Notes to Consolidated Financial Statements
March 31, 2026
(Unaudited)
1. Business and Organization
DigitalBridge Group, Inc. ("DBRG," and together with its consolidated subsidiaries, the "Company") is a leading global investment manager in digital infrastructure. The Company deploys and manages capital on behalf of its investors and shareholders across the digital infrastructure ecosystem, including but not limited to, data centers, cell towers and fiber networks. The Company's investment management platform is anchored by its flagship value-add digital infrastructure equity offerings, as well as offerings in core equity, credit, liquid securities, and its InfraBridge mid-market infrastructure equity.
Organization
The Company operates as a taxable C Corporation and conducts all of its activities and holds substantially all of its assets and liabilities through its operating subsidiary, DigitalBridge Operating Company, LLC (the "Operating Company" or the "OP"). The Company, as sole managing member, owned 97% of the OP at March 31, 2026, with the remaining 3% owned by certain current and former employees of the Company as noncontrolling interest.
Proposed Acquisition of DBRG
On December 29, 2025, DBRG, the Operating Company and indirect subsidiaries of SoftBank Group Corp. (TSE: 9984, "SoftBank") entered into an agreement and plan of merger (the “Merger Agreement”) pursuant to which, among other things, DBRG and the Operating Company would be acquired by such indirect subsidiaries pursuant to a series of mergers (the "Merger").
SoftBank, through its indirect subsidiaries, will acquire all of (i) DBRG's issued and outstanding common stock and (ii) the OP common units that are not held by DBRG and the Operating Company (unless otherwise agreed by a holder of OP units and SoftBank through its indirect subsidiary), for $16.00 per share or per unit in cash. The preferred stock of DBRG and the Operating Company will remain outstanding. Warrants to purchase DBRG's common stock will be treated in accordance with the terms of the applicable warrant agreements.
Consummation of the Merger required approval by DBRG’s common stockholders, which was received on April 23, 2026, and is subject to certain other closing conditions, including receipt of required consents for the Company’s flagship investment funds and from a specified percentage of fee-paying clients of the Company, and receipt of regulatory approvals, as well as customary closing conditions.
Upon consummation of the Merger, the Company will become an indirect, wholly-owned subsidiary of SoftBank.
2. Summary of Significant Accounting Policies
The significant accounting policies of the Company are described below.
Basis of Presentation
The accompanying unaudited interim financial statements have been prepared in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. However, the results of operations for the interim period presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2026, or any other future period. These interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in, or presented as exhibits to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
The accompanying consolidated financial statements include the accounts of the Company and its controlled subsidiaries. All significant intercompany accounts and transactions have been eliminated. The portions of equity, net income or loss and other comprehensive income or loss of consolidated subsidiaries that are not attributable to the parent are presented separately as amounts attributable to noncontrolling interests in the consolidated financial statements. Noncontrolling interests represent predominantly: carried interest allocation to certain executives of the Company, limited
partners of consolidated funds; and membership interests in OP primarily held by certain current and former employees of the Company.
To the extent the Company consolidates a subsidiary that is subject to industry-specific guidance, such as investment company accounting applied by the Company's sponsored funds that are consolidated, the Company retains the industry-specific guidance applied by that subsidiary in its consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates and assumptions.
Principles of Consolidation
The Company consolidates entities in which it has a controlling financial interest by first considering if an entity meets the definition of a variable interest entity ("VIE") for which the Company is deemed to be the primary beneficiary, or if the Company has the power to control an entity through a majority of voting interest or through other arrangements.
Variable Interest Entities—A VIE is an entity that either (i) lacks sufficient equity to finance its activities without additional subordinated financial support from other parties; (ii) whose equity holders lack the characteristics of a controlling financial interest; and/or (iii) is established with non-substantive voting rights. A VIE is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the VIE through (a) power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, and (b) obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. This assessment may involve subjectivity in the determination of which activities most significantly affect the VIE’s performance, and estimates about current and future fair value of the assets held by the VIE and financial performance of the VIE. In assessing its interests in the VIE, the Company also considers interests held by its related parties, including de facto agents. Additionally, the Company assesses whether it is a member of a related party group that collectively meets the power and benefits criteria and, if so, whether the Company is most closely associated with the VIE. In performing the related party analysis, the Company considers both qualitative and quantitative factors, including, but not limited to: the characteristics and size of its investment relative to the related party; the Company’s and the related party's ability to control or significantly influence key decisions of the VIE including consideration of involvement by de facto agents; the obligation or likelihood for the Company or the related party to fund operating losses of the VIE; and the similarity and significance of the VIE’s business activities to those of the Company and the related party. The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, may involve significant judgment, and depends upon facts and circumstances specific to an entity at the time of the assessment.
Voting Interest Entities—Unlike VIEs, voting interest entities have sufficient equity to finance their activities and equity investors exhibit the characteristics of a controlling financial interest through their voting rights. The Company consolidates such entities when it has the power to control these entities through ownership of a majority of the entities' voting interests or through other arrangements.
At each reporting period, the Company reassesses whether changes in facts and circumstances cause a change in the status of an entity as a VIE or voting interest entity, and/or a change in the Company's consolidation assessment. Changes in consolidation status are applied prospectively. An entity may be consolidated as a result of this reassessment, in which case, the assets, liabilities and noncontrolling interests in the entity are recorded at fair value upon initial consolidation. Any existing equity interest held by the Company in the entity prior to the Company obtaining control will be remeasured at fair value, which may result in a gain or loss recognized upon initial consolidation. However, if the consolidation represents an asset acquisition of a voting interest entity, the Company's existing interest in the acquired assets, if any, is not remeasured to fair value but continues to be carried at historical cost. The Company may also deconsolidate a subsidiary as a result of this reassessment, which may result in a gain or loss recognized upon deconsolidation depending on the carrying values of deconsolidated assets and liabilities compared to the fair value of any interests retained.
Noncontrolling Interests
Redeemable Noncontrolling Interests—This represents noncontrolling interests in sponsored open-end funds in the liquid securities strategy that are consolidated by the Company. The limited partners of these funds have the ability to withdraw all or a portion of their interests from the funds in cash with advance notice.
Redeemable noncontrolling interests is presented outside of permanent equity. Allocation of net income or loss to redeemable noncontrolling interests is based upon their ownership percentage during the period. The carrying amount of redeemable noncontrolling interests is adjusted to its redemption value at the end of each reporting period to an amount not less than its initial carrying value, except for amounts contingently redeemable which will be adjusted to redemption value only when redemption is probable. Such adjustments will be recognized in additional paid-in capital.
Noncontrolling Interests in Investment Entities—This represents (i) carried interest allocations to certain senior executives of the Company (Note 14); and a third party participation interest; (ii) equity interests held by current and former employees and a third party participation interest in general partner entities of the Company's sponsored funds; and (iii) limited partners of consolidated closed-end funds. Excluding carried interest, allocation of net income or loss is generally based upon relative ownership interests.
Noncontrolling Interests in Operating Company—This represents membership interests in OP held by certain current and former employees of the Company. Noncontrolling interests in OP are allocated a share of net income or loss in OP based upon their weighted average ownership interest in OP during the period. Noncontrolling interests in OP have the right to require OP to redeem part or all of such member’s membership units in OP ("OP units") for cash based on the market value of an equivalent number of shares of class A common stock of the Company at the time of redemption, or at the Company's election as managing member of OP, through issuance of shares of class A common stock (registered or unregistered) on a one-for-one basis. At the end of each reporting period, noncontrolling interests in OP is adjusted to reflect their ownership percentage in OP at the end of the period, through a reallocation between controlling and noncontrolling interests in OP, as applicable.
Discontinued Operations
If the disposition of a component, being an operating or reportable segment, business unit, subsidiary or asset group, represents a strategic shift that has or will have a major effect on the Company’s operations and financial results, the operating profits or losses of the component when classified as held for sale, and the gain or loss upon disposition of the component, are presented as discontinued operations in the statements of operations.
A business or asset group acquired in connection with a business combination that meets the criteria to be accounted for as held for sale at the date of acquisition is reported as discontinued operations, regardless of whether it meets the strategic shift criterion.
The Company's discontinued operations in the periods presented herein represent residual activities from the Company's former real estate investments along with an adjacent investment management business, which have predominantly been disposed as part of the Company's transformation into an investment manager with a digital infrastructure focus.
Recently Adopted Accounting Pronouncements
Measurement of Credit Losses for Accounts Receivable and Contract Assets
In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which simplifies the estimation of expected credit losses applied to revenue transactions from contracts with customers (pursuant to Topic 606). The ASU provides for election of a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the current accounts receivable and current contract assets. This would forego the existing requirement to develop forecasts of future economic conditions in estimating expected credit losses.
The Company adopted this ASU on a prospective basis effective January 1, 2026, electing the practical expedient. The adoption of this ASU did not impact the Company's consolidated financial statements.
Future Accounting Standards
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses, in response to longstanding investor requests for disaggregated information about expenses by nature to supplement income statement expenses presented by function (for example, cost of sales and administrative expenses). The new standard requires tabular disclosure in a footnote, disaggregating each income statement line item that contains any of the following natural expenses: (a) purchases of inventory; (b) employee compensation; (c) depreciation; (d) intangible asset amortization; and (e) depletion. If an expense caption that is presented as a natural expense on the income statement includes more than one of the required expense categories, further disaggregation is required. For example, an expense caption consisting of
depreciation and intangible asset amortization would need to be disaggregated to separately disclose each category in the footnotes. An expense caption that consists entirely of one of the required natural expense categories is not required to be disaggregated. Further, certain expenses, gains or losses that are required to be disclosed under US GAAP, if they are recorded within the expense line items that contain any of the prescribed expense categories, are to be separately quantified within the same tabular disclosure. Any remaining amounts in expense line items that contain any of the prescribed expense categories that have not been separately quantified are to be included in the tabular disclosure to reconcile to the corresponding amount on the income statement and to be qualitatively described.
