Bridge Investment Group Holdings Inc.

Greetings and welcome to the Bridge Investment Group's third quarter 2021 earnings call and webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star one, star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Charlotte Morse, Director of Investor Relations and Marketing. Thank you, Charlotte. You may begin.

Good morning, everyone. I'm Charlotte Morse. We appreciate you joining us for the company's third quarter 2021 financial results conference call. Our prepared remarks will include comments from our Executive Chairman, Robert Morse, Bridge's Chief Executive Officer, Jonathan Slager, and our Chief Accounting Officer, Katie Elsnapp. 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 IRR website at www.ir.bridgeig.com. These slides can be found under the events and presentations portion of the site along with the third quarter earnings call event link. They are also available live during the webcast. It is now my pleasure to turn the call over to Robert.

Thank you, Charlotte, and thank you to everybody joining us this morning. We're proud to report another strong quarter for Bridge and our first quarter as a public company. As you may recall, we executed our IPO on July 16th of this year, and some of the financial data is as of and after that date. During our roadshow, we highlighted a number of differentiating factors that positioned Bridge to succeed in the real estate alternative asset investment business. not the least of which is our purpose-built organization centered around the two pillars of real estate specialization and forward integration into property management to capture alpha at the asset level. These two pillars, in combination with our carefully curated focus on the most attractive areas of commercial real estate in the U.S., have driven strong results this quarter, and we believe will continue to power our company forward in the quarters to come. As I mentioned at the time of our 2Q results, which were disclosed after the IPO date, but for the benefit of the company as it was prior to the IPO, the bridge focus on the U.S. as the preeminent global investment destination, on selected rapidly growing sectors of the market, with specialized and forward integrated operations, and a professional team second to none, all helped to propel our company forward. Since the IPO, we have continued to invest in our company, in our professionals, in the infrastructure that effectively serves our funds and fund investors, and in our industry-leading research and analytics. On slide five, we highlight some of the important metrics from 3Q financial results. First, we had another strong quarter of gross AUM growth. which ended the third quarter totaling $31.8 billion, up 37% year over year, and represents a compound annual growth rate of 35% over the past five years. We continue to be pleased at our growth in both mature and newly launched strategies. In the aggregate, our strategies are designed to address and benefit from three of the major themes defining the U.S. economy and financial markets, the current and seemingly protracted housing shortage in virtually all parts of the U.S., which we addressed through our residential offerings in multifamily workforce and affordable housing, opportunity zone development, and seniors housing. Second, the dire need for infrastructure investments, which we addressed through our logistics offerings, logistics value add and logistics net lease. And third, the search for meaningful yield in a low structural interest rate environment. which we address through our residentially focused CRE-backed fixed income offerings, debt strategies, and AMBS. Our fund offerings are completed by an office fund, which addresses the growing need of office-using employers in fast-growing areas of the U.S. In all of these offerings, we seek to provide investors with leading returns characterized by current distributions and capital appreciation as appropriate. We do so while ensuring that our investments benefit our residents and tenants via social and community programming at many of our residential communities through the development and preservation of affordable housing and by carefully considering and incorporating leading ESG and DEI principles in all that we do. As we continue the 3Q review on the right side of slide five, you can see that Bridge also grew trailing fee-related revenue by 38% in the third quarter to $220 million. The growth in our fees was driven by strong and diverse AUM growth. In addition, we had another strong quarter for realized performance fees as bridge funds continue to harvest gains. Our outperformance in realized performance fees is related to a combination of timing of asset sales and outperformance of our assets in disposition. Jonathan will give you some more color on our unrealized gains as well. which will give you some context on how long the runway for our performance fee growth is. As you can see, it has been a good track record recently as our aggregate fee-related revenues have grown at a compound annual growth rate of 21% over the past five years. Finally, as you saw in our release, our results drove another strong quarter for distributable earnings to the operating company before taxes. which were $42.4 million or 38 cents per share in the third quarter, which represents growth of 185% compared to a year ago on a pro forma basis. For the stub period from the date of IPO to September 30th, the distributable earnings to the operating company before taxes was 34 cents per share. This translates into approximately 26 cents per share after tax. As a reminder, we plan to pay out substantially all of our distributable earnings in the form of dividends to shareholders. And as a result, our board declared a dividend for public shareholders of 24 cents per share, which is 95% of our estimate due