Jacky Wu: And candidly, some of that volatility is associated with just a geography flip between corporate expenses being now allocated to IM. So you’ll see almost a dollar for dollar flip between those two segments. But obviously, our digital earnings is way up because that obviously gets neutralized, that geography.
Richard Choe: And then thank you for the fund performance reporting slide that is very helpful. The performance has been good so far, but can you give us a sense of how they’re tracking, granted there’s still a lot of time in the second one, but just overall, how your current projections are panning out?
Marc Ganzi: I’m not sure. Repeat the first part of that question, Richard, sorry.
Richard Choe: Sorry. Just tell the gross MOICs tracking for DBP I and DBP II?
Marc Ganzi: Yes. So this is our first quarter of reporting fund level performance, I think is what you’re indicating to Richard. But what I would tell you is gross MOICs have been up quarter-over-quarter on Fund I and Fund II. Fund II, as you can tell from the vintage is going through the J curve phase. And so those MOICs will catch up, and we actually think Fund II where it sits today vis-à-vis Fund I, is performing better than Fund I. So we’re pretty optimistic. I know other firms, and not that we stand around watching other firms, but we know from Q1 to Q2 and Q2 to Q3 and Q3 to Q4 other financial sponsors, other GPs have had some challenges and there’s been markdowns. We’ve not suffered from that at all. Actually, our marks have moved up through Q1 through Q2 and Q3.
We anticipate both Fund I and Fund II at DigitalBridge to continue to perform as the discounted cash flows across all of our portfolios are up quarter-over-quarter and year-over-year. And then I think also with respect to GIF I and GIF II, we’ve had very good solid performance in the InfraBridge I Fund, as you can see from the table. That’s performing at our expectations and we’re continuing to deliver DPI. We’ve made it very clear that we are in the process of unwinding and exiting out of GIF I, some of those assets. We’ve also had tremendous DPI across our first fund and some of the continuation vehicle. So, returning capital right now is super important to LPs, Richard. If you want to go out and raise money right now, you’ve got to produce DPI.
And we’ve done a very good job there. We’ve produced over cumulatively about $4.2 billion of DPI this year in the last 14 months for our LPs. So, returning capital and raising capital, that’s the cycle.
Operator: Our next question comes from Eric Luebchow with Wells Fargo.
Eric Luebchow: Just wanted to touch on kind of the M&A landscape across the different digital infrastructure verticals you operate in. Are you seeing any traction on higher interest rates recently moving down multiples for private infrastructure? Or are they kind of still remaining in pretty elevated ranges? And does that shift at all your desire to just accelerate greenfield development versus M&A as you look at ways to deploy capital going forward?
Marc Ganzi: Yes, it’s super interesting you should ask that question, because I’m actually giving a speech later today where I’m going to talk exactly about this. So fiber has come down significantly, Eric. We’ve seen private market multiples move from the mid-20s into the low-teens. We even think there’s further compression in fiber multiples, particularly in residential fiber, where the investor is exposed exactly to the household, where the cash flows are month to month, 30 days. And then certain aspects of fiber, enterprise fiber, wholesale transport fiber, down a little bit but not quite as heavily hit as fiber to the home. Data centers actually you could make the argument, Eric, that multiples have gone up in the good assets.
And you know what the good assets are. Those are the hyperscale, public cloud focused campuses, where there’s a lot of growth and there’s a lot of opportunity and you’ve got a wallet that’s growing. On the enterprise side, you’ve seen on the flip of that coin, which is older legacy data centers that are 20-plus years old, like 6-year suffered and really don’t have a growth story, so there’s really not even a bid for those kinds of data centers. They’re just so impaired. So, whether it’s enterprise and then you’ve got DataBank, which is doing edge and they’re performing really well and there’s been no degradation in the valuation of that equity. So data centers are tricky. I always tell investors that there’s 6 different ways that you can invest, Eric, in data centers.
There’s 6 different sub-industries in the data center sector. Where are evaluations holding? They’re holding in hyperscale and they’re holding in edge. Where are they going down? Managed services, hybrid cloud, enterprise, those are the areas that are suffering. And then I would say private cloud, which is what Switch does, is performing quite well. So 3 good verticals, 3 probably less good verticals, and so there’s a wide range of valuation there. You could see as high as 30x EBITDA, and you could see all the way down in enterprise and managed services, like 6x to 7x EBITDA because in some instances, there’s just no bid because of the debt. Towers have actually held in pretty well. On the private side, we’ve seen private transactions in Europe recently trade in the mid-20s, 24x to 25x, there hasn’t been a material degradation in tower valuations, maybe they’ve lost 3 to 4 turns in Europe.
In the U.S., there just hasn’t been any material M&A. And while the public multiples are down 20% to 30%, private multiples actually have hung in. And the smaller transactions that Vertical Bridge is chasing, they’re still losing deals at 25x to 26x. Now, those were the deals they were losing at 32x to 36x a year ago. So there’s probably been a 6 to 8 turn compression in what I would call small ball M&A. But there hasn’t been a material big M&A trade in the space to really see where those multiples are. And I think you could basically push private market small cell multiples into the same bucket as U.S. towers. And then in Southeast Asia and Latin America, we’ve seen tower multiples trade in the high teens. And in some parts of Asia, Jacky, we’ve seen towers hanging at 20x to 21x.
So the market is still one that’s really attractive from a tower multiple perspective. But again, digital infrastructure sort of painting it with one paintbrush isn’t fair. I think you got to sort of lay out the canvas and bring 12 paintbrushes to the canvas because you’re going to have to paint it a lot of different ways right now, Eric.
Eric Luebchow: And just to follow-up, your comments on residential fiber, fiber to the home. There’s obviously been some speculation about a big consolidation wave coming in that market. You kind of touched on this a little bit, but I guess given where cost of capital have gone for a lot of those over builders, is that an area that — traditionally I know you’ve shied away from, but if we see an appropriate discount in evaluations here, is that an area if we could see you potentially play in further going forward?
Marc Ganzi: I think, look, right now, we’re very focused from a credit perspective and we’re providing credit to some of those companies. So certainly, up at the investment committee level, we’re very supportive of residential fiber and there’s certain management teams who really like and we’re backing them and we’re giving them in the form of credit. And the equity investment committees were not constructive on residential fiber right now. We haven’t been and I think we’ve been pretty vocal about that. We’ve had our reasons. Now that the valuations are moving in line, if we do find the right geography, the right management team and the right set of competitive dynamics, we’re happy to write an equity check behind a great management team in the residential fiber space.