The ASU is effective for annual reporting periods beginning January 1, 2027 and interim reporting periods beginning January 1, 2028. Early adoption is permitted. Transition is prospective with the option to apply retrospective application. The Company is currently evaluating the effects of this new guidance.
3. Investments
The Company's equity and debt investments are represented by the following:
| | | | | | | | | | | | | | |
| (In thousands) | | March 31, 2026 | | December 31, 2025 |
| Equity method investments | | | | |
| Principal investments | | $ | 1,442,227 | | | $ | 1,433,113 | |
| Carried interest allocation | | 503,842 | | | 540,890 | |
| | | | |
| Other equity investments | | 26,347 | | | 25,570 | |
| Debt investment | | 29,375 | | | 30,490 | |
| | 2,001,791 | | | 2,030,063 | |
| Equity investments of consolidated funds | | | | |
| Marketable equity securities | | 118,483 | | | 115,101 | |
| Other investment | | 121,239 | | | 121,239 | |
| | $ | 2,241,513 | | | $ | 2,266,403 | |
Equity Method Investments
Principal Investments
Principal investments represent investments in the Company's sponsored investment vehicles, accounted for as equity method investments as the Company exerts significant influence in its role as general partner. The Company typically has a small percentage interest in its sponsored funds as general partner or special limited partner. The Company also has additional investments as general partner affiliate alongside the funds' limited partners, primarily with respect to the Company's flagship value-add funds, InfraBridge funds and single asset funds invested in data center portfolio companies, DataBank and Vantage SDC.
The Company's proportionate share of net income (loss) from investments in its sponsored investment vehicles, primarily unrealized gain (loss) from changes in fair value of the underlying fund investments, and distributions of income, including from realization events, are recorded in principal investment income on the consolidated statements of operations.
Carried Interest
Carried interest represents a disproportionate allocation of returns of up to 20% to the Company, as general partner or special limited partner (which may be paid to the special limited partner entity owned by the Company in place of the general partner entity), based upon the extent to which cumulative performance of a sponsored fund exceeds minimum return hurdles, typically an annual preferred return of 6% to 8%. Carried interest generally arises when appreciation in value of the underlying investments of the fund exceeds the minimum return hurdles, after factoring in a return of invested capital and a return of certain costs of the fund pursuant to terms of the governing documents of the fund. Realization of carried interest occurs upon disposition of all underlying investments of the fund, or in part the disposition of each investment. Unrealized carried interest is recognized as the amount that would be due pursuant to the fund governing documents assuming a hypothetical liquidation of the investments of the fund at their estimated fair values as of reporting date. Unrealized carried interest is driven primarily by changes in fair value of the underlying investments of the fund, which may be affected by various factors, including but not limited to, the projected financial performance of the portfolio company, economic conditions and comparable transactions in the market. When the fair value of fund investments fall below return hurdles or remain constant and preferred returns on unreturned capital accumulate, this may result in a reversal of unrealized carried interest previously recognized.
Generally, carried interest is distributed upon profitable disposition of an investment if at the time of distribution, cumulative returns of the fund exceed minimum return hurdles. Depending upon the final realized value of all investments at the end of the life of a fund (and, with respect to certain funds, periodically during the life of the fund), if it is determined that cumulative carried interest distributed has exceeded the final carried interest amount due (or amount due as of the calculation date), the Company is obligated to return the excess carried interest previously received. Therefore, carried interest distributed to the Company may be subject to clawback, up to the amount previously received on an after-tax basis. A liability would be established if a clawback obligation arises assuming a hypothetical liquidation of the investments of the fund at their prevailing fair values as of reporting date. However, the actual determination of a clawback, if any, and payment thereof would occur only after final disposition of investments at the end of the life of a fund, except for funds that have interim clawback provisions. The Company, through the OP, has guaranteed the clawback obligation of its subsidiaries that act as general partner or special limited partner of its respective sponsored funds, for the benefit of these funds and their limited partners.
A portion of carried interest earned by the Company is allocated to current and former employees and for certain funds, to a third party participation interest. Their share of carried interest is subject to recognition and reversal in accordance with the related carried interest income earned by the Company, and is not paid until the Company receives carried interest distributions from its funds. If the related carried interest distributions received by the Company are subject to clawback, the previously distributed carried interest to employees and a third party participation interest would be similarly subject to clawback. The Company withholds a portion of the distribution of carried interest to employees to satisfy their potential clawback obligation. The amount withheld resides in entities outside of the Company.
Carried interest is presented gross of allocation to employees and third party participation interest.
Carried Interest Distributed
There was no distribution of carried interest during the first quarter of 2026. In 2025, carried interest of $2.5 million was distributed, of which $1.6 million was allocated to current and former employees, recorded as carried interest compensation.
Clawback Obligation
At March 31, 2026, $32.6 million of previously distributed carried interest on an after-tax basis ($25.0 million at December 31, 2025) would be subject to clawback assuming a hypothetical liquidation of carry paying funds at the March 31, 2026 estimated fair values. The clawback liability is included in amount due to affiliates (Note 14). At March 31, 2026, $27.4 million and $1.5 million of the clawback obligation ($20.9 million and $1.2 million at December 31, 2025) would be the responsibility of current/former employees and a third party participation interest, respectively. These amounts are included in due from affiliates (Note 14) and as an allocation to noncontrolling interests in investment entities. The Company's share of the clawback obligation would be $3.7 million as of March 31, 2026 ($2.9 million at December 31, 2025). In this case, actual clawback obligation, if any, would be determined and become payable at the end of the life of the fund. To satisfy the employees' share of this clawback obligation, $15.2 million of carried interest had been withheld from payment to employees at the time of distribution.
If, at March 31, 2026, all of the funds' investments are deemed to have no value, a possibility that the Company views as remote, the amount of carried interest distributed to date subject to potential clawback would be $103.4 million on an after-tax basis, of which $66.2 million would be the responsibility of current and former employees and $2.6 million the responsibility of a third party participation interest. To satisfy employees' clawback obligation, $20.6 million of cash had been withheld from payment to employees to date and with respect to certain distributed carried interest, a portion of employees' equity investment will serve as collateral.
Other Equity Investments
Other equity investments include primarily venture investments and an investment in a managed account.
These investments are generally carried at fair value or under the measurement alternative, which is at cost, adjusted for impairment and observable price changes. Changes in the value of these investments are recorded in other gain (loss) on the consolidated statements of operations.
Debt Investment
Interest income on debt investment is recorded in other income.
CLO Subordinated Notes
The Company holds all of the subordinated notes of a collateralized loan obligation ("CLO"), sponsored and managed by a third party. The final maturity date of the CLO is 2037. The CLO subordinated notes are classified as available-for-sale ("AFS") debt securities.
Following the end of the non-call period of the CLO in October 2026, the subordinated notes may be redeemed (in whole, not in part) at the option of the collateral manager or the Company with consent of the collateral manager, if there is sufficient proceeds from sale of collateral assets, including payment of expenses therewith. The redemption price for the subordinated notes is equal to the excess interest and principal proceeds payable at the time of redemption.
The balance of the CLO subordinated notes is summarized as follows:
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| | Amortized Cost without Allowance for Credit Loss | | Allowance for Credit Loss | | Gross Cumulative Unrealized | | |
| (in thousands) | | | | Gains | | Losses | | Fair Value |
| March 31, 2026 | | $ | 29,375 | | | $ | — | | | $ | — | | | $ | — | | | $ | 29,375 | |
| December 31, 2025 | | 30,490 | | | — | | | — | | | — | | | 30,490 | |
In estimating fair value of the CLO subordinated notes, classified as Level 3 of the fair value hierarchy, the Company used a benchmarking approach by looking to the implied credit spreads derived from observed prices on recent comparable CLO issuances, and also considering the current size and diversification of the CLO collateral pool, and projected return on the subordinated notes. Based upon these data points, at March 31, 2026 and December 31, 2025, the Company determined that the issued price of the subordinated notes, net of capital distributions, approximates a reasonable representation of fair value and that the CLO subordinated notes are not impaired.
Equity Investments of Consolidated Funds
The Company consolidates sponsored funds in which it has more than an insignificant equity interest in the fund as general partner (Note 13). Equity investments of consolidated funds are composed of marketable equity securities held by funds in the liquid securities strategy and a venture investment held by a single asset fund. Equity investments of consolidated funds are carried at fair value with changes in fair value recorded in other gain (loss) on the consolidated statements of operations.
4. Intangible Assets
Intangible assets are composed of the following: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| March 31, 2026 | | December 31, 2025 |
| (In thousands) | Carrying Amount (1)(2) | | Accumulated Amortization(1)(2) | | Net Carrying Amount(1) | | Carrying Amount (1)(2) | | Accumulated Amortization(1)(2) | | Net Carrying Amount(1) |
| Investment management contracts | $ | 138,162 | | | $ | (119,028) | | | $ | 19,134 | | | $ | 139,682 | | | $ | (117,342) | | | $ | 22,340 | |
| Investor relationships | 54,191 | | | (31,977) | | | 22,214 | | | 54,497 | | | (30,634) | | | 23,863 | |
| Trade name | 4,300 | | | (2,875) | | | 1,425 | | | 4,300 | | | (2,769) | | | 1,531 | |
Other (3) | 1,518 | | | (895) | | | 623 | | | 1,518 | | | (857) | | | 661 | |
| $ | 198,171 | | | $ | (154,775) | | | $ | 43,396 | | | $ | 199,997 | | | $ | (151,602) | | | $ | 48,395 | |
__________
(1) Presented net of impairments and write-offs, if any.
