Bridge Investment Group Holdings Inc.

Greetings and welcome to the Bridge Investment Group's second quarter 2021 earnings call and webcast. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, please press star one on your telephone keypad. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sloan Bolin, Investor Relations. Thank you. Please go ahead.

Thank you, and good morning, everyone. I'm Sloan Bolin. We appreciate you joining us for the Bridge Investment Group second quarter 2021 financial results conference call. Our prepared remarks will include comments from our executive chairman, Robert Morse, our chief executive officer, Jonathan Slager, our vice chairman and head of our client solutions group, Dean Alera, and our chief accounting officer, Katie Elsnab. We will hold a Q&A session following the prepared remarks from our leaders. During the call today, we will reference slides highlighting key points of discussion as well as certain non-GAAP financial metrics. The reconciliation of the non-GAAP metrics are provided in the appendix of our supplemental slides. The supplemental materials are accessible on our IR website at www.ir.bridgeig.com. These slides can be found under the events and presentations portion of the site along with the second quarter earnings call event link. They are also available live during the webcast. It is now my pleasure to turn the call over to Bob.

Good morning. Thank you, Sloan, for the introductions. On behalf of my senior management colleagues and the entire Bridge team, we are delighted to host this second quarter earnings call. Thank you to all the investors and analysts who are joining today. Before we begin, I'd like to thank all of our 1700 Bridge colleagues, the talented and dedicated employees who have made Bridge what it is today. Our successful IPO earlier this summer is a milestone in our company evolution and establishes a platform that we believe will be the foundation of significant future success. Our IPO will engender some changes at Bridge, and many of our characteristics will remain the same. We will continue to perform as a specialized, differentiated, and forward-integrated real estate investment manager with a focus on selected large and growing real estate sectors dedicated to delivering top-tier results to our public shareholders and fund investors, and will continue to execute on the strategic vision which has created our scale and profitability. We have meaningful dry powder from our primary IPO proceeds, our unused credit line, and existing modest term debt to take advantage of opportunities to consolidate in our fragmented industry. We will continue to invest in our company, in our team, and in our capabilities. More on all that later and in subsequent quarters. Our IPO has given us the opportunity to bring some fresh perspective and benefit from the enormous knowledge of our newly constituted board of directors. Our outside board members, Debbie Hopkins, Deborah Martin Chase, and Chad Lee, bring years of success and experience to our board, and we've already begun to benefit from that expertise. If you turn to slide five, as this is our first quarterly earnings presentation, and with the understanding that some of our constituency did not attend our roadshow, I wanted to start by providing a brief introduction to Bridge and our differentiated approach to real estate investment management. On this slide, we depict visually the scale of our business. We manage approximately 29 billion of AUM and touch the lives of almost 100,000 residents across our residential communities, as well as thousands of office tenants. We operate in over 30 states across the U.S., carefully selected after intensive data analytics. We are specialized across our areas of focus. Our investment professionals are sharpshooters who know their sectors intimately, understand that real estate is both national and local, appreciate the nuances required to make informed investment decisions, and we enjoy unparalleled deal flow. We have over 100 investment professionals, and most bring decades of successful experience to their jobs. We are forward-integrated. high touch property managers who operate virtually everything that we acquire or develop. Our property management teams allow Bridge to create alpha at the asset level by finding opportunities for revenue enhancement and cost savings every day. We have thousands of property management specialists that represent an invaluable asset. We built the team, the approach, and the expertise over the past decade. As you will hear, we deliver world-class service at a cost equal to or less than hiring an outside manager with better results. We have carefully curated where we invest, in the U.S., which we believe is the preeminent global investment destination, and in selected verticals within real estate that offer above-market growth, such as multifamily, workforce and affordable housing, logistics, and income-generating fixed income. We start our investment process with a top-down view data-driven proprietary approach, which helps to determine, by vertical, which cities in which to invest and where to avoid. As we've grown, we've invested massively in our research and data capabilities, in our research, financial planning and analysis, business intelligence, strategy, and related teams aggregate to over 20 professionals. We've further amplified our capabilities through selected partnerships with leading prop tech firms, which partnerships have already paid meaningful dividends. This dual focus on specialized sectors and the bridge target markets has driven our strong performance. Most of our multifamily funds are ranked first quartile by Trequin, and six of our funds