4 min read.Updated: 21 Nov 2021, 07:49 PM ISTMIRIAM GOTTFRIED, The Wall Street Journal
CEO Marc Ganzi has shifted $73 billion of assets into digital infrastructure as surging investor demand powers the company’s market value to $4.3 billion
Marc Ganzi, chief executive officer of DigitalBridge Group Inc., is a big fan of digital infrastructure—and these days he’s not alone.
In July 2019, Colony Capital Inc. bought Mr. Ganzi’s private-equity firm and unveiled a plan to shift from being a real-estate generalist to focusing on digital assets such as data centers, cell towers and fiber networks. It fell to Mr. Ganzi, who took over from Colony founder Thomas Barrack last year as the combined companies’ CEO, to make that vision a reality.
A veteran of digital-infrastructure investing who got his start in distressed real estate, Mr. Ganzi wasted little time executing the transformation. All told, he has rotated $73 billion in assets, selling off $33 billion of traditional real estate and acquiring a portfolio of $40 billion in digital holdings.
A few months after the merger was consummated, the firm announced a $5.9 billion deal to sell its industrial warehouses to Blackstone Inc. In 2020, it agreed to sell its hotel portfolio for about $2.8 billion and unloaded $700 million of other legacy holdings.
This year, Colony—which changed its name in June to DigitalBridge to reflect its new identity—agreed to sell a portfolio of other nondigital assets to Fortress Investment Group LLC and struck a $3.2 billion deal with a separate group of buyers to unload more than 300 medical and senior-housing facilities.
Meanwhile, DigitalBridge has acquired companies such as fiber-network operator Zayo Group LLC; Vertical Bridge Holdings LLC, the largest private cell-tower operator in the U.S.; and AtlasEdge Data Centres, a European data-center business it created through a joint venture with Liberty Global PLC.
Shares of DigitalBridge, a real-estate investment trust, have tripled since Mr. Ganzi became CEO in July 2020, giving it a current market value of $4.3 billion.
Aiding the stock’s rise has been a surge in demand for digital-infrastructure assets as data consumption balloons, underscored by roughly $20 billion in deals last week alone, including CyrusOne Inc.’s sale to KKR & Co. and Global Infrastructure Partners LLC. That has meant stiffer competition from private-equity firms like KKR and Blackstone, which are drawn to the assets’ stable income generation.
The second iteration of DigitalBridge’s flagship fund had raised $8.1 billion as of its third-quarter earnings report, double the size of its predecessor.
“What I saw in Colony a couple of years ago was a REIT without any core strategic direction," Mr. Ganzi says. The company’s stock had lost more than half its value in the two years following Colony’s ill-fated 2016 merger with NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp.
Even before the pandemic, Mr. Ganzi said he and the firm’s board saw trouble brewing in many areas of traditional real estate. Home-sharing giant Airbnb Inc. was disrupting the hotel business. Amazon.com Inc. and the rise of e-commerce had dented the value of retail real estate. Even in the office market, the best assets were priced to perfection.
Mr. Ganzi had met Mr. Barrack, a friend of Mr. Ganzi’s father, nearly 30 years ago while growing up in Southern California. The two later reconnected, and in 2018 their companies formed digital-infrastructure investment firm Digital Colony Management LLC through a joint venture.
(Mr. Barrack, a major fundraiser for former President Donald Trump, stepped down as the firm’s executive chairman earlier this year and was indicted in June on charges that he acted as a foreign agent of the United Arab Emirates and lied to federal investigators. He has pleaded not guilty.)
A resident of Wellington, Fla., Mr. Ganzi owns a horse farm and helped found the World Polo League with his wife, Melissa Ganzi, a top polo player.
He attended the University of Pennsylvania’s Wharton School, graduating in 1993. He got a job buying distressed real estate for Resolution Trust Corp., a now-defunct U.S.-government-owned entity charged with selling off assets of thrifts declared insolvent during the savings-and-loan crisis.
Mr. Ganzi was tasked with evaluating a building with a cellphone antenna on top of it. Unsure of how to value the revenue stream from leasing the antenna, he consulted two fellow Wharton graduates who worked in the cellular industry. The three ended up starting a business helping property owners negotiate antenna agreements with telecom companies, selling it in 2000.
In 2003, Mr. Ganzi founded Global Tower Partners, building it into the largest privately held operator of U.S. cell towers. American Tower Corp. bought the business in 2013 for $4.8 billion.
That year, Mr. Ganzi and Blackstone veteran Ben Jenkins, now his chief investment officer, started Digital Bridge Holdings LLC, the entity they eventually sold to Colony for $325 million.
“This is really the golden era of all things digital infrastructure," Mr. Ganzi says. “We’re not going to be busy just during Covid. We’re going to be busy for the rest of our lives."
This story has been published from a wire agency feed without modifications to the text
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