(2) Exclude intangible assets that were fully amortized in prior years.
(3) Represents primarily the value of an acquired domain name.
Amortization expense for finite-lived intangible assets totaled $4.7 million and $6.6 million for the three months ended March 31, 2026 and 2025, respectively. There was no impairment of identifiable intangible assets in the periods presented.
Future Amortization of Intangible Assets
The following table presents the expected future amortization of finite-lived intangible assets:
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| Year Ending December 31, | | |
| (In thousands) | Remaining 2026 | | 2027 | | 2028 | | 2029 | | 2030 | | 2031 and thereafter | | Total |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
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| Amortization expense | $ | 13,043 | | | $ | 12,038 | | | $ | 7,944 | | | $ | 3,133 | | | $ | 1,468 | | | $ | 5,770 | | | $ | 43,396 | |
5. Restricted Cash, Other Assets and Other Liabilities
Restricted Cash
Restricted cash represents primarily cash reserves that are maintained pursuant to the governing documents of the corporate securitized debt.
Other Assets
The following table summarizes the Company's other assets.
| | | | | | | | | | | | | | |
| (In thousands) | | March 31, 2026 | | December 31, 2025 |
| Prepaid taxes and deferred tax assets, net | | $ | 4,197 | | | $ | 3,936 | |
Operating lease right-of-use asset for corporate offices | | 19,853 | | | 21,237 | |
Accounts receivable, net (1) | | 2,308 | | | 96,470 | |
| Prepaid expenses | | 5,882 | | | 6,758 | |
| Other assets | | 1,241 | | | 1,197 | |
Fixed assets, net (2) | | 6,633 | | | 6,988 | |
| Assets of discontinued operations | | 189 | | | 193 | |
| | 40,303 | | | 136,779 | |
| Other assets of consolidated funds | | 2,646 | | | 2,135 | |
| Total other assets | | $ | 42,949 | | | $ | 138,914 | |
__________
(1) Amount at December 31, 2025 included $90.1 million of consideration due from fund investors who assumed interests in the Company's sponsored funds previously held by the Company, with such amounts fully received in January 2026.
(2) Net of accumulated depreciation of $10.8 million at March 31, 2026 and $10.2 million at December 31, 2025.
Other Liabilities
The following table summarizes the Company's other liabilities:
| | | | | | | | | | | | | | |
| (In thousands) | | March 31, 2026 | | December 31, 2025 |
Deferred investment management fees (Note 11) (1) | | $ | 26,120 | | | $ | 26,882 | |
Interest payable on corporate debt | | 33 | | | 98 | |
| Common and preferred stock dividends payable | | 16,539 | | | 16,545 | |
Current and deferred income tax liability | | 4,434 | | | 5,377 | |
| Accrued compensation | | 23,750 | | | 69,475 | |
| Accrued incentive fee and carried interest compensation | | 327,287 | | | 358,506 | |
Operating lease liability for corporate offices | | 29,991 | | | 32,162 | |
| Accounts payable and accrued expenses | | 57,599 | | | 43,888 | |
Due to affiliates (Note 14) | | 33,795 | | | 26,112 | |
| Other liabilities | | 1,487 | | | 3,084 | |
| | | | |
| | 521,035 | | | 582,129 | |
| Other liabilities of consolidated funds | | | | |
Securities sold short | | 80,562 | | | 74,287 | |
Due to custodians | | 12,329 | | | 13,483 | |
| Other liabilities | | 1,440 | | | 256 | |
| Total other liabilities | | $ | 615,366 | | | $ | 670,155 | |
__________(1) Deferred investment management fees are expected to be recognized as fee revenue over a weighted average period of 3.8 years and 4.3 years as of March 31, 2026 and December 31, 2025. Deferred investment management fees recognized as income of $2.9 million and $1.5 million in the three months ended March 31, 2026 and 2025, respectively, pertain to the deferred management fee balance at the beginning of each respective period.
Deferred Income Taxes
The Company has significant deferred tax assets associated with its domestic entities, related principally to capital loss carryforwards, outside basis difference in DBRG's interest in the OP, outside basis difference in investment in partnerships and net operating losses generated by a taxable U.S. subsidiary. As of March 31, 2026 and December 31, 2025, a full valuation allowance has been established against the deferred tax assets of its domestic entities as the realizability of these deferred tax assets did not meet the more-likely-than-not threshold.
6. Debt
The Company's corporate debt is composed of a securitized financing facility.
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| | March 31, 2026 | | December 31, 2025 |
| (In thousands) | Principal | | | | Deferred Financing Cost | | Amortized Cost | | Principal | | | | Deferred Financing Cost | | Amortized Cost |
| | | | | | | | | | | | | | | | |
| Securitized financing facility | | $ | 300,000 | | | | | $ | (790) | | | $ | 299,210 | | | $ | 300,000 | | | | | $ | (1,196) | | | $ | 298,804 | |
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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 $100 million (following the Company's election in June 2025 to reduce its capacity from $300 million, pursuant to its terms) Secured Fund Fee Revenue Variable Funding Notes, Series 2021-1, Class A-1 (the “VFN” and, together with the Class A-2 Notes, the “Series 2021-1 Notes”). The VFN allow the Co-Issuers to borrow on a revolving basis. The Series 2021-1 Notes were issued under an Indenture dated July 2021, as amended in April 2022, that allows the Co-Issuers to issue additional series of notes in the future, subject to certain conditions.
The Series 2021-1 Notes represent obligations of the Co-Issuers and certain other special-purpose subsidiaries of DBRG, and neither DBRG, the OP nor any of DBRG's other subsidiaries are liable for the obligations of the Co-Issuers. The Series 2021-1 Notes are secured by net investment management fees earned by subsidiaries of DBRG, and equity interests in certain sponsored funds and co-investments held by subsidiaries of DBRG, as collateral.
The following table summarizes certain key terms of the securitized financing facility: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| ($ in thousands) | | Outstanding Principal | | Interest Rate (Per Annum)(1) | | Anticipated Repayment Date ("ARD")(2) | | Years Remaining to ARD(2) |
Class A-2 Notes | | $ | 300,000 | | | 3.93 | % | | September 2026 | | 0.5 |
Variable Funding Notes | | — | | | Adjusted 1-month Term SOFR + 3% | | September 2026 | | NA |
__________
(1) Adjusted 1-month Term Secured Overnight Financing Rate ("SOFR") is the equivalent of 1-month Term SOFR plus 0.11448%. Unused capacity under the VFN facility is subject to a commitment fee of 0.5% per annum.
(2) The final maturity date of the Class A-2 Notes is in September 2051. The ARD of the VFN reflects its final one year extension exercised in July 2025.
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.
7. Stockholders' Equity
The table below summarizes the share activities of the Company's preferred stock and common stock.
| | | | | | | | | | | | | | | | | | | | |
| | Number of Shares |
| (In thousands) | | Preferred Stock | | Class A Common Stock | | Class B
Common Stock |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Shares outstanding at December 31, 2024 | | 32,876 | | | 174,202 | | | 150 | |
| | | | | | |
| | | | | | |
| Shares issued upon redemption of OP units | | — | | | 13 | | | — | |
| Equity awards issued, net of forfeitures | | — | | | 2,391 | | | — | |
| Shares canceled for tax withholding on vested equity awards | | — | | | (512) | | | — | |
| Shares outstanding at March 31, 2025 | | 32,876 | | | 176,094 | | | 150 | |
| | | | | | |
| Shares outstanding at December 31, 2025 | | 32,876 | | | 182,643 | | | — | |
| | | | | | |
| | | | | | |
| Shares issued upon redemption of OP units | | — | | | 306 | | | — | |
| Equity awards issued, net of forfeitures | | — | | | 190 | | | — | |
| Shares canceled for tax withholding on vested equity awards | | — | | | (771) | | | — | |
| Shares outstanding at March 31, 2026 | | 32,876 | | | 182,368 | | | — | |
Preferred Stock
In the event of a liquidation or dissolution of the Company, preferred stockholders have priority over common stockholders for payment of dividends and distribution of net assets.
The table below summarizes the preferred stock issued and outstanding at March 31, 2026:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Description | | Dividend Rate Per Annum | | Initial Issuance Date | | Shares Outstanding (in thousands) | | Par Value (in thousands) | | Liquidation Preference (in thousands) | | Earliest Redemption Date |
| Series H | | 7.125 | % | | April 2015 | | 8,395 | | | $ | 84 | | | $ | 209,870 | | | Currently redeemable |
| Series I | | 7.15 | % | | June 2017 | | 12,867 | | | 129 | | | 321,668 | | | Currently redeemable |
| Series J | | 7.125 | % | | September 2017 | | 11,614 | | | 116 | | | 290,361 | | | Currently redeemable |
| | | | | | 32,876 | | | $ | 329 | | | $ | 821,899 | | | |
All series of preferred stock are at parity with respect to dividends and distributions, including distributions upon liquidation, dissolution or winding up of the Company. Dividends are payable quarterly in arrears in January, April, July and October.
Each series of preferred stock is currently redeemable at $25.00 per share plus accrued and unpaid dividends (whether or not declared) prorated to their redemption dates, exclusively at the Company’s option. In addition, each outstanding series of our preferred stock is subject to certain conversion and optional redemption rights upon a change in control.
