarter, again 48% higher over the prior year. Next slide please. So, on the simplification front, it’s quite simple. We deconsolidated DataBank. I can’t tell you how thrilled I am to use the past tense here, for a couple of reasons. One, the recap was a huge success for DigitalBridge. We doubled our money in only a few years, generating a 32% IRR for DigitalBridge shareholders.

Just this last quarter, we added another $50 million in proceeds, including $28 million in carried interest, bringing the total monetized value to DigitalBridge to $471 million. This was a smart use of our balance sheet. And look, we’re retaining a stake in the business. The stake is worth $434 million at the price we just transacted. DataBank as most of you know is experiencing explosive strong growth led by edge AI leasing. So, we’re excited to be retaining a meaningful stake in the business. We don’t anticipate any additional sell down here in the near-term as we’re excited about the future prospects. We’re delighted to continue to support Raul and the DataBank team. The other reason I’m pleased to finalize the process is the closing resulted in the deconsolidation of DataBank from our financial statements, most notably, the transformation of our balance sheet.

As of September 14, 2023, $2.3 billion of consolidated debt comes off the books, a reduction of 42%. While most of this debt at share was not really attributable to DigitalBridge, it did create a lot of unnecessary complexity for investors that were new to evaluating our business. So, it’s a big milestone in our drive to simplify the DigitalBridge story. One to go, Vantage SDC is next and I remain confident the next time we report earnings there’ll be some more good news, if not sooner. Next slide please. As we complete our transition to a pure play alternative asset manager, a second facet of our simplification initiative has been to improve and amplify our financial reporting. This quarter, I’m pleased to announce we’re introducing fund performance metrics into our quarterly 10-K and Q reporting, further aligning with our peer set.

This has probably been the most requested dataset in recent quarters. So, we’re pleased to provide shareholders with insight into the performance of our platforms. A couple of important notes here. First, these include solely the commingled funds we’ve managed for over 1 year. So, our core and credit platforms will be incorporated in 2024 as these are new products on our platform. And because it just includes commingled funds, it does not incorporate returns from the SPVs or continuation funds that were formed in the original DB Holdings investments or from GTP, the tower company that I built and sold to American Tower. These returns will always be out of the perimeter. Second, as you know, our long dated funds are early in their lifecycle and in some cases, the multiple on invested capital calculations or MOICs include recent investments that have not benefited from the compounding effects of our value add investment strategy.

Third, we’ve incorporated the InfraBridge funds which we acquired earlier this year into our reporting framework. With the investment and asset management teams now fully integrated, we expect this to further strengthen the GIF fund performance over time as we overlay our asset management framework and our value add cookbook to enhance the performance of those assets. So, stepping back, these fund performance metrics highlight how we’re delivering for LPs, generating steady, risk-adjusted returns consistent with their expectations and with the broader infrastructure sector. Next slide please. Finally, I want to highlight the portfolio company performance that ultimately underpins and drives those investment returns over time, specifically our discounted cash flows.

Monthly reoccurring revenue across the portfolio is up again in all 4 of our verticals. This was driven by organic and investment-led growth. I want to highlight data centers inside the quarter. They were really the standout with monthly reoccurring revenue up over 20% and the rest of our verticals performing well. Towers, up 6.6%, fueled principally by 5G overlays and 5G amendment traffic. As we then calibrate in the next 3 to 7 years into densification across the four geographies we serve, we expect towers to be a consistent performer in organic growth. Fiber is up 10%, this is really driven by the fact that folks are returning back to office and we’re seeing steady contributions in enterprise fiber, long haul fiber and data center connectivity, including recent performance at Zayo and small cells up 5.5% as we’ve seen a nice turn in leasing activity, driven by mobile carriers moving from 5G overlays and amendments into 5G densification.

We’re really excited about what’s happening in small cells because it’s not just the mobile carriers that are driving traffic, it’s private enterprises, it’s IoT networks and even cable companies. So, we remain really optimistic about what’s going to happen in the small cell segment in the coming years. Look, take a step back to still this at 50,000 feet, it’s really simple. The demand for compute and connectivity continues to grow steadily and our ability to deliver for customers continues to expand along with our portfolio. DigitalBridge’s unique ability to show up anywhere at any time for a customer across the planet is true differentiation. With that, I’d like to turn it over to Jacky to cover the financials. Jacky?

