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KBRA Assigns a Preliminary Rating to DigitalBridge Issuer, LLC and DigitalBridge Co-Issuer, LLC Secured Fund Fee Revenue Notes, Series 2026-1

28 Apr 2026   |   New York

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KBRA assigns a BBB preliminary rating to the Secured Fund Fee Revenue Notes, Series 2026-1, Class A-2 (the "Revenue Notes") issued by DigitalBridge Issuer, LLC (the “Issuer”) and DigitalBridge Co-Issuer, LLC (the “Co-Issuer” and together the “Issuers”). The Outlook is Stable. The total issuance amount is $400.0 million of notes across two classes: $100.0 million of Secured Fund Fee Variable Funding Notes, Class A-1 (“Variable Funding Notes” or, the "VFN"), and $300.0 million of Revenue Notes (and together with the Variable Funding Notes, the "Notes"). This transaction will have a legal maturity of 30 years with an Anticipated Repayment Date of 5 years.

The Notes will be secured by management fees and carried interest from current and future investment vehicles managed by DigitalBridge Group, Inc. ("DigitalBridge") as well as all existing and future balance sheet investments of DigitalBridge.

Key Credit Considerations

  • Asset Coverage: The transaction is subject to a maximum permitted loan-to-value (LTV) ratio of 35.0%, equivalent to minimum asset coverage of 285.7%. The collateral value securing the Notes is based on the discounted present value of DigitalBridge’s management fees and the carrying value of its balance sheet investments, adjusted for accumulated depreciation. Based on the December 2025 collateral valuation (excludes additional assets pledged as of April 1, 2026 (Balance Sheet GP Affiliated Investments of DigitalBridge Partners III, DigitalBridge Strategic Assets Fund, Credit I, and Credit II)), the LTV at issuance will be 9.4% (1,063.8% asset coverage). On a pro forma basis, assuming a full draw on the VFN, the LTV increases to 12.5% (801.0% asset coverage).
  • Transaction Structure: The transaction considers several key structural features, further described below:
    • Interest Reserve Account: Is sized to cover one quarter’s interest due on the Notes and is replenished through the priority of payments, subject to available funds. The reserve may also be supported by interest reserve letters of credit.
    • LTV Trigger: If Class A LTV exceeds the maximum permitted threshold of 35.0%, a Class A LTV Condition is triggered and available funds are swept to repay Class A principal until the trigger is cured. The trigger can also be cured via additional eligible investments being contributed to the collateral pool.
    • Debt Service Coverage Ratio (DSCR) Trigger/Cash Trap: If DSCR falls below 1.75x, a Cash Trap Condition arises and 50.0% of available funds remaining after senior waterfall items are trapped and deposited into the Cash Trap Reserve Account. Further draws on the VFN are prohibited. If the DSCR falls below 1.50x, 100.0% of available funds after senior waterfall items. If DSCR falls below 1.20x at quarter-end, an Amortization period commences and excess cash flow is applied to repay the outstanding notes until the trigger is cured.
    • Pre-ARD: Prior to the ARD, available funds, after payment of expenses and interest in accordance with the priority of payments, may be distributed to the Issuer’s or Equity, subject to compliance with the LTV ratios and DSCR triggers.
    • Post-ARD: Following the ARD, available funds are applied to repay the Variable Funding Notes first, followed by the Term Notes, in accordance with the priority of payments.
    • Post-ARD Interest: Additional Interest of 5.0% + p.a., accruing after the ARD and deferred until all principal is repaid.
  • Senior Administrative Expenses: Senior Administrative Expenses represent cash compensation and administrative costs of the investment management platform (excluding equity-based compensation, long-term incentive compensation, fundraising and transaction-related costs, and other non-cash or non-recurring items). These expenses are deducted from gross management fee revenue to derive Net Fund Fees and are capped at 60.0% of aggregate management fees received during the preceding 12 months. As a result, they reduce cash flow available to the structure on an upstream basis rather than as a separate waterfall item. Elevated expense levels may reduce Annualized Recurring Fees (“ARF”) and DSCR and increase the likelihood of a Cash Trap Condition or Amortization Period.
  • Asset Valuation Methodology: The valuation methodology for determining collateral value and Net Fund Fees is determined as follows:
    • Net Fund Fees: Management fee income (including carried interest) net of Senior Administrative Expenses. Net Fund Fees are used to derive Annualized Recurring Fees (ARF), which are based on the prior 12 months of Net Fund Fees and adjusted to reflect the current level of fee-earning equity under management. ARF is assumed to remain constant over the life of the transaction to maturity (2056) and is discounted to present value using the stipulated discount rate (6.75%) to support the Class A LTV calculation.
    • Digital Balance Sheet Investments: The transaction’s non-fee collateral (Equity Interests and LP Interests) is valued based on carrying value calculated in accordance with Generally Accepted Accounting Principles (“GAAP”) or IFRS, at the Manager’s discretion, as reported in the relevant financial statements. The value of these assets will be consistent with the reporting of asset value in connection with any of DigitalBridge’s underlying funds or remaining balance sheet investments.
  • Sensitivity to Portfolio Valuation: The 35.0% LTV threshold will be monitored against an ongoing valuation of the borrowing base. While reliance on periodic valuation introduces a degree of uncertainty, this risk is partially mitigated by defined valuation guidelines. Under these guidelines, net fund fees (primarily management fees) are valued using a discounted cash flow approach based on ARF, derived from trailing fee income and adjusted to a forward run-rate. Balance sheet investments are assessed based on carrying value (or undepreciated book value), subject to write-downs where applicable, and are capped at 40.0% of total collateral value for LTV purposes.
  • Digital Balance Sheet Collateral Contribution and Restrictions: DigitalBridge and its subsidiaries may contribute additional collateral, including equity and LP interests in wholly owned subsidiaries, to the Issuers, subject to specified conditions. This may introduce a degree of adverse selection risk, as newly added assets may differ in quality from the initial collateral pool. This risk is partially mitigated by structural features within the transaction, including a 40% cap on the contribution of equity and LP interests to collateral value for LTV calculation purposes, such that fee-related cash flows account for the majority of the borrowing base. In addition, any contribution of incremental collateral that causes the aggregate value of such additions to exceed 25% of the initial value of equity and LP interests included in the collateral pool requires rating agency confirmation, limiting the ability to alter the risk profile of the collateral pool over time.
  • Alignment of Interests: The Notes have an anticipated repayment date of June 2031 but are intended to provide ongoing financing for DigitalBridge. This structure creates an alignment of interests between Noteholders and DigitalBridge, as Noteholder performance is closely linked to the stability and growth of net fund fees generated by DigitalBridge’s asset management platform. As such, the ability to service and refinance the Notes is dependent on DigitalBridge’s continued execution in managing and expanding its digital infrastructure investment platform.
  • Reliance on Future Fundraising: Without giving credit to the liquidation values of the balance sheet investments, Noteholders will rely on DigitalBridge to successfully raise future funds that generate management fees at a level consistent with recent demonstrated fundraising. This risk is mitigated by the transaction’s leverage restrictions that would accelerate the repayment of the Notes if fundraising were to decline below certain thresholds. There is further mitigation by the Noteholder’s security interest in the balance sheet investments, which though volatile, can offset declines in DigitalBridge’s Fee Earning Equity Under Management (“FEEUM”) over time and can be used to de-lever the transaction.
  • Manager Track Record: Founded in 1991, DigitalBridge Group, Inc. (“DigitalBridge” or the “Firm”) is a global digital infrastructure asset manager with $114.8 billion of AUM, employing approximately 316 professionals in 9 locations across 6 countries, as of December 31, 2025. The Firm has built a portfolio of 45+ digital portfolio companies in digital infrastructure assets including macro cell towers, small cells networks, fiber networks, data centers and edge infrastructure. DigitalBridge has a 30+ year track record of investing, having previously managed industrial, healthcare and hospitality holdings, and operated a retail investment management business. In 2025, DigitalBridge closed $5.6 billion in new capital commitments. In December 2025, DigitalBridge entered into an agreement to be acquired by SoftBank for $16.00 per share. The transaction implies an enterprise value of approximately $4.0 billion and is expected to close in 2H26. DigitalBridge is expected to continue operating as a separately managed platform.