Preferred stock generally does not have any voting rights, except if the Company fails to pay the preferred dividends for six or more quarterly periods (whether or not consecutive). Under such circumstances, the preferred stock will be entitled to vote, together as a single class with any other series of parity stock upon which like voting rights have been conferred and are exercisable, to elect two additional directors to the Company’s board of directors, until all unpaid dividends have been paid or declared and set aside for payment. In addition, certain changes to the terms of any series of preferred stock cannot be made without the affirmative vote of holders of at least two-thirds of the outstanding shares of each such series of preferred stock voting separately as a class for each series of preferred stock.
Common Stock
In June 2025, all issued and outstanding shares of class B common stock totaling 149,571 shares were converted pursuant to their terms into an equivalent number of shares of class A common stock, and were cancelled following their conversion.
Previously, class B common stock had the same rights and privileges, and ranked equally, shared ratably in dividends and distributions, and was identical in all respects as to all matters as class A common stock, except that class B common stock had thirty-six and one-half votes per share while class A common stock has one vote per share. This had given the holders of class B common stock a right to vote that reflected the aggregate outstanding non-voting economic interest in the Company (in the form of OP units) attributed to class B common stock holders and therefore, did not provide any disproportionate voting rights.
Dividend Reinvestment and Direct Stock Purchase Plan
The Company's Dividend Reinvestment and Direct Stock Purchase Plan (the “DRIP Plan”) provides existing common stockholders and other investors the opportunity to purchase shares (or additional shares, as applicable) of the Company's class A common stock by reinvesting some or all of the cash dividends received on their shares of the Company's class A common stock or making optional cash purchases within specified parameters. No shares of class A common stock have been acquired under the DRIP Plan in the form of new issuances in the last three years.
Stock Repurchases
The Company does not currently have an authorized stock repurchase program.
Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in each component of AOCI attributable to stockholders, net of immaterial tax effect.
Changes in Components of AOCI—Stockholders | | | | | | | | | | | | | | | | | |
(In thousands) | | | | | Foreign Currency Translation Gain (Loss) | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| AOCI at December 31, 2024 | | | | | $ | 505 | | | | | | | |
| Other comprehensive income (loss) before reclassifications | | | | | 2,092 | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| AOCI at March 31, 2025 | | | | | $ | 2,597 | | | | | | | |
| | | | | | | | | | | |
| AOCI at December 31, 2025 | | | | | $ | 5,616 | | | | | | | |
| Other comprehensive income (loss) | | | | | (1,084) | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| AOCI at March 31, 2026 | | | | | $ | 4,532 | | | | | | | |
There were no changes in the component of AOCI attributable to noncontrolling interests in investment entities for 2026 and 2025. AOCI attributable to noncontrolling interests in Operating Company was immaterial.
8. Noncontrolling Interests
Redeemable Noncontrolling Interests
The following table presents the activities in redeemable noncontrolling interests in open-end funds in the liquid securities strategy consolidated by the Company.
| | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, |
| (In thousands) | | 2026 | | 2025 | | |
| Redeemable noncontrolling interests | | | | | | |
| Beginning balance | | $ | 33,226 | | | $ | 24,356 | | | |
| Contributions | | 50 | | | 1,300 | | | |
| Distributions paid and payable, including redemptions | | (104) | | | (808) | | | |
| Net income (loss) | | 1,126 | | | (748) | | | |
| | | | | | |
| Ending balance | | $ | 34,298 | | | $ | 24,100 | | | |
Noncontrolling Interests in Operating Company
Certain current and former employees of the Company directly or indirectly own interests in OP, presented as noncontrolling interests in the Operating Company. Noncontrolling interests in OP have the right to require OP to redeem part or all of such member’s OP units for cash based on the market value of an equivalent number of shares of the Company's class A common stock at the time of redemption, or at the Company's election as managing member of OP, through issuance of shares of class A common stock (registered or unregistered) on a one-for-one basis. At the end of each period, noncontrolling interests in OP is adjusted to reflect their ownership percentage in OP at the end of the period, through a reallocation between controlling and noncontrolling interests in OP.
Redemption of OP units—The Company redeemed OP units totaling 306,346 in the first quarter of 2026 and 6,128,311 in fiscal year 2025 through issuance of an equal number of shares of class A common stock on a one-for-one basis.
9. Fair Value
Recurring Fair Values
Financial assets and financial liabilities carried at fair value on a recurring basis include financial instruments for which the fair value option was elected. Fair value is categorized into a three tier hierarchy that is prioritized based upon the level of transparency in inputs used in the valuation techniques, as follows.
Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in non-active markets, or valuation techniques utilizing inputs that are derived principally from or corroborated by observable data directly or indirectly for substantially the full term of the financial instrument.
Level 3—At least one assumption or input is unobservable and it is significant to the fair value measurement, requiring significant management judgment or estimate.
Where the inputs used to measure the fair value of a financial instrument falls into different levels of the fair value hierarchy, the financial instrument is categorized within the hierarchy based on the lowest level of input that is significant to its fair value measurement.
Due to the inherently judgmental nature of Level 3 fair value, changes in assumptions or inputs applied as of reporting date could result in a higher or lower fair value, and realized value may differ from the estimated unrealized fair value.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurement Hierarchy |
| (In thousands) | | Level 1 | | Level 2 | | Level 3 | | Total |
| March 31, 2026 | | | | | | | | |
| Assets | | | | | | | | |
Investments (Note 3) | | | | | | | | |
| Other equity investments—Marketable equity securities | | $ | 401 | | | $ | — | | | $ | — | | | $ | 401 | |
| CLO subordinated notes | | — | | | — | | | 29,375 | | | 29,375 | |
| Equity investments of consolidated funds | | 118,483 | | | | | 121,239 | | | 239,722 | |
| Fair Value Option: | | | | | | | | |
| Equity method investment | | — | | | — | | | 144,336 | | | 144,336 | |
| Liabilities | | | | | | | | |
| Other liabilities | | | | | | | | |
InfraBridge contingent consideration | | — | | | — | | | 1,300 | | | 1,300 | |
| | | | | | | | |
| | | | | | | | |
Securities of consolidated fund sold short | | 80,562 | | | — | | | — | | | 80,562 | |
| December 31, 2025 | | | | | | | | |
| Assets | | | | | | | | |
Investments (Note 3) | | | | | | | | |
| Other equity investments—Marketable equity securities | | $ | 401 | | | $ | — | | | $ | — | | | $ | 401 | |
| CLO subordinated notes | | — | | | — | | | 30,490 | | | 30,490 | |
| Equity investments of consolidated funds | | 115,102 | | | — | | | 121,239 | | | 236,341 | |
| Fair Value Option: | | | | | | | | |
| Equity method investment | | — | | | — | | | 144,037 | | | 144,037 | |
| | | | | | | | |
| Liabilities | | | | | | | | |
| Other liabilities | | | | | | | | |
InfraBridge contingent consideration | | — | | | — | | | 2,500 | | | 2,500 | |
| | | | | | | | |
DBRG stock warrants (1) | | — | | | — | | | 400 | | | 400 | |
Securities of consolidated fund sold short | | 74,287 | | | — | | | — | | | 74,287 | |
__________(1) Represent liability-classified warrants that are out-of-the-money and expire in July 2026. Fair value of zero at March 31, 2026.
Equity Investments of Consolidated Funds
Equity investments of consolidated funds include marketable equity securities held by our liquid strategy funds and a venture investment held by a single asset fund. The marketable equity securities comprise publicly listed stocks in U.S. and Europe, primarily in the digital infrastructure, real estate, technology, media and telecommunications sectors, valued based upon listed prices in active markets, classified as Level 1. The venture investment, classified as level 3, was valued using a recent transacted price at March 31, 2026 and December 31, 2025.
Fair Value Option
Equity Method Investments
The Company has elected to account for a co-investment in a portfolio company as an equity method investment under the fair value option. Fair value was determined using a discounted cash flow model based upon the portfolio company's projected earnings, discounting unlevered cash flows at a weighted average cost of capital of 7.4% at March 31, 2026 and 8.2% at December 31, 2025. The fair value is classified as Level 3 of the fair value hierarchy and changes in fair value are recorded in principal investment income.
Contingent Consideration—InfraBridge
In connection with the Company's acquisition of InfraBridge in February 2023, contingent consideration may become payable by the Company if prescribed fundraising targets are met for follow-on InfraBridge flagship funds and co-investments. The contingent consideration was measured at March 31, 2026 and December 31, 2025 by applying a probability-weighted approach to the likelihood of meeting various fundraising targets and discounting the estimated future contingent consideration payment at 6.8% and 6.6%, respectively, to derive a present value amount, classified as Level 3 of the fair value hierarchy.
