10-K: DigitalBridge 2025 Annual Report: SoftBank Merger & Growth

DigitalBridge Group, Inc. reports strong FEEUM growth and improved distributable earnings in its 2025 Annual Report, alongside details of its pending acquisition by SoftBank for $16.00 per share.

Summary

• DigitalBridge Group, Inc. (DBRG) entered into an agreement on December 29, 2025, to be acquired by indirect subsidiaries of SoftBank Group Corp. for $16.00 per common share or OP common unit in cash.
• The acquisition by SoftBank is expected to close in the second half of 2026, contingent on DBRG's common stockholder approval, required consents for flagship investment funds, specified fee-paying client consents, and regulatory approvals.
• Fee Earning Equity Under Management (FEEUM) increased by $5.5 billion, or 15%, reaching $41.0 billion at December 31, 2025.
• The company raised $5.6 billion in capital during 2025, primarily for its third flagship digital infrastructure fund, DigitalBridge Partners III (DBP III), which had its final closing on October 31, 2025, with total commitments of $7.2 billion.
• Net income attributable to common stockholders significantly increased to $83.2 million in 2025, up from $11.9 million in 2024.
• Total revenues decreased to $94.0 million in 2025 from $607.0 million in 2024, primarily due to a large net reversal in unrealized carried interest.
• Fee revenue increased by $44.8 million, or 14%, to $374.4 million in 2025, driven by capital raised for DBP III and new co-investment vehicles.
• Fee-Related Earnings (FRE) increased by $34.9 million, or 33%, to $142.0 million in 2025, with the FRE margin improving to 38%.
• Distributable Earnings (DE) increased by $44.3 million to $96.8 million in 2025.
• The company received approximately $59.7 million in proceeds from a secondary sale of equity by its DataBank portfolio company in February 2025.
• Corporate debt outstanding under Class A-2 Notes is $300 million, with an anticipated repayment date of September 2026.
• Unfunded equity commitments to sponsored funds totaled $194 million as of December 31, 2025.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive report, primarily driven by the pending acquisition by SoftBank at a fixed price, which provides certainty for common stockholders, and strong growth in core fee-related and distributable earnings, despite a significant non-cash reversal in carried interest.

Positives

• Net income attributable to common stockholders increased significantly to $83.2 million in 2025 from $11.9 million in 2024.
• FEEUM grew by 15% to $41.0 billion at December 31, 2025, demonstrating strong asset growth.
• Successfully raised $5.6 billion in capital in 2025, including the final closing of DBP III with $7.2 billion in commitments.
• Fee revenue increased by 14% to $374.4 million in 2025, indicating robust core business performance.
• Fee-Related Earnings (FRE) increased by 33% to $142.0 million, with the FRE margin improving to 38%, reflecting operational efficiency.
• Distributable Earnings (DE) increased by $44.3 million to $96.8 million, highlighting improved cash generation for distributions and reinvestments.
• Realized $59.7 million from a secondary sale of equity in the DataBank portfolio company in February 2025.
• The company is in compliance with all financial covenants for its securitized financing facility.
• Management concluded that internal control over financial reporting was effective as of December 31, 2025.

Negatives

• Total revenues decreased significantly to $94.0 million in 2025 from $607.0 million in 2024, primarily due to a large net reversal in unrealized carried interest.
• Unrealized carried interest allocation was a net reversal of $(376.2) million in 2025, compared to a net positive allocation of $218.3 million in 2024, indicating a decline in the fair value of underlying fund investments relative to return hurdles.
• A clawback obligation of $25.0 million for previously distributed carried interest was identified as of December 31, 2025, with the company's net share being $2.9 million.
• A $40.3 million loss from a portfolio company of an InfraBridge fund was recognized in the second quarter of 2025.
• Income (loss) from continuing operations before income taxes was a loss of $(17.0) million in 2025, compared to income of $168.8 million in 2024.
• Transaction-related costs increased by $15.5 million to $20.8 million in 2025, largely due to the proposed acquisition of DBRG.
• Income tax expense increased to $5.7 million in 2025 from $2.9 million in 2024.
• A full valuation allowance of $432.1 million has been maintained on deferred tax assets of domestic entities, indicating uncertainty about the future realizability of these tax benefits.