Jacky Wu: Thank you, Marc, and good morning, everyone. As a reminder, in addition to the release of our third quarter earnings, we filed a supplemental financial report this morning, which is available within the Shareholders section of our website. Starting on Page 15, all of our quarterly key operating and financial metrics increased significantly year-over-year driven by our robust fundraising efforts and acquisition of InfraBridge platform. We anticipate the strong momentum to continue as we progress in the fourth quarter. Turning to Page 16. Total company distributable earnings was $35 million or $0.20 per share including $28 million of carried interest realized from the final closing of DataBank recapitalization. Assets under management increased to $75 billion in the third quarter, which grew by 48% from the same period last year and fee earning equity under management increased to $30 billion, a 46% increase from the same period last year.

AUM and FEEUM growth were primarily driven by the InfraBridge acquisition and capital raised in our new strategies and fee paying co-investments. Our fundraising pipeline remains robust and we look forward to closing out the year with a strong fourth quarter, principally from commitments to our latest flagship fund DigitalBridge Partners III or DBP III. I would also like to highlight that effective today, we will begin generating management fees coinciding with the first closing in DBP III. Moving to Page 17, the company achieved healthy year-over-year growth propelled by the expansion of the investment management business and further enhanced by our streamlined corporate structure. For the third quarter, consolidated revenues were $477 million which represents an 11% increase from the same period last year.

As a reminder, consolidated revenues include realized and unrealized carried interest. Total company adjusted EBITDA was $34 million, up 15% from the same period last year. This growth is primarily attributable to an increase in investment management fee revenues, offset partially by the reduced ownership in operating assets, which we will cover in more detail on the following pages. Moving to Page 18. The Company continues to grow its investment management earnings and fee earning equity under management generated by additional fundraising and deployments in our flagship funds, new strategies, fee paying co-investments and contributions from InfraBridge funds. Fee income excluding incentive fees was $66 million and fee-related earnings was $29 million, representing 57% and 36% increases from the same period last year, respectively.

Investment Management segment distributable earnings increased by 51% to $53 million from the same period last year, benefiting primarily from carried interest recognized as part of the recapitalization of DataBank, which closed on September 14th. It is also important to note that as a result of the deconsolidation of DataBank, the Company’s leverage profile and balance sheet continue to improve and become materially simpler and more asset-light. As Marc and I had previewed, was our corporate strategy and mission going forward. Turning to Page 19, last quarter we began including new disclosures designed to provide additional detail on carried interest allocations and expenses. For the third quarter, net carried interest income before non-controlling interests was $96 million due to the fair value of our managed funds increasing at a rate that exceeds the preferred return hurdles in our investment vehicles which generates carried interest to DigitalBridge as the manager.

Moving to Page 20, the Company’s share of digital operating revenues and earnings have continued to decline due to lower ownership interests. On September 14th, we announced the completion of the recapitalization of our interest in DataBank, reducing our ownership to 9.9%. This transaction generated nearly $50 million in proceeds inclusive of $28 million in carried interest for DigitalBridge. Going forward, our remaining interest in the DataBank platform will be treated as an equity method investment and we expect to sell a portion of our ownership interest in Vantage SDC in the near future, which would complete our planned deconsolidation of the operating segment. Turning to Page 21, fee revenues and our high margin investment management segment continue to grow, partially offset by the realization of 2 assets within the InfraBridge platform.

Since the third quarter of 2022, our annualized fee revenues increased from $182 million to $264 million and fee-related earnings increased from $100 million to $125 million. We expect fee related earnings to grow materially as we continue to raise capital for DBP III and as mentioned earlier effective today the commencement of DBP III management fee billings. Looking at the right side of the page, run rate annual fee revenues are $276 million. We are on track to meet our previously provided fee revenue and FRE guidance ranges. Turning to Page 22, our balance sheet has significantly changed following the deconsolidation of DataBank, highlighted by the substantial reduction in investment level debt. And upon the deconsolidation of Vantage SDC, in the near future, our debt profile will be similar to those of our peers in the alternative investment management space, especially as we continue to monitor the capital markets and consider further opportunistic optimization of our leverage profile through both preferred and common equity redemptions and distributions.