Changes in Level 3 Fair Value
The following table presents changes in recurring Level 3 fair value assets held for investment. Realized and unrealized gains (losses) are included in other gain (loss). | | | | | | | | | | | | | | | | | | | | | | | | |
| Level 3 Assets | | | Level 3 Liabilities |
| | Fair Value Option - Equity Method Investments | | Equity Investments of Consolidated Funds | | | | Contingent Consideration—InfraBridge | | |
| (In thousands) | | | | | |
| Fair value at December 31, 2024 | | $ | 137,154 | | | $ | 63,154 | | | | | $ | (6,100) | | | |
| | | | | | | | | | |
| Unrealized gain (loss) in earnings, net | | 100 | | | — | | | | | 3,900 | | | |
| Fair value at March 31, 2025 | | $ | 137,254 | | | $ | 63,154 | | | | | $ | (2,200) | | | |
| | | | | | | | | | |
| Net unrealized gain (loss) in earnings on instruments held at March 31, 2025 | | $ | 100 | | | $ | — | | | | | $ | 3,900 | | | |
| | | | | | | | | | | |
| Fair value at December 31, 2025 | | $ | 144,037 | | | $ | 121,239 | | | | | $ | (2,500) | | | |
| | | | | | | | | | |
| Unrealized gain (loss) in earnings, net | | 299 | | | — | | | | | 1,200 | | | |
| | | | | | | | | | |
| Fair value at March 31, 2026 | | $ | 144,336 | | | $ | 121,239 | | | | | $ | (1,300) | | | |
| | | | | | | | | | |
| Net unrealized gain (loss) in earnings on instruments held at March 31, 2026 | | $ | 299 | | | $ | — | | | | | $ | 1,200 | | | |
Nonrecurring Fair Values
The Company measures fair value of certain assets on a nonrecurring basis: (i) on the acquisition date for business combinations; (ii) when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable or based upon availability of observable prices for equity investments under the measurement alternative; and (iii) upon deconsolidation of a subsidiary for any retained interest. Adjustments to fair value generally result from application of the lower of amortized cost or fair value for assets held for disposition or otherwise, an adjustment of asset values due to impairment or observable price changes.
There were no assets or liabilities measured at fair value on a nonrecurring basis at March 31, 2026. An equity investment accounted for under the measurement alternative was carried at its estimated fair value of $3.7 million at December 31, 2025 based upon a recent transaction price.
Fair Value of Financial Instruments Reported at Cost
The Company's debt obligation, specifically its secured fund fee revenue notes had fair values of $297.2 million at March 31, 2026 and $294.8 million at December 31, 2025, estimated based upon indicative quotes.
The carrying values of cash and cash equivalents, accounts receivable, due from and to affiliates, interest payable and accounts payable generally approximate fair value due to their short term nature, and credit risk, if any, is negligible.
10. Earnings per Share
The following table presents the basic and diluted earnings per common share computations.
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended March 31, | | |
| (In thousands, except per share data) | | 2026 | | 2025 | | | | | | |
| Net income (loss) allocated to common stockholders | | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Income (Loss) from continuing operations attributable to DigitalBridge Group, Inc. | | $ | 25,305 | | | $ | 17,700 | | | | | | | |
| | | | | | | | | | |
| Preferred dividends | | (14,660) | | | (14,660) | | | | | | | |
| (Income) Loss allocated to participating securities | | (95) | | | (41) | | | | | | | |
| Income (Loss) from continuing operations attributable to common stockholders | | 10,550 | | | 2,999 | | | | | | | |
| Income (Loss) from discontinued operations attributable to common stockholders | | (5,340) | | | (3,918) | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| Net income (loss) allocated to common stockholders—basic and diluted | | $ | 5,210 | | | $ | (919) | | | | | | | |
| Weighted average common shares outstanding | | | | | | | | | | |
| Weighted average number of common shares outstanding—basic | | 179,333 | | | 171,680 | | | | | | | |
Weighted average effect of dilutive shares (1)(2) | | 908 | | | 250 | | | | | | | |
| Weighted average number of common shares outstanding—diluted | | 180,241 | | | 171,930 | | | | | | | |
| Income (Loss) per share—basic | | | | | | | | | | |
| Income (Loss) from continuing operations | | $ | 0.06 | | | $ | 0.01 | | | | | | | |
| Income (Loss) from discontinued operations | | (0.03) | | | (0.02) | | | | | | | |
| Net income (loss) attributable to common stockholders per common share—basic | | $ | 0.03 | | | $ | (0.01) | | | | | | | |
| Income (Loss) per share—diluted | | | | | | | | | | |
| Income (Loss) from continuing operations | | $ | 0.06 | | | $ | 0.01 | | | | | | | |
| Income (Loss) from discontinued operations | | (0.03) | | | (0.02) | | | | | | | |
| Net income (loss) attributable to common stockholders per common share—diluted | | $ | 0.03 | | | $ | (0.01) | | | | | | | |
__________
(1) The calculation of diluted earnings per share includes the weighted average effect of class A common shares and share equivalents issuable in relation to the following dilutive securities: (i) performance stock units (Note 12) of 119,887 and 149,500 for the three months ended March 31, 2026 and 2025, respectively; and (ii) certain equity-classified DBRG stock warrants that were in-the-money of 787,793 and 100,300 for the three months ended March 31, 2026 and 2025, respectively.
(2) OP units may be redeemed for registered or unregistered class A common stock of the Company on a one-for-one basis and are not dilutive. At March 31, 2026 and 2025, 5,488,714 and 11,910,400 of OP units, respectively, were not included in the computation of diluted earnings per share in the respective periods presented.
11. Fee Revenue
The following table presents the Company's fee revenue by type. | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | |
| (In thousands) | | 2026 | | 2025 | | | | | | |
Management fees | | $ | 85,471 | | | $ | 89,860 | | | | | | | |
Incentive fees | | 836 | | | 6 | | | | | | | |
Other fees | | 1,002 | | | 273 | | | | | | | |
| Total fee revenue | | $ | 87,309 | | | $ | 90,139 | | | | | | | |
Management Fees—Management fees are generally calculated based upon the following per annum contractual rates:
•Commingled equity funds—up to 1.60% of investors' committed capital during the commitment period, and thereafter, invested capital (subject to certain reductions for NAV write-downs);
•Credit and other equity funds—up to 2.00% of contributed or invested capital from inception;
•Co-investment vehicles—up to 1.25% of contributed or invested capital from inception; and
•Liquid strategy funds and InfraBridge co-investment vehicles—up to 1.50% of NAV or gross asset value, respectively.
Also, co-investment vehicles may charge a one-time fee upfront on committed or invested capital, generally to be paid in tranches, but with recognition of fee revenue over the expected investment holding period. Certain co-investment vehicles may be non fee-bearing.
Incentive Fees—The Company is entitled to incentive fees from sub-advisory accounts in its liquid securities strategy. Incentive fees are determined based upon the performance of the respective accounts, subject to the achievement of specified return thresholds in accordance with the terms set out in their respective governing agreements. A portion of incentive fees earned by the Company is allocable to certain employees and former employees, included in carried interest and incentive fee compensation expense.
Other Fee Revenue—Other fees include advisory fees and loan origination fees from co-investors, which are non-recurring, and service fees for information technology, facilities and operational support provided to certain portfolio companies.
Revenue Concentration
Revenue concentration is defined as a single fund or investment vehicle that generates 10% or more of the Company's total management fees. Three funds met the concentration criteria, aggregating to 60.0% of total management fees for the three months ended March 31, 2026.
12. Equity-Based Compensation
The Company's 2024 Omnibus Stock Incentive Plan (the "2024 Equity Incentive Plan"), consistent with the previous plan in effect prior to April 2024, provides for the grant of restricted stock, performance stock units ("PSUs"), Long Term Incentive Plan ("LTIP") units, restricted stock units ("RSUs"), deferred stock units ("DSUs"), options, warrants or rights to purchase shares of the Company's common stock, cash incentives and other equity-based awards to the Company's officers, directors (including non-employee directors), employees, co-employees, consultants or advisors of the Company or of any parent or subsidiary who provides services to the Company, but excluding employees of portfolio companies. Shares reserved for the issuance of awards under the 2024 Equity Incentive Plan are subject to equitable adjustment upon the occurrence of certain corporate events. The number of shares of class A common stock reserved and available for issuance under the 2024 Equity Incentive Plan as of its adoption in April 2024 is 5.5 million shares.
Restricted Stock—Restricted stock awards in the Company's class A common stock are granted to senior executives, directors and certain employees, subject to a service condition or a combination of both a service and performance condition, generally with annual time-based vesting in equal tranches over a three-year period, or for certain awards, a two-year cliff vesting. Vesting of performance-based restricted stock awards occur upon achievement of certain Company-specific metrics over a specified performance measurement period. Restricted stock is entitled to dividends declared and paid on the Company's class A common stock and such dividends are not forfeitable prior to vesting of the award. Restricted stock awards are valued based upon the Company's class A common stock price on grant date and equity-based compensation expense is recognized on a straight-line basis over the requisite service period.
Restricted Stock Units—RSUs in the Company's class A common stock are subject to a service condition or a combination of service and performance conditions. RSUs with only a service condition vest over a two-year period. Vesting of performance-based RSUs are dependent upon achievement of a business performance metric over an annual measurement period, with annual time-based vesting in equal tranches over a three-year period. Only vested RSUs are entitled to accrued dividends declared and paid on the Company's class A common stock during the time period the RSUs are outstanding. RSUs are initially valued based upon the Company's class A common stock price on grant date and not subsequently remeasured for equity-classified awards. Equity-based compensation expense is recognized over the vesting period if and when it is probable that the performance condition will be met, subject to reversal if no longer probable.
Performance Stock Units—PSUs are granted to the Company's officers, and are subject to a service condition and performance condition.
Following the end of the measurement period, the recipients of PSUs who remain employed will vest in, and be issued a number of shares of the Company's class A common stock, generally ranging from 0% to 200% of the number of PSUs granted. PSUs have a performance condition in which vesting is determined based upon achievement of prescribed targets for three-year cumulative distributable earnings per share (as defined in the award agreements), with a relative total shareholder return metric applied thereafter to determine the final number of shares vested. The relative total shareholder return metric is based upon performance of the Company's class A common stock over a three-year measurement period relative to a specified peer group.