are, in fact, ranked number one for their vintage and investment focus. We count as LP some of the largest and most prominent investors globally, and we have over 6,600 total investors. Many of our investors have invested in multiple vehicles as evidence of their trust in bridge. We have built a scalable, state-of-the-art infrastructure platform to accommodate significant growth and have demonstrated repeatedly the ability to launch new products and new verticals and deliver attractive returns to our investors in a successful manner. We've created a strong income statement composed primarily of fee-related income, have long duration, sticky revenue, and a growing base. We are solidly profitable with strong margins and opportunities for growth. Our growth has been strategic, deliberate, and carefully curated. We seek to compete only when we have a differentiated advantage. In the last seven years, we've successfully incepted efforts in real estate fixed income, both debt strategies and AMBS, opportunity zones, and more recently in logistics by hiring and attracting talented women and men who want to work at Bridge. We believe our best years are ahead of us as we build further on the platform we've created. On slide six, we outlined the key investment highlights for Bridge. We invest only in the most attractive sectors of U.S. real estate, carefully selected after much research. We've avoided most of the problem areas, such as retail and hospitality. Our focus is differentiated, and in fact, we believe we are unique in the industry as an investor and property management specialist. A high-touch, boots-on-the-ground model drives asset-level alpha. Our model has a deep moat around it, and it would be harder or impossible to replicate. Across our verticals, we focus on prime growth markets where we invest with tailwinds, which takes a very local and data-driven approach to our investments, but can do so while leveraging our national scale. Our average investment is in the range of $25 million, and to do that across $29 billion of AUM requires both local insight and national scale to source and manage a broad portfolio efficiently. Our strategies have highly visible and recurring fee streams, both because of the long duration of our funds, but also because many of our investors invest in multiple funds or across strategies. In fact, 59% of bridge fund investors have invested in two or more funds, and 40% of investors are in at least three funds. The embedded growth that sits within our existing funds as a result of that loyalty affords us the ability to pursue larger funds organically and or considered growth through inorganic means within the US footprint or potentially beyond. The tailwinds for alternative asset management and differentiated real estate specifically have been in place for many years. The alternatives market is projected to grow at nearly a 10% CAGR over the next five years to over $17 trillion by 2025. Nearly 30% of institutions are expecting to increase allocations to real estate this year And in this market, even a 10 basis point increase in total allocations implies new demand of approximately $100 billion for real estate. We believe that our culture is second to none, and we celebrate mutual success and own our mistakes collectively. On slide seven, our AUM has grown by a compound annual growth rate of 40% over the past five years, which has driven strong fee-related revenues, including our record highs recorded in this past quarter. On slide eight, you can see our funds are invested entirely within the U.S., which we believe is the preeminent global investment destination. Bridge investments are made with highly developed local knowledge, but applied with the full advantage of our national scale. And scale matters in this business, as we were able to deploy a record $998 million over just the past quarter. Our investment mix by strategy is in selected verticals that offer above-market growth. I mentioned before our attractive performance. Most of our multifamily funds are ranked first quartile by Prequin, and six of our funds are in fact ranked number one for their vintage and investment focus, as shown on slide nine. We count as LPs some of the largest and most prominent investors globally, and we have over 6,600 total investors. Slide 10 depicts the strength, experience, and diversity of the leaders of our specialized investment teams. most of whom bring decades of successful experience to their jobs. Unlike many managers, our investment professionals are sharpshooters who know their sectors intimately and understand that real estate is both national and local. Before I turn the call to Jonathan, let me review slide 11 and some of the things we're proud of at Bridge. We operate with a careful focus on our residents and tenants and have years of action in line with ESG's best principles before ESG even had a name. As but one example, when COVID struck last year, we mobilized to provide meaningful relief to our residents in the form of the Bridge Cares COVID Relief Fund versions 1.0 and 2.0. As partners and employees, we donated over $2 million to our residents, those most affected and most in need. We delivered over 60,000 meals, and we provided access to public assistance and other actions. Each of our employees has a lot of pride in what Bridge means to our communities, And as chairman, I'd like to state up front that it is our clear mission to take the same approach to our shareholders, and we look forward to doing just that for what we believe will be the best years of this firm. With that, let me turn the call over to CEO Jonathan Swager to take a closer look at our quarter and what we believe sets Bridge apart. Thank you.