Turning to Page 23, as we have completed another milestone in our progress to simplify our capital structure, we have almost reached our target corporate debt level with no near-term debt maturities. And with approximately $530 million of liquidity including the full $300 million available from our securitization revolver, our balance sheet and liquidity remains strong and poised for accretive uses. In summary, Marc and I are proud of the substantial strides we’ve taken this year to simplify the business and solidify DigitalBridge’s position as a preferred partner of choice in the digital infrastructure space. Our financial performance continues to show market improvement despite a difficult fundraising environment and we remain committed to generating long-term shareholder success by scaling new products and our dynamic investment management platform led by our robust fundraising abilities.

We look forward to closing out the year strong already highlighted by the completion of a first close in our flagship fund DBP III and continued progress in deconsolidating our balance sheet interest in Vantage SDC. And with that, I will turn it back to Marc. Thank you.

Marc Ganzi: Thanks Jacky. So, this quarter in Section 3 where we always talk about executing the digital playbook, I want to talk about the DigitalBridge Credit and how we’ve extended our platform organically into the private credit asset class. Let’s start with some context, for the strong growth the asset class is experiencing, before I walk you through a case study that highlights how we’re bringing skilled capital to the game here. It’s clear to most of you that private credit is a growing force in global capital markets. Since 2010, over $1.8 trillion in capital has been formed by alternative asset managers to fill a growing demand for credit that traditional lenders hampered by tightening restrictions and regulations have not been able to keep up with.

On the right, you can see in just the last 5 years that private credit is taking share, filling the gap led by traditional lenders, to meet growing demand from borrowers that need liquidity and growth capital. At the same time, institutional LPs are increasingly being drawn to the sector, attracted by better risk-adjusted returns on the back of higher interest rates and the reliability of credit products in an uncertain macro. Next slide please. As you can see here, credit’s attractive risk-adjusted profile is driving increasing institutional interest in private credit. On the right side, over $1 trillion has been raised in private credit in the past 5 years alone. This is doubling AUM over that time period. The average fund size continues to increase and it’s expected that 2023 will generate another $200 billion-plus of capital formation, the fourth year in a row exceeding that level.

As you can see, this is not just a fad, it’s sustainable. The best part is as you can see on the left, DigitalBridge is at the intersection of the two asset classes, with the highest intent to increase allocation among institutional investors. Private credit, 1; infrastructure, 2, are the only two asset classes where that intent is greater than 50%. The intention here is everything. We’re talking to LPs on a global basis and they want to be exposed to digital infrastructure and they want great exposure to private credit, so why not give them both in the same product set and this is where we’ve landed. This puts us in a real sweet spot in an already fast growing market. Next slide please. So, what have we built so far? Over the past couple of years, we have organically grown a private credit business led by Dean Criares, dedicated to supporting the growth of companies across the digital infrastructure sector and ecosystem.

We finished Q3 2023 with $1 billion in fee paying capital, delivering private credit investment solutions to other financial sponsors. And in essence, we’re providing the key skill capital that leverages our ecosystem. Those investment solutions span the full spectrum from first lien senior secured debt, all the way to preferred equity. Most of the lending is floating rate securities with check sizes in the $20 million to $300 million range across all of the verticals inside of digital infrastructure: Fiber, towers, data centers and emerging infrastructures such as small cells and other parts of the ecosystem. It is important to note digital infrastructure is an incredibly capital-intensive sector. So, we’re just getting started in servicing a really big and growing TAM.

As I mentioned in previous years on our earnings calls, that TAM grows approximately about $500 billion per year in terms of the total wallet size. So, on a reasonable loan to value equation, one could assume about $250 billion of new credit could be written every year. This is a sleeve that can become an evergreen source of growth for DigitalBridge. We are really excited about the future prospects of this business. Let’s cover a case study on the next couple of slides to give you a sense for how DigitalBridge Credit and financing the growth of the digital economy. Next slide please. This summer, DigitalBridge Credit participated in the financing for CoreWeave, a company many of you are familiar with. CoreWeave is a leading next-generation specialized cloud provider focused on servicing AI workloads at scale with the latest technology.

It fit alongside the large cloud service providers within the infrastructure layer of the AI tech stack you see on the left, but with a business purpose-built for artificial intelligence. That means access to thousands of the latest generation GPUs, a specialized networking fabric built to reduce latency and boost chip utilization and value-add software and technical resources. To distill it, simply put, this is GPU-as-a-service serving rapidly growing AI workloads. CoreWeave represents an incredibly compelling customer value prop focused on delivering first: the best pound for pound AI compute; second, a very fast and flexible and cost effective service; three, it’s incredibly scalable; and then four, they’re targeting a large and growing market estimated to reach $160 billion by 2027.