Recipients of PSUs whose employment is terminated after the first anniversary of their PSU grant are eligible to vest in a portion of the PSU award following the end of the measurement period based upon the final number of shares vested for that award. PSUs also contain dividend equivalent rights which entitle the recipients to a payment equal to the amount of dividends that would have been paid on the shares that are ultimately issued at the end of the measurement period.
The fair value of PSUs consider the probability of achieving the cumulative distributable earnings per share targets and additionally, assign a value to the relative total shareholder return metric using a Monte Carlo simulation under a risk-neutral premise by applying the following assumptions.
| | | | | | | | |
| | 2025 PSU Grants |
Expected volatility of the Company's class A common stock (1) | | 49.8% |
| | |
Risk-free rate (per annum) (2) | | 3.9% |
__________
(1) Based upon historical volatility of the Company's stock and those of a specified peer group.
(2) Based upon the continuously compounded zero-coupon U.S. Treasury yield for the term coinciding with the measurement period of the award as of valuation date.
Fair value of PSU awards is recognized on a straight-line basis over their measurement period as compensation expense. With respect to performance condition awards, expense recognition occurs only if and when it is probable that the cumulative distributable earnings per share targets will be achieved and subject to reversal if no longer probable. In contrast, expense recognized on market condition awards is not subject to reversal even if the total shareholder return metric is not achieved.
The dividend equivalent right is accounted for as a liability-classified award. The fair value of the dividend equivalent right is recognized as compensation expense on a straight-line basis over the measurement period, and is subject to adjustment to fair value at each reporting period.
LTIP units—LTIP units are units in the Operating Company that are designated as profits interests for federal income tax purposes. Unvested LTIP units that are subject to a market condition do not accrue distributions. Each vested LTIP unit is convertible, at the election of the holder (subject to capital account limitation), into one common OP unit and upon conversion, subject to the redemption terms of OP units (Note 7).
LTIP units issued have both a service condition and a market condition based upon the Company's class A common stock achieving a target price over a predetermined measurement period, subject to continuous employment to the time of vesting, and valued using a Monte Carlo simulation. No LTIP awards were issued in all periods presented.
Equity-based compensation cost on LTIP units is recognized on a straight-line basis over the derived service period, irrespective of whether the market condition is satisfied. The derived service period is a service period that is inferred from the application of the simulation technique used in the valuation of the award, and represents the median of the terms in the simulation in which the market condition is satisfied.
Deferred Stock Units—Certain non-employee directors may elect to defer the receipt of annual base fees and/or restricted stock awards, and in lieu, receive awards of DSUs. DSUs awarded in lieu of annual base fees are fully vested on their grant date, while DSUs awarded in lieu of restricted stock awards vest one year from their grant date. DSUs are entitled to a dividend equivalent, in the form of additional DSUs based on dividends declared and paid on the Company's class A common stock, subject to the same restrictions and vesting conditions, where applicable. Upon separation of service from the Company, vested DSUs will be settled in shares of the Company’s class A common stock. Fair value of DSUs are determined based upon the price of the Company's class A common stock on grant date and recognized immediately if fully vested upon grant, or on a straight-line basis over the vesting period as equity based compensation expense and equity.
Equity-based compensation cost in continuing operations is presented on the consolidated statement of operations, as follows.
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | |
(In thousands) | | 2026 | | 2025 | | | | | | |
| Compensation expense | | $ | 7,397 | | | $ | 7,620 | | | | | | | |
| Administrative expense | | 146 | | | 91 | | | | | | | |
| | $ | 7,543 | | | $ | 7,711 | | | | | | | |
Changes in unvested equity awards are summarized below. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | Weighted Average Grant Date Fair Value |
| | Restricted Stock | | LTIP units (1) | | DSUs | | RSUs (2) | | PSUs (3) | | Total | | PSUs | | All Other Awards |
Unvested shares and units at December 31, 2025 | | 4,045,582 | | | 125,000 | | | 45,894 | | | 659,992 | | | 931,484 | | | 5,807,952 | | | $ | 10.45 | | | $ | 11.60 | |
| Granted | | 6,532 | | | — | | | 144 | | | — | | | — | | | 6,676 | | | — | | | 15.31 | |
| Vested | | (1,583,335) | | | — | | | (114) | | | (251,589) | | | — | | | (1,835,038) | | | — | | | 12.38 | |
| Forfeited | | (26,600) | | | — | | | — | | | — | | | (397,262) | | | (423,862) | | | 11.63 | | | 11.13 | |
Unvested shares and units at March 31, 2026 | | 2,442,179 | | | 125,000 | | | 45,924 | | | 408,403 | | | 534,222 | | | 3,555,728 | | | 9.57 | | | 11.13 | |
__________
(1) LTIP units that do not meet their market condition for vesting at the end of their measurement period are reflected as forfeitures.
(2 RSUs that do not meet their performance condition for vesting at the end of their measurement period are reflected as forfeitures.
(3) Number of PSUs granted does not reflect potential increases or decreases that could result from the final outcome based upon the total shareholder return measured at the end of the performance period. PSUs for which the probability of meeting the distributable earnings target changes during the measurement period are reflected as either additional units granted or forfeited. Forfeiture also reflects PSUs issued in 2023 that had a market condition based upon total shareholder return that was not met upon expiration of its measurement period in March 2026.
Fair value of equity awards that vested, determined based upon their respective fair values at vesting date, totaled $28.3 million and $15.2 million for the three months ended March 31, 2026 and 2025, respectively.
At March 31, 2026, aggregate unrecognized compensation cost for all unvested equity awards was $21.7 million, which is expected to be recognized over a weighted average period of 1.5 years.
13. Variable Interest Entities
A VIE is an entity that either (i) lacks sufficient equity to finance its activities without additional subordinated financial support from other parties; (ii) has equity holders who lack the characteristics of a controlling financial interest; and/or (iii) is established with non-substantive voting rights. The following discusses the Company's involvement with VIEs where the Company is the primary beneficiary and consolidates the VIEs or where the Company is not the primary beneficiary and does not consolidate the VIEs.
Operating Subsidiary
The Company's operating subsidiary, OP, is a limited liability company that has governing provisions that are the functional equivalent of a limited partnership. The Company holds the majority of membership interest in OP, acts as the managing member of OP and exercises full responsibility, discretion and control over the day-to-day management of OP. The noncontrolling interests in OP do not have substantive liquidation rights, substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of noncontrolling interest members (including by such a member unilaterally). The absence of such rights, which represent voting rights in a limited partnership equivalent structure, would render OP to be a VIE. The Company, as managing member, has the power to direct the core activities of OP that most significantly affect OP's performance, and through its majority interest in OP, has both the right to receive benefits from and the obligation to absorb losses of OP. Accordingly, the Company is the primary beneficiary of OP and consolidates OP. As the Company conducts its business and holds its assets and liabilities through OP, the total assets and liabilities, earnings (losses), and cash flows of OP represent substantially all of the total consolidated assets and liabilities, earnings (losses), and cash flows of the Company.
Company-Sponsored Funds
The Company sponsors funds and other investment vehicles as general partner for the purpose of providing investment management services in exchange for management fees and carried interest. These funds are established as limited partnerships or equivalent structures. Limited partners of the funds do not have either substantive liquidation rights,
or substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of limited partners or by a single limited partner. Accordingly, the absence of such rights, which represent voting rights in a limited partnership, results in the funds being considered VIEs. The nature of the Company's involvement with its sponsored funds comprise fee arrangements and equity interests in its capacity as general partner and general partner affiliate. The fee arrangements are commensurate with the level of management services provided by the Company, and contain terms and conditions that are customary to similar at-market fee arrangements.
Consolidated Company-Sponsored Funds—The Company currently consolidates sponsored funds in which it has more than an insignificant equity interest in the fund as general partner. As a result, the Company is considered to be acting in the capacity of a principal of the sponsored fund and is therefore the primary beneficiary of the fund. The Company’s exposure is limited to its capital account balance in the consolidated funds of $104.4 million at March 31, 2026 and $104.6 million at December 31, 2025. The liabilities of the consolidated funds may only be settled using assets of the consolidated funds, and the Company, as general partner, is not obligated to provide any financial support to the consolidated funds. The Company does not have unfunded commitments to consolidated funds.
The following table presents the assets and liabilities of the consolidated funds: | | | | | | | | | | | | | | |
| (In thousands) | | March 31, 2026 | | December 31, 2025 |
| Assets | | | | |
| Cash and cash equivalents | | $ | 82,464 | | | $ | 87,119 | |
Investments (Note 3) | | 239,722 | | | 236,340 | |
| Other assets | | 2,646 | | | 2,135 | |
| | $ | 324,832 | | | $ | 325,594 | |
| Liabilities | | | | |
| Other liabilities | | | | |
| Securities sold short | | 80,562 | | | 74,287 | |
| Due to custodian | | 12,329 | | | 13,483 | |
| Other | | 1,440 | | | 256 | |
| | $ | 94,331 | | | $ | 88,026 | |
Unconsolidated Company-Sponsored Funds—The Company does not consolidate its sponsored funds where it has insignificant equity interests in these funds as general partner. As such interests absorb insignificant variability from the fund, the Company is considered to be acting in the capacity of an agent of the fund and is therefore not the primary beneficiary of these funds. The Company accounts for its equity interests in unconsolidated funds under the equity method. The Company's maximum exposure to loss is limited to: (i) the amounts funded, net of distributions, for investments in unconsolidated funds and any carried interest clawback obligations (Note 3) totaling $808.0 million at March 31, 2026 and $823.6 million at December 31, 2025; and (ii) receivables from its unconsolidated funds for fee revenue and reimbursable or recoverable costs, as discussed in Note 14. At March 31, 2026, the Company's unfunded commitments to its unconsolidated funds as general partner and general partner affiliate totaled $212.1 million (including commitments attributed to the ownership by employees and former employees in the general partner entities). Generally, the timing for funding of these commitments is not known and the commitments are callable on demand at any time prior to their respective expirations.