Risks

• The proposed Merger with SoftBank may not be completed on the anticipated terms or timeline, or at all, due to various closing conditions including stockholder and regulatory approvals.
• Adverse judgments in potential lawsuits challenging the Merger could prevent or delay the transaction.
• Failure to consummate the Merger could have a material adverse impact on the company's business, results of operations, and financial condition, including a potential $96 million termination fee.
• Uncertainty regarding the completion of the Merger may adversely impact the company's ability to maintain relationships with investors and business partners, and to attract and retain key employees.
• Provisions in the Merger Agreement, such as no-shop clauses and termination fees, could discourage potential competing acquirers.
• Directors and executive officers have interests in the Merger that are different from, or in addition to, those of other stockholders.
• Difficult market and political conditions, including inflation, high interest rates, economic slowdowns, and geopolitical tensions, could adversely impact the business.
• The business depends heavily on the ability to raise capital from investors; failure to do so would materially reduce revenues and cash flow.
• The investment management business is intensely competitive, potentially limiting the ability to generate attractive risk-adjusted returns.
• Poor performance of the company's funds could lead to a decline in revenue, potential repayment obligations for performance fees, and difficulty in raising capital for future funds.
• Many parts of revenues, earnings, and cash flow are highly variable, making steady earnings growth difficult and potentially causing share price volatility.
• Investments in digital infrastructure expose the company to unique risks, including physical infrastructure failures, dependence on third-party suppliers, intense competition, technological obsolescence, and evolving government regulation.
• Operations in foreign markets (Europe, Asia, Latin America) expose the business to risks such as changes in tax rates, repatriation restrictions, foreign exchange rate fluctuations, and compliance with diverse legal frameworks.
• Valuation methodologies for illiquid assets in managed institutional private funds involve subjective judgments, which could lead to incorrect fair values and misstatement of performance.
• The organization and management of current and future investment vehicles may create conflicts of interest, particularly in investment and financing opportunities.
• Expansion into new investment strategies, geographic markets, and businesses carries risks related to integration, capital investment, and compliance with new regulatory regimes.
• The company does not directly control the operations of its portfolio companies and is dependent on their management teams.
• Funds may be forced to dispose of investments at a disadvantageous time, potentially resulting in lower-than-expected returns.
• Climate change and regulatory/societal efforts related to environmental, social, and governance (ESG) matters could adversely affect the business, increasing compliance costs and reputational risks.
• Dependence on key personnel; the loss of their services or investor confidence in them could materially adversely affect the business.
• Conflicts of interest exist between the company and its Chief Executive Officer and President due to their personal investments in certain portfolio companies (e.g., DataBank, Vantage SDC).
• Cybersecurity incidents or a failure to implement effective information and cybersecurity policies could disrupt operations, cause financial harm, and damage business relationships.
• Risks related to emerging and changing technology, particularly artificial intelligence, including potential for inaccuracy, error, bias, and increased competition.
• The company is subject to substantial litigation risks and may face significant liabilities and damage to its professional reputation.
• Actions of activist stockholders could cause substantial costs and divert management's attention.
• The company requires capital to operate and grow; failure to obtain it could materially adversely affect the business and ability to maintain distributions.
• Changes in debt financing markets or higher interest rates could negatively impact asset values and access to capital for funds and portfolio companies.
• Increases in interest rates could adversely affect the value of investments and increase interest expense, reducing earnings and cash available for distribution.
• The company may not be able to generate sufficient cash flow to meet all existing or potential future debt service obligations.
• Restrictive terms in securitization transaction documents could limit the company's activities or cash distributions.
• The market price and trading volume of Class A common stock has been and may continue to be volatile.
• Issuance of additional equity securities may dilute existing stockholder interests.
• Certain provisions of Maryland law could inhibit changes in control.
• Conflicts of interest may exist or could arise in the future with the Operating Partnership (OP) and its members.
• Extensive regulation in the United States and abroad affects activities, increases costs, and creates potential for significant liabilities.
• Privacy and data protection regulations are complex and rapidly evolving; any failure to comply could harm the business.
• The company may fail to realize the anticipated benefits of becoming a taxable C Corporation.
• Ability to use capital loss and Net Operating Loss (NOL) carryforwards to reduce future tax payments may be limited.
• The company could be subject to increased taxes if international tax rules and regulations are modified.
• There is a risk of changes in the tax law applicable to an investment in the company.