Just recently, CoreWeave unveiled the world’s fastest AI supercomputer built in partnership with one of their equity investors, NVIDIA. This is a terrific company with a terrific CEO that was seeking capital to finance the incredible growth they are experiencing. So, let’s turn to the next slide to cover the financing and how we leverage our DigitalBridge ecosystem. As you can see on the left, in July of 2023, DigitalBridge Credit participated in a $2.3 billion financing for CoreWeave alongside Blackstone, Magnetar and Coatue. CoreWeave was looking to fund a significant amount of growth CapEx, ramp to-be-contracted AI compute demand, including the purchase of thousands of the latest generation GPUs, securing significant new data center capacity, as well as continued working capital investment in their platform.

It’s a financing backed ultimately by CoreWeave’s high-quality investment grade counterparties and supported by a durable asset backed collateral. This at the end of the day really is in parallel with how we underwrite our investments at DigitalBridge. We’re always focused on long-term contracts, investment grade counterparties and asset backed collateral. This is seminal to our investment thesis in DigitalBridge Credit. Over the course of the financing, DigitalBridge leveraged its ecosystem in unique ways to source, VET, and accelerate the transaction, highlighting the strategic value of our platform. So, let’s start with the source. Here, our significant market intelligence and tangible value prop attracted CoreWeave to working with DigitalBridge.

Given the breadth of our data center assets and industry expertise, CoreWeave actively sought to work with DigitalBridge. Next, VET. In terms of vetting, the ability to de-risk transactions is always really important us in the underwriting process. In this case, our credit underwriting process was enhanced by access to DigitalBridge’s data center portfolio companies and the long-term relationships we maintain with leading global technology companies. Basically, in a nutshell, we talk to the logos. Finally accelerate. Here, we already actively were supporting CoreWeave’s time to market advantage, leveraging DigitalBridge’s global datacenter footprint including Switch, Vantage, DataBank, Scala, AIMS and AtlasEdge. The CoreWeave transaction is a great example of the next-gen digital infrastructure we’re financing at DigitalBridge Credit and how our team and portfolio companies can both benefit from what we call the power of the platform.

With that, I’ll turn now to the CEO checklist for the quarter before we wrap it up and open it up the line for Q&A. Next slide please. Great. As always, let’s wrap it up with the review from the CEO’s checklist. First, on fundraising, our number one KPI. $5.4 billion year-to-date and we remain again on target to hit our fundraising targets for the year. The last quarter will be busy. I can promise you that. And I’m confident we’re going to get the job done. Also, the DigitalBridge Partner Series FEEUM kicks in this quarter. So we’ll start to see the flow through from our fundraising efforts, which is really important. Next up on simplification, we closed DataBank. Generating a great return for our shareholders, while reducing complexity in our financial statements and delevering our balance sheet.

Vantage SDC is up next and we’ll get it done. We’ve also introduced fund performance metrics, further aligning our profile with other alternative asset management peers, this is an important step. It’s delivering on something that you, our investors, have been asking for, and now we’re presenting it to you. We’re pleased with our performance and we’re excited about the future of our funds in our flagship series. Finally, and most importantly, down in the trenches at the portfolio level. We’ve continued to support the growing compute and connectivity needs for the most powerful investment grade logos in the world, including through our growing credit franchise that benefits from the power of the DigitalBridge platform. Thank you for your support as we continue to execute on the final stage of our transition to a fast-growing alternative asset management, levered towards the powerful tailwinds in digital infrastructure.

I look forward to updating you next quarter on our continued progress. With that, I’ll hand it over to the operator to begin the Q&A section. Thank you.

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Q&A Session

Operator: Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Michael Elias with Cowen & Company.

Michael Elias: To start, with the boom in data center leasing that we’ve seen, it also appears that there’s been a boom in demand for debt capital to build new data centers. Marc, I’m just curious if you could share any observations related to the depth of the debt capital markets for data centers relative to the demand for debt? And as part of that, any observations around where spreads are going for data center debt? And then I have a follow-up.