14. Transactions with Affiliates
Affiliates include (i) investment vehicles that the Company sponsors and/or manages, the majority of which the Company has an equity interest in; (ii) portfolio companies of sponsored funds; and (iii) directors and employees of the Company.
Amounts due from and due to affiliates consist of the following:
| | | | | | | | | | | | | | |
| (In thousands) | | March 31, 2026 | | December 31, 2025 |
| Due from Affiliates | | | | |
| Investment vehicles and portfolio companies | | | | |
| Fee revenue | | $ | 87,455 | | | $ | 73,334 | |
| Cost reimbursements and recoverable expenses | | 17,781 | | | 16,855 | |
Carried interest clawback receivable (Note 3) | | 17,192 | | | 13,173 | |
| Employees | | 734 | | | 1,016 | |
| | $ | 123,162 | | | $ | 104,378 | |
Due to Affiliates (Note 5) | | | | |
Carried interest clawback liability (Note 3) | | 32,660 | | | 24,980 | |
| Other affiliates | | 1,135 | | | 1,132 | |
| | $ | 33,795 | | | $ | 26,112 | |
Significant transactions with affiliates include the following:
Fee Revenue—Fee revenue earned from investment vehicles that the Company manages and/or sponsors, the majority of which the Company has an equity interest in, are presented in Note 11. Substantially all fee revenue is from affiliates.
Cost Reimbursements and Recoverable Expenses—The Company receives reimbursements and recovers certain costs paid on behalf of investment vehicles sponsored by the Company, which include: (i) organization and offering costs related to formation and capital raising of the investment vehicles up to specified thresholds; (ii) third party professional fees incurred in performing investment due diligence; and (iii) direct and indirect operating costs for managing the operations of certain investment vehicles and their portfolio companies.
To the extent the Company determines it acts in the capacity of principal in the incurrence of such costs, the reimbursements are included in other income, which totaled $1.3 million and $2.4 million for the three months ended March 31, 2026 and 2025, respectively. To the extent the Company determines that it acts in the capacity of an agent, the costs incurred and related reimbursements are presented on a net basis in the consolidated statements of operations.
Investments or Commitments Transferred—The Company may acquire investments on behalf of prospective sponsored investment vehicles or subscribe to commitments in its sponsored funds on behalf of prospective investors. The investments or commitments are transferred to the investment vehicle or prospective investor when sufficient third party capital, including debt, is raised. The Company may be paid a fee by the investment vehicle or investor, akin to an interest charge, typically calculated as a percentage of the acquisition price of the investment or the commitment amount funded, to compensate the Company for its holding cost. The terms of such arrangements may differ for each sponsored investment vehicle and by investment or investor.
Digital Bridge Holdings —Marc Ganzi, Chief Executive Officer of the Company, and Ben Jenkins, President and Chief Investment Officer of the Company, were former owners of Digital Bridge Holdings, LLC ("DBH") prior to its merger into the Company in July 2019. Messrs. Ganzi and Jenkins had retained their equity investments and general partner interests in the portfolio companies of DBH.
With respect to investment vehicles sponsored by the Company for which Messrs. Ganzi and Jenkins are invested in their capacity as former owners of DBH, and not in their capacity as employees of the Company, any carried interest entitlement attributed to such investments by Messrs. Ganzi and Jenkins as general partner are not subject to continuing vesting provisions and do not represent compensatory arrangements to the Company. Such carried interest allocation to Messrs. Ganzi and Jenkins that are unrealized or distributed but unpaid are included in noncontrolling interests on the balance sheet in the amount of $9.8 million at March 31, 2026 and $18.0 million at December 31, 2025. Net carried interest reversal was recorded as net loss attributable to noncontrolling interests totaling $8.3 million and $13.9 million for the three months ended March 31, 2026 and 2025, respectively. At March 31, 2026 and December 31, 2025, a portion of carried interest previously distributed to Messrs. Ganzi and Jenkins in their capacity as former owners of DBH would be subject to clawback totaling $8.7 million and $6.6 million, respectively, assuming a hypothetical liquidation of the
associated fund at the reporting date estimated fair values (Note 3), for which Messrs. Ganzi and Jenkins would be personally responsible.
Prior to the Company’s acquisition of DBH, Messrs. Ganzi and Jenkins had made personal investments in Vantage Data Centers ("Vantage"), a portfolio company of DBH. Vantage SDC, which the Company has an investment in, is a carve out of the stabilized data center portfolio of Vantage's North American business. Additional investments made by the Company in Vantage SDC subsequent to its initial acquisition may trigger future carried interest payments to Messrs. Ganzi and Jenkins in connection with their personal investments in Vantage. Such investments made by the Company in Vantage SDC include ongoing payments for the build-out of expansion capacity, including lease-up of the expanded capacity and existing inventory.
Investment in Managed Investment Vehicles—Subject to the Company's related party policies and procedures, certain employees (who may thereafter become former employees) may invest on a discretionary basis in investment vehicles sponsored by the Company, either directly in the vehicle or indirectly through the Company's general partner entities. These investments are not subject to management fees or carried interest, but otherwise bear their proportionate share of other operating expenses of the investment vehicles. Such investments, to the extent they pertain to consolidated investment vehicles and general partner entities, are presented on the consolidated balance sheet within redeemable noncontrolling interests and noncontrolling interests in investment entities and totaled $60.5 million at March 31, 2026 and $62.0 million at December 31, 2025. Their proportionate share of net income (loss) from these investments totaled $0.4 million and $(0.2) million for the three months ended March 31, 2026 and 2025, respectively. Such amounts are reflected in net income (loss) attributable to noncontrolling interests on the consolidated statement of operations and exclude their share of carried interest allocation, which is reflected in incentive fee and carried interest compensation expense.
Private Aircraft—Pursuant to Mr. Ganzi’s employment agreement, the Company has agreed to reimburse Mr. Ganzi for the variable costs of business travel on a chartered or private jet (including any aircraft that Mr. Ganzi may partially or fully own), provided that the Company will not reimburse the allocable share (based on the total number of passengers) of such variable costs for any passenger who is not traveling on Company business. The Company has also agreed to reimburse Mr. Ganzi for the cost of up to 100 hours of personal travel, which is treated as a compensatory arrangement. Additionally, the Company has agreed to reimburse Mr. Ganzi for a proportional share of the fixed cash costs of any aircraft partially or fully owned by Mr. Ganzi. The fixed cost reimbursements will be made based on an allocable portion of annual fixed cash operating costs of the aircraft, based on the total number of hours the aircraft is used for Company business and personal hours claimed (up to 100 hours annually) divided by the total hours flown. Expenses incurred on behalf of Mr. Ganzi and expenses reimbursed or are reimbursable to Mr. Ganzi associated with the use of private aircraft (including both aircraft owned by Mr. Ganzi and third party chartered flights) totaled $1.6 million and $1.7 million for the three months ended March 31, 2026 and 2025.
15. Segment Reporting
The entirety of the Company's business, inclusive of all income and expense from continuing operations of the Company as a whole, is reported as a single reportable segment. The approach of managing the whole Company as a single business is consistent with the manner in which its Chief Executive Officer, in the role as the Company's chief operating decision maker or CODM, assesses the allocation of resources and performance of the Company.
The segment earnings measure is net income (loss) from continuing operations attributable to common stockholders.
The CODM is provided with significant expense categories that are consistent with those disclosed in the consolidated statements of operations and additionally, budgeted fee revenue, compensation and administrative expenses of the Company. This information, along with the segment earnings measure, is used by the CODM to monitor financial performance from core operations of the business against budget and in making strategic decisions regarding key areas of growth for the business and consequently, investment or divestment of resources. The CODM does not review disaggregated assets by segment.
Segment Results of Operations
The following table presents net income (loss) from continuing operations attributable to common stockholders for the Company's single reportable segment and is reconciled to the consolidated statement of operations.
| | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | |
| | | 2026 | | 2025 | | | | | | |
| Revenues | | | | | | | | | | |
| Fee revenue | | $ | 87,309 | | | $ | 90,139 | | | | | | | |
| Carried interest allocation | | (44,729) | | | (55,464) | | | | | | | |
| Principal investment income | | 24,586 | | | 5,307 | | | | | | | |
| Other income | | 5,070 | | | 5,465 | | | | | | | |
| Total revenues | | 72,236 | | | 45,447 | | | | | | | |
| Expenses | | | | | | | | | | |
| Compensation expense—cash and equity-based | | 49,150 | | | 46,110 | | | | | | | |
| Compensation expense—incentive fee and carried interest allocation | | (23,140) | | | (22,304) | | | | | | | |
| Administrative and other expenses | | 19,737 | | | 15,946 | | | | | | | |
| Interest expense | | 3,543 | | | 3,898 | | | | | | | |
| Transaction-related costs | | 14,168 | | | 4,421 | | | | | | | |
| Depreciation and amortization | | 5,320 | | | 7,226 | | | | | | | |
| | | | | | | | | | |
| Total expenses | | 68,778 | | | 55,297 | | | | | | | |
| Other income (loss) | | | | | | | | | | |
| Other gain (loss), net | | 4,053 | | | (519) | | | | | | | |
| Income (loss) from continuing operations before income taxes | | 7,511 | | | (10,369) | | | | | | | |
| Income tax benefit (expense) | | 8 | | | (301) | | | | | | | |
| Income (loss) from continuing operations | | 7,519 | | | (10,670) | | | | | | | |
| Income (loss) from continuing operations attributable to noncontrolling interests: | | | | | | | | | | |
| Redeemable noncontrolling interests | | 1,126 | | | (748) | | | | | | | |
| Investment entities | | (19,213) | | | (27,882) | | | | | | | |
| Operating Company | | 301 | | | 260 | | | | | | | |
| Income (loss) from continuing operations attributable to DigitalBridge Group, Inc. | | $ | 25,305 | | | $ | 17,700 | | | | | | | |
| Preferred stock dividends | | 14,660 | | | 14,660 | | | | | | | |
| | | | | | | | | | |
| Income (loss) from continuing operations attributable to common stockholders | | $ | 10,645 | | | $ | 3,040 | | | | | | | |
| | | | | | | | | | |
| Reconciliation of segment earnings measure to consolidated statement of operations: | | | | | | | | | | |
| Income (loss) from continuing operations attributable to common stockholders | | $ | 10,645 | | | $ | 3,040 | | | | | | | |
| Income (loss) from discontinued operations attributable to common stockholders | | (5,340) | | | (3,918) | | | | | | | |
| Net income (loss) attributable to common stockholders | | $ | 5,305 | | | $ | (878) | | | | | | | |
Geography
Geographic information about the Company's total revenues from continuing operations and long-lived assets, excluding assets of discontinued operations, are as follows. Geography is generally presented as the location in which income generating services are substantially performed. | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended March 31, | | |
(In thousands) | | 2026 | | 2025 | | | | | | |
| Total revenues by geography: | | | | | | | | | | |
| United States | | $ | 59,838 | | | $ | 33,090 | | | | | | | |
Europe (1) | | 10,354 | | | 9,984 | | | | | | | |
| Other | | 759 | | | 15 | | | | | | | |
Total (2) | | $ | 70,951 | | | $ | 43,089 | | | | | | | |
| | | | | | | | | | | | | | |
| (In thousands) | | March 31, 2026 | | December 31, 2025 |
| Long-lived assets by geography: | | | | |
| United States | | $ | 15,012 | | | $ | 16,319 | |
| Europe | | 10,564 | | | 10,878 | |
| Other | | 910 | | | 1,028 | |
Total (3) | | $ | 26,486 | | | $ | 28,225 | |
__________(1) Revenues generated in Europe are predominantly U.S. dollar denominated.
(2) Total revenues excludes cost reimbursement income from affiliates (Note 14) that is included within other income, and income from discontinued operations.
(3) Long-lived assets include lease right-of-use assets and fixed assets, and exclude financial instruments, goodwill, intangible assets and assets of discontinued operations.
16. Commitments and Contingencies
Litigation
The Company may be involved in litigation and other proceedings that arise in the ordinary course of business. Other than as described below, as of March 31, 2026, the Company is not involved in any legal proceedings that are expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.
On July 2, 2021, the Company was named as a defendant in the matter of Hernandez v. Colony Capital, Inc., et al., initially filed in the Superior Court of California, County of Sacramento on February 10, 2020 (the “Lawsuit”). The Lawsuit arises from the 2019 death of a resident at an assisted living facility located on a property that was part of a healthcare real estate investment portfolio owned by the Company prior to its strategic exit from the healthcare sector. In the Lawsuit, the plaintiffs alleged claims including negligence and wrongful death, among others, and sought compensatory and punitive damages. On March 3, 2026, the jury issued a verdict against several defendants, including the Company, for approximately $10.2 million in compensatory damages and $100 million in punitive damages. The court has determined to offset the compensatory damages, for which the Company is jointly and severally liable, using $2.5 million of settlement proceeds from several defendants, including the operator of the facility, that settled with the plaintiffs prior to conclusion of the trial in a settlement that the court ruled was not entered into in good faith. The Company’s share of the punitive damages, based on the jury’s findings, is $92 million. However, as of the filing of this Quarterly Report, no judgment has been entered by the court.
The Company disagrees with the verdict and intends to appeal any judgment based on that verdict and pursue all available post-trial remedies. The Company believes there are substantial grounds to challenge both liability findings and the size of the punitive damages award. However, the timing and outcome of post-trial proceedings and any appeal are uncertain, and the Company cannot predict the ultimate outcome of the Lawsuit. The Company believes any compensatory damages would be adequately covered by insurance, although the Company cannot be certain of ultimate recovery at this time. The Company continues to operate its business in the ordinary course and no longer owns or operates healthcare-related assets, having divested its healthcare portfolio in 2022.
The Company has accrued a contingent loss of $7.7 million in discontinued operations in the first quarter of 2026, which management believes to be a reasonable estimate of the probable loss incurred as of the reporting date. It is reasonably possible that an exposure to loss may exceed the amount accrued and that such excess could be significant. However, because the Lawsuit remains subject to significant uncertainties, the Company is unable to reasonably estimate the range of possible loss that may be attributable to liabilities, if any, in excess of the amount accrued. The Company’s contingent liability will be adjusted based upon future developments.
17. Subsequent Events
No subsequent events have occurred that would require recognition in the consolidated financial statements or disclosure in the accompanying notes.
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Quarterly Report on Form 10-Q (this "Quarterly Report") constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend such statements to be covered by the safe harbor provisions contained therein. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases which are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions.
The forward-looking statements contained in this Quarterly Report reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements:
•uncertainties as to the timing of the merger contemplated by the Agreement and Plan of Merger (the "Merger Agreement") by and among DBRG, the OP, and indirect subsidiaries of SoftBank Group Corp. (TSE: 9984, "SoftBank") (the "Merger");
•the risk that the Merger may not be completed on the anticipated terms in a timely manner or at all;
•the failure to satisfy any of the conditions to the consummation of the Merger;
•the possibility that competing offers or acquisition proposals for the Company will be made;
•the possibility that any or all of the various conditions to the consummation of the Merger may not be satisfied, in a timely manner or at all, or waived, including the failure to receive any required regulatory approvals from any applicable governmental entities (or any conditions, limitations or restrictions placed on such approvals);
•the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, including in circumstances which would require the Company to pay a termination fee;
•the effect of the announcement or pendency of the transactions contemplated by the Merger Agreement on the Company’s ability to retain and hire key personnel, its ability to maintain relationships with its customers, suppliers and others with whom it does business, or its operating results and business generally;
•risks related to diverting management’s attention from the Company’s ongoing business operations as a result of the Merger;
•certain restrictions during the pendency of the Merger that may impact the Company’s ability to pursue certain business opportunities or strategic transactions;
•risks that the benefits of the Merger are not realized when and as expected;
•the risk that the Company’s business and/or SoftBank’s business will be adversely impacted during the pendency of the acquisition;
•difficult market and political conditions, including those resulting from inflation, high interest rates, trade barriers, a general economic slowdown or a recession;
•our ability to raise capital from investors for our Company, our funds and the companies that we manage;
•the performance of our funds and investments relative to our expectations and the highly variable nature of our revenues, earnings and cash flow;
•our exposure to risks inherent in the ownership and operation of infrastructure and digital infrastructure assets, including our reliance on third-party suppliers to provide power, network connectivity and certain other materials and services to our managed companies;
•our exposure to business risks in Europe, Asia, Latin America and other foreign markets, including the impact of changes in foreign exchange rates on the value of our investments;
•our ability to increase fee earning equity under management ("FEEUM") and expand our existing and new investment strategies while maintaining consistent standards and controls;
•our ability to appropriately manage conflicts of interest;
•our ability to expand into new investment strategies, geographic markets and businesses, including through acquisitions in the infrastructure and investment management industries;
•the impact of climate change and regulatory or societal efforts associated with environmental, social and governance matters;
•our ability to maintain effective information and cybersecurity policies, procedures and capabilities and the impact of any cybersecurity incident affecting our systems or network or the system and network of any of our managed companies or service providers;
•uncertainty around, and disruption from, new and emerging technologies, including the adoption and utilization of artificial intelligence;
•the ability of our portfolio companies to attract and retain key customers and to provide reliable services without disruption;
•any litigation and contractual claims against us and our affiliates, including potential settlement and litigation of such claims and stockholder litigation in connection with the transactions contemplated by the Merger Agreement or the outcome of any other legal proceedings that may be instituted against the Company or SoftBank and/or others relating to the Merger may result in significant costs of defense; indemnification and liability;
•our ability to obtain and maintain financing arrangements, including securitizations, on favorable or comparable terms or at all;
•the general volatility of the securities markets in which we participate;
•the market value of our assets and effects of hedging instruments on our assets;
•the impact of legislative, regulatory and competitive changes, including those related to privacy and data protection and new SEC rules governing investment advisers;
•whether we will be able to utilize existing tax attributes to offset taxable income to the extent contemplated;
•our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended;
•changes in our board of directors or management team, and availability of qualified personnel;
•our ability to make or maintain distributions to our stockholders; and
•our understanding of and ability to successfully navigate the competitive landscape in which we and our managed companies operate.
While forward-looking statements reflect our good faith beliefs, assumptions and expectations, they are not guarantees of future performance. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes. Moreover, because we operate in a very competitive and rapidly changing environment, new risk factors are likely to emerge from time to time. We caution investors not to place undue reliance on these forward-looking statements and urge you to carefully review the disclosures we make concerning risks in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report. Readers of this Quarterly Report should also read our other periodic filings made with the Securities and Exchange Commission (the "SEC") and other publicly filed documents for further discussion regarding such factors.