Key Takeaways
- • DigitalBridge closed a $500 million securitized notes issuance in July 2021, consisting of $300 million in Class A-2 term notes priced at 3.933% and up to $200 million in Class A-1 variable funding notes, extending the company's effective debt maturity from 2022 to 2026.
- • This represents the first-of-its-kind securitization backed by investment management fees, a structural innovation that secured DigitalBridge's inaugural investment-grade rating (BBB from Kroll Bond Rating Agency) and demonstrated viability of fee-based collateral in capital markets.
- • The transaction lowers DigitalBridge's cost of capital by leveraging its high-quality digital infrastructure collateral base and rotating its financing profile away from traditional corporate credit facilities toward longer-duration, structured products.
- • Proceeds will be used for general corporate purposes, with the financing providing a strategic refinancing vehicle that improves the company's liquidity profile and debt maturity ladder.
- • DigitalBridge's investment management platform, which underpins the collateral, manages substantial assets with fee-earning equity generating recurring revenue streams that support the securitized notes structure.
Summary
DigitalBridge Group, Inc. completed a landmark $500 million securitized notes issuance on July 9, 2021, marking a significant milestone in the company's evolution as a digital infrastructure REIT. The transaction comprised two tranches: $300 million aggregate principal amount of Series 2021-1 3.933% Secured Fund Fee Revenue Notes, Class A-2, with a September 2026 anticipated repayment date, and Series 2021-1 Secured Fund Fee Revenue Variable Funding Notes, Class A-1, which permitted revolving borrowings up to $200 million.
The securitization was structured as a first-of-its-kind transaction backed by investment management fees earned by DigitalBridge affiliates, rather than traditional asset-based collateral. This innovative structure garnered DigitalBridge's first investment-grade credit rating—BBB from Kroll Bond Rating Agency—validating the credit quality of recurring fee income streams derived from the company's investment management platform. The transaction demonstrated that structured finance markets recognize investment management fees as viable, bankable collateral with sufficient durability to support investment-grade securities.
Beyond credit profile expansion, the securitization achieved three critical strategic objectives: extension of the company's effective debt maturity from 2022 into 2026, reduction in cost of capital through access to securitized financing markets rather than traditional corporate credit facilities, and refinancing of the company's existing corporate credit facility. The successful market reception for Class A-2 notes at 3.933% reflected investor confidence in DigitalBridge's fee-based business model and digital infrastructure positioning.
Net proceeds from the issuance were designated for general corporate purposes, providing flexibility to support growth initiatives and capital allocation priorities. The transaction highlighted DigitalBridge's successful strategic rotation toward digital infrastructure assets and recurring fee-generating business models, which created a higher-quality collateral profile capable of accessing capital markets at favorable terms relative to traditional REIT financing alternatives.
The securitization was structured as a first-of-its-kind transaction backed by investment management fees earned by DigitalBridge affiliates, rather than traditional asset-based collateral. This innovative structure garnered DigitalBridge's first investment-grade credit rating—BBB from Kroll Bond Rating Agency—validating the credit quality of recurring fee income streams derived from the company's investment management platform. The transaction demonstrated that structured finance markets recognize investment management fees as viable, bankable collateral with sufficient durability to support investment-grade securities.
Beyond credit profile expansion, the securitization achieved three critical strategic objectives: extension of the company's effective debt maturity from 2022 into 2026, reduction in cost of capital through access to securitized financing markets rather than traditional corporate credit facilities, and refinancing of the company's existing corporate credit facility. The successful market reception for Class A-2 notes at 3.933% reflected investor confidence in DigitalBridge's fee-based business model and digital infrastructure positioning.
Net proceeds from the issuance were designated for general corporate purposes, providing flexibility to support growth initiatives and capital allocation priorities. The transaction highlighted DigitalBridge's successful strategic rotation toward digital infrastructure assets and recurring fee-generating business models, which created a higher-quality collateral profile capable of accessing capital markets at favorable terms relative to traditional REIT financing alternatives.
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