The general argument is that fiber and small cells in the long run are best-positioned to support an increase in network traffic. Overall, DBRG's fully diluted equity interests in DataBank have now raked in $1.5 billion instead of the intended $1.2 billion.ĭigitalBridge has invested in various companies in the data center, fiber, tower, and small-cell sectors. DigitalBridge announced in its recent 8-K Sec filling that this recapitalization had reduced its DataBank holdings by 8% to 13.4%. By selling 8% from its 21.8% remaining stake DigitalBridge received a sum of $318 million (representing an increase of 38.3%) in cash instead of the intended $230 million. Structural InvestmentsĭBRG's sale of its fully diluted equity interest in DataBank in August 2022 has seen a double-digit increase of its pre-transaction net value since its initial investment in 2019 due to the entry of new investors. The management will likely work to move the stock's market value above the 52-week high. As we know, positive fundamentals will cause the stock to rise towards its 52-week high of $34 and beyond.Īt this point it is vital to consider that CEO Marc Ganzi's employment contract with DigitalBridge stated that he was entitled to a compensation of not less than $100 million if he could maintain the Class A common stock, par value $0.01 at or above the $10 trading level on the NYSE for 90 consecutive trading days during his five-year term. I hope that the reverse stock split coincides with the improvement in operations and projected earnings made by the company. Further, at the price of $12.59 a share, the stock is trading just 1.37% shy of the 52-week low of $12.42. In retrospect, the 1-for-4 reverse stock split will see investors owning 100 shares reduce their holding to 25 shares. As of June 2022, other companies such as American Tower Corporation had 465.6 million outstanding shares, Crown Castle is at 430 million while SBA Communication is at 108 million shares. It is yet to be clarified which companies DigitalBridge is comparing itself to since it had about 655 million shares pre-reverse stock split. However, over the past 5 years, the stock price has declined⁓ 75% in tandem with the decrease in dividends. Investors can consider the pre-reverse stock period (in 2017) when the dividend was at least $0.27 per share which would now translate to $1.08 per share in the quarter in 2022 (had it kept up with the momentum). The number of outstanding Class A common stock was reduced to around 163.9 million while Class B common stock was reduced by 0.2 million shares. DBRG intends to use the reverse stock split to strengthen its business transformation but more specifically to align its outstanding share count with companies of similar size. The quarterly dividends were suspended on May 8, 2020, and shareholders will find a reprieve in this call.įrom an income perspective, the dividend is not as high as I hoped, considering the company also announced a 1-for-4 reverse stock split. Quarterly dividend reinstatementĭigitalBridge, a global digital infrastructural company structured as a real estate investment trust (REIT) announced that it had reinstated its quarterly dividend by declaring a cash dividend of $0.01 per share payable on October 17, 2022. Additionally, while the company has been able to handle construction costs, it has still been affected by high fiber prices and rising administrative expenses. However, the company has been facing material delays in bringing new capacity online due to power delays, especially in Europe and North Virginia. Another playbook is DataBank through which DigitalBridge has harnessed $1 billion from an investment of $500 million in less than 3 years of the initial investment. Additionally, DBRG approximates that the Switch and GD Towers transactions will take its DigitalBridge Partner II fund towards 90% of its committed capital. The company hopes to augment shareholder value through co-investments into 2023 by creating opportunities that will attract partners in quality global digital infrastructural businesses. ThesisĭigitalBridge conducted its 1-for-4 reverse stock split with investors looking forward to a performance-based turnaround strategy into Q3 2022. The past quarters had seen the acquisition of other data center operators such as CyrusOne for $15 billion by KKR and QTS Realty Trust for $10 billion by Blackstone. ( SWCH ) was bought by Florida-based DigitalBridge Group ( NYSE: DBRG ) and IFM Investors for $11 billion including debt. Back in May 2022, data center operator, Switch Inc. The data center industry has seen a beehive of consolidation activity due to its role in building cloud computing infrastructure and the increase in a business's digital footprint.
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