Rating Sensitivities

  • Changes in FEEUM and Continued Performance Stability: Continued demonstrated growth in FEEUM and stable performance from current and future investments outside of expectations at issuance could result in a positive rating change. Alternatively, decreases in FEEUM and declines in performance from current and future investments outside of expectations at issuance could result in a negative rating change.
  • Changes in Asset Coverage: Assuming a stable collateral base and expected performance, increases in Asset Coverage and potential borrowing base appreciation could result in a positive rating change. Conversely, prolonged decreases in Asset Coverage could result in a negative rating change.
  • Weakened Performance and/or Reductions to Forecasted Fundraising: A deterioration of Fund performance that changes KBRA’s view of the strength of the transaction’s cash flows could result in a negative rating change. KBRA may consider a downward rating revision if the diversity of the underlying sources of management fees were to change without commensurate de-leveraging of the Notes.
  • Credit Profile of the Borrower: Given the transaction’s reliance on the long-term viability of the Firm, a decline in the credit quality of DigitalBridge Group, Inc could result in a negative rating change.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

This credit rating is endorsed by Kroll Bond Rating Agency Europe Limited for use in the European Union and by Kroll Bond Rating Agency UK Limited for use in the UK. Information on a credit rating’s endorsement status is available on its rating page at KBRA.com.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

There are certain issuers, entities or transactions rated by KBRA Europe or KBRA UK that may be or have relationships with Shareholders and/or Shareholder-Related Companies, as that term is defined in KBRA’s Shareholder and Shareholder Related Companies for KBRA Europe and KBRA UK Policy and Procedure. Relevant disclosure information may be found here.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

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