Marc Ganzi: So we think that the data center marketplace over the next, call it, next 7 years is somewhere around 35 gigawatts of new leasing capacity that needs to be delivered. As you know, Michael, most of that will be greenfield. So when we contextualize that, it’s literally hundreds of billions of dollars of new construction activity in the data center industry, it depends on what your metric is on the price per megawatt. And then obviously, you can compute that to your price per gigawatt. So we think that the market is literally shaping up from a CapEx perspective somewhere in the $1.5 billion range just for us just this year in terms of the stuff that we’re financing. So If you contextualize that and there’s probably $1 trillion of data center spend and you assume a reasonable capital structure of a 50% loan to value, you can assume that there’s $500 billion of data center financings coming up here in the next 7 years.

We think that most of that as new construction loans will go, will be financed by private credit. Banks obviously given bank regulations are somewhat handtied in terms of financing greenfield construction as you know. And traditional real estate lenders are going through a significant amount of digestion and what to do with office space and other forms of commercial real estate that are under stress. So we are seeing a surge in interest, particularly in our credit side and financing new data center builds. And keep in mind, our credit team finances four portfolio companies that don’t belong to us. So there’s a huge universe of potential folks that we’re working with in terms of developers that we know well, that we don’t have the equity in, but certainly have the dead end.

So contextually $500 billion TAM and pretty expansive. On the pricing side, it really depends, Michael, on structure, whether it’s a HoldCo note to help finance a data center operator, whether it’s actually a construction loan. But what we’re seeing is obviously with base rates in the near 5 and new construction loans certainly being riskier, which is where we’re playing and HoldCo notes which are above the senior, as you take the capital structure north of a 50% loan to value, you can obviously begin to see spreads with credit enhancements in those loans, entry fees, exit fees. You could see total yields on those loans in the 12% to 14% range, with coupons somewhere on the low side for the high quality assets in the 7s and the mediocre to perhaps less quality assets in the 8.5% to 9.5% range.

So, we’re seeing all kinds of opportunities in the data center space and obviously it is driven by public cloud and private cloud and those AI workloads that you and I have talked about over the summer. So it’s a big marketplace. We’re very active. We’ve got a pipeline of over 60 loans that we’re working on right now. We can’t stress enough how big the private credit opportunity is in data centers, but also in fiber and towers as well, Michael.

Michael Elias: And then, just as a follow-up, you’re talking of the 35 gigawatt incremental opportunity here. A two-parter question. First is, can you talk about how DigitalBridge is positioning itself to win more than its fair share of that opportunity? And then as part of that, perhaps at the portfolio company level, if you could just talk about the unlevered return targets across the data center platforms as you think about these large scale AI workloads? Thank you, Marc.

Marc Ganzi: Yes, thanks. So we do think we’re taking within our market share — I mean, we’ve had a tremendous year of leasing and not quite sure where it all lands, but it’s measured in the hundreds of megawatts across Switch, Vantage, DataBank and Scala and AIMS and AtlasEdge. So, as you know, we play the sector in multiple different ways. We play it from a private cloud perspective up at Switch. We play it from a public cloud perspective at Vantage Europe and Vantage North America, Vantage Asia and Scala. And then we’re playing the Edge compute business at AIMS and DataBank in AtlasEdge. So, we’ve got multiple platforms to go attack the different verticals and the different workloads. And I think you have to understand that AZ’s availability zones which are essentially the search rings of the data center sector, having localized teams from São Paulo to Europe, to North America, to Asia is really helpful.

It allows us to obviously think globally with our big customers, but indeed act locally in terms of securing power and the ability to execute and deliver for customers. So I think that, we don’t love to give out yields, it’s somewhat of a competitive advantage. But here’s what I can share with you, Michael. I can tell you that cash on cash yields are up year-over-year significantly, somewhere between 20% and 30% on average in terms of the CAGR growth of the yields. What I can also share with you is that rents are up. Rents are up 21% year-over-year on a global basis. When you distill the 6 portfolio companies that we own and operate and you look at their results year-over-year, we’ve seen rental rates come up significantly. This is really a function of supply and demand.

And there’s more demand than there’s supply. And so our existing locations where we have land, where we have power, where we have entitlements, those are renting at a premium. So I think, look, the punch line is rents are up, development yields are up. We’ve got the biggest platform in the world to go attack this. Today, we have just a little under 300 data centers and we have over 1.7 gigawatts of compute power to offer to our customers. So, we do think on a global basis, we are one of the largest, if not the largest operators of edge, cloud, public cloud and private cloud data centers in the world. And just looking at absorption, if we end up leasing somewhere between 770 megawatts and 1.2 gigawatts this year. I think that’s going to lead the league in leasing, certainly far bigger than DLR and far bigger than Equinix.