Future Outlook

The proposed acquisition by SoftBank is expected to be completed in the second half of 2026, subject to DBRG's common stockholder approval and various regulatory consents. Following the merger, DigitalBridge will become an indirect, wholly-owned subsidiary of SoftBank but will continue to operate as a separately managed platform. The company is also actively seeking to refinance its corporate debt, including the Class A-2 Notes and Variable Funding Notes, prior to their anticipated repayment date in September 2026. The company continues to evaluate the effects of new U.S. tax legislation and upcoming accounting standards.

Management Comments

• "We believe we have sufficient cash on hand, and anticipated cash generated from operating activities and availability of external financing sources, to meet our short term and long term liquidity and capital requirements."
• "While we have sufficient liquidity to meet our operational needs, we continuously evaluate alternatives to efficiently manage our capital structure and market opportunities to strengthen our liquidity and provide further operational and strategic flexibility."

Industry Context

StockSavvy.ai notes that DigitalBridge operates in the highly competitive digital infrastructure investment management sector, which is experiencing increased institutional investor interest and rapid technological evolution, including the adoption of artificial intelligence. The company's focus on value-add digital infrastructure, including data centers, cell towers, and fiber networks, aligns with strong secular growth themes like 5G and cloud adoption. The pending SoftBank acquisition could further solidify its position by providing significant backing, potentially enhancing its ability to compete for large-scale investment opportunities and expand globally, while also navigating the complexities of a rapidly evolving regulatory landscape for technology and data.

Comparison to Industry Standards

• The filing highlights competition from 'other private equity and infrastructure sponsors, credit and hedge fund sponsors and REITs who may have greater financial resources, longer track records, more established relationships and more attractive fees and other fund terms.'
• DigitalBridge Partners I (DBP I) achieved a gross Internal Rate of Return (IRR) of 10.2% and a net IRR of 7.8% since its inception in March 2018.
• DigitalBridge Partners II (DBP II) achieved a gross IRR of 10.4% and a net IRR of 7.8% since its inception in November 2020.
• The Core Strategic Assets Fund (SAF) achieved a gross IRR of 4.6% and a net IRR of 2.5% since its inception in November 2022.
• InfraBridge Global Infrastructure Fund I (GIF I) achieved a gross IRR of 8.7% and a net IRR of 6.1% since its inception in March 2015.
• InfraBridge Global Infrastructure Fund II (GIF II) reported negative gross and net IRRs (<0%) since its inception in June 2018, indicating underperformance in this specific fund.
• Credit I achieved a gross IRR of 10.8% and a net IRR of 7.2% since its inception in December 2022.
• StockSavvy.ai notes that while specific comparable company performance metrics are not provided in the filing, the reported IRRs for DBP I, DBP II, and Credit I appear competitive within the value-add digital infrastructure and credit sectors, especially considering the challenging macroeconomic environment. However, the negative performance of InfraBridge GIF II warrants closer scrutiny compared to similar middle-market infrastructure funds, suggesting potential areas for improvement or strategic re-evaluation within that specific vehicle.

Corporate Governance

Legal Proceedings

• The company is involved in litigation and other proceedings in the ordinary course of business, but none are expected to have a material adverse effect on its results of operations, financial position, or liquidity as of December 31, 2025.
• Colony Capital Investment Advisors, LLC (CCIA), an investment adviser to certain legacy funds, entered into a settlement agreement with the SEC in September 2024 regarding alleged deficiencies in compliance with fiduciary duty and disclosure of affiliate transactions.
• Stockholders may file lawsuits challenging the proposed Merger or related transactions, which could result in significant defense costs and divert management's attention.

Related Party Transactions

• Marc C. Ganzi (CEO) and Benjamin Jenkins (President & CIO) retained personal equity investments and general partner interests in DBH Portfolio Companies (e.g., DataBank, Vantage SDC) prior to the 2019 merger, which may lead to future carried interest payments to them and potential conflicts of interest.
• The company reimburses Mr. Ganzi for variable costs of business travel on private jets and up to 100 hours of personal travel, totaling $4.7 million in 2025.
• Certain employees may invest in sponsored investment vehicles, with these investments not subject to management fees or carried interest but bearing their proportionate share of other operating expenses.
• The company receives reimbursements from affiliates for costs paid on behalf of sponsored investment vehicles, including organization and offering costs, investment due diligence, and operating costs.
• A portion of carried interest previously distributed to Messrs. Ganzi and Jenkins in their capacity as former owners of DBH, totaling $6.6 million, would be subject to clawback as of December 31, 2025, for which they would be personally responsible.

Stakeholder Impact

• Shareholders (Common Stock): Will receive $16.00 per share in cash upon the expected completion of the SoftBank merger, providing a definitive exit value. This offers certainty but limits potential upside beyond the offer price.
• Shareholders (Preferred Stock): Preferred stock will remain outstanding post-merger, continuing to receive dividends in accordance with their terms, indicating no direct impact from the common stock acquisition.
• Employees: The pending merger introduces uncertainty regarding future roles and employment arrangements. The company's ability to attract and retain key personnel is highlighted as a risk during this transition.
• Investors in Funds: Continued access to digital infrastructure investment opportunities through the company's platform. Fund performance and management fees directly impact their returns. Potential for conflicts of interest in investment allocation is a noted risk.
• Business Partners and Customers: Uncertainty surrounding the merger could cause some partners to delay decisions or re-evaluate relationships, potentially affecting revenues and business continuity.
• Creditors: The company's corporate debt requires refinancing by September 2026. Compliance with financial covenants is ongoing, and successful refinancing is crucial for financial stability.
• Regulatory Authorities: The merger is subject to various regulatory approvals, including antitrust and foreign investment reviews, indicating ongoing scrutiny and potential conditions on the transaction.

Next Steps

• Consummation of the Merger with SoftBank is expected in the second half of 2026, pending stockholder and regulatory approvals.
• The company plans to refinance its corporate debt, including the Class A-2 Notes and Variable Funding Notes, prior to their anticipated repayment date in September 2026.
• A dividend of $0.01 per share of common stock is scheduled to be paid in April 2026.
• The company expects to sub-lease a portion of its new office space, which is expected to commence in 2026.
• EU member states are required to implement AIFMD II into national law by April 16, 2026, which may impact the company's European operations.
• The company continues to evaluate the effects of the new U.S. tax legislation, 'An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14' (the 'One Big Beautiful Bill Act').
• The company is evaluating the effects of new accounting standards, ASU 2025-06 (Internal-Use Software) and ASU 2024-03 (Disaggregation of Income Statement Expenses), for future adoption.

Key Dates

Recommendation

The pending acquisition by SoftBank at a fixed price of $16.00 per share provides a clear ceiling for the common stock's value, making significant upside unlikely unless a competing offer emerges. While the core business shows strong operational performance with growing FEEUM, FRE, and DE, the non-cash reversal in carried interest and the inherent risks associated with the merger process (regulatory approvals, potential lawsuits, termination fees) suggest a 'hold' position for investors who own the stock below $16.00, awaiting the merger's completion. For those considering new investment, the limited upside to the acquisition price makes it less attractive.

Keywords

Digital infrastructure, Investment management, SoftBank acquisition, FEEUM, Carried interest, Data centers, Cell towers, Fiber networks, Private equity, Alternative assets, Corporate governance, Cybersecurity, Artificial intelligence, Financial performance, SEC filing, 10-K