Speaking at the RBC Capital Markets’ Global Towers and Wireless Infrastructure Summit on Sept. 28, Marc Ganzi, president and chief executive officer of DigitalBridge Group, discussed macro tower installations, 800,000 outdoor small-cell nodes that need to be built, the three phases of 5G wireless communications deployment and what he called DigitalBridge’s incredible flywheel that allows unrestricted digital infrastructure investments.
“We’ve created this incredible flywheel at DigitalBridge where we’re not restricted in our ability to invest in digital infrastructure,” Ganzi said. “The key is having a great team: We have 100 investors who wake up every day with a singular focus of investing in the digital future. There’s not another investment team on the planet that has that amount of experience, capability and geographic reach. That’s the story we take to investors: We have a unique capability to invest; we have a unique capability to operate. Some are operators, some are investors, we can do both — so that gives us a lot of latitude. … We now manage over $40 billion in digital assets on a global basis.”
On Oct. 1, three days after Ganzi’s presentation at the RBC summit, DigitalBridge announced the expansion of the Vantage SDC (Stabilized Data Centers) platform with the acquisition of CA22, a 24-megawatt hyperscale data center serving the Santa Clara, California, market. That transaction, valued at $539 million, marks a milestone for Vantage SDC, representing its first hyperscale data center acquisition since its formation in July 2020 through a $3.5 billion strategic partnership between Vantage Data Centers and a DigitalBridge-led investor group.
“DigitalBridge’s commitment to supporting the growth of its portfolio companies while serving the growing need for hyperscale data centers remains strong,” Ganzi said on Oct. 1. “This transaction not only advances Vantage SDC’s strategic plan to grow its portfolio of stabilized data centers, but also increases DigitalBridge’s exposure to world-class digital infrastructure assets that deliver consistent returns for investors.”
At the RBC summit, Ganzi mentioned DigitalBridge’s agreement last month to sell Wellness Infrastructure business — including a portfolio of more than 300 facilities across senior housing, skilled nursing, medical office buildings and hospitals — in a transaction valued at $3.2 billion. “It’s a great transaction for us, Ganzi said. “We expect to close the transaction by the end of the year, put the money on our balance sheet, pay off some debt and focus on being a purely digital business. A lot liquidity is rotating back to our balance sheet.”
Ganzi also revealed that he previously told his investors that he wanted DigitalBridge to be at about $2 billion liquidity by the end of 2021. “It looks like we’ll come in at the top end of that range — so we’ll be well-armed to play offense in 2022. Digital infrastructure has been a hot space for everyone to invest in the last 7 or 8 years — but even hot sectors have some challenges when you have global macro headwinds in front of you. My job was to get us through the other side, get these assets sold, build our cash position and play some classic Ganzi offense,” he said with a wink in his voice.
The DigitalBridge CEO said that about 800,000 outdoor small-cell nodes probably would need to be built. “So, if we’re playing a nine-inning baseball game in terms of 5G, we’re probably in the bottom of the first inning or top of the second inning in terms of that build plan.”
He said he looks at 5G in terms of three segments: “Phase 1 is all about macros. Jay Brown, Alex Gellman, Jeff Stoops and Tom Bartlett [Crown Castle, Vertical Bridge, SBA Communications and American Tower CEOs, respectively] are all saying the same thing: That macro demand is strong, but the initial phase of 5G is over on top of macro. And further to that, densification on top of macro. The second phase will obviously be overlaying on small-cell infrastructure in the initial phase of densification, and the third phase will be pure densification and edge out. That will probably be the most interesting phase.”
Ganzi said that he believes that 2021, 2022 and 2023 will all be about the macros; and that toward the tail-end of 2022, it starts to turn for small cells, and that 2023, 2024 and 2025 will be big years for small cells. “I think the final phase of that infrastructure — 2025, 2026 and 2027 — will be further densification and more of what I like to call virtualized edge RAN, which will be more focused on fiber and data center traffic. 5G is a really complicated build — probably the most complicated build in what I’ve seen in my three decades of doing this.”
With a heritage of more than 25 years investing in and operating businesses across the digital ecosystem including towers, data centers, fiber, small cells and edge infrastructure, DigitalBridge Group, formerly named Colony Capital, has had a complicated — albeit lucrative — financial history.
In July 2019, Colony Capital purchased for $325 million a company Ganzi founded and led as CEO, a company called Digital Bridge, with a space between the two words in the company name. Digital Bridge owned a broad range of communications infrastructure including Vertical Bridge and ExteNet Systems, and Colony Capital was primarily a global real-estate investment firm. At the time, Colony Capital reported that during the next two years, Ganzi would transition into the role of CEO of Colony Capital, succeeding Thomas J. Barrack Jr. Ganzi also was a managing partner at Digital Colony, which Colony Capital acquired in 2019.
The Digital Bridge acquisition followed the May 2019 closing of a $4.05 billion fund sponsored by Digital Colony and Colony Capital. Digital Bridge managed nearly $20 billion of digital infrastructure globally, directly and through Digital Colony Partners.
Prior to being purchased by Colony Capital, Digital Bridge was a holding company that invested in telecommunications infrastructure. Founded in 2013 by Ganzi and Ben Jenkins, the holding company initially focused on cellular infrastructure, but later expanded to data centers, fiber networks, and other areas. In 2017, it bought data center company Vantage Data Centers Management for more than $1 billion.
The DigitalBridge Group team now manages a $40 billion portfolio of digital infrastructure assets on behalf of its limited partners and shareholders. Ganzi said that having the best CEOs in the right swim lanes is the secret of the company’s success. “We really have a great family of 23 CEOs who are best in class,” he said. “And, once again, that’s advantage us. And that’s advantage to DigitalBridge Group shareholders. We want to keep doing that and we want to keep our heads down and keep delivering for customers.”
Ganzi pointed to the success of DataBank, a Dallas-based data center provider under the DigitalBridge Group umbrella, which has grown exponentially from six data centers to 66 data centers in five years, quadrupling its EBITDA. “You just don’t see that, and that’s a function of the people.”
Mike Harrington is a contributing editor.