Windows Virtual Desktop spring update using Azure ADDS - WVD Session host unavailable

I am trying to setup WVD using ARM (spring update). I am using Azure ADDS (so no on-premise AD, no AD Sync). The account I am using is part of Azure ADDC admin group, global admin role and contributor permission on subscription. I am able to manually join machine to the domain.

When I use WVD ARM template wizard, WVD Session host are unavailable. I event tried to add the domain joined machine to hostpool by manually installing agent and bootloader, still same error. But I am able to get Windows Server (with RDSH role) up and running in hostpool.

What am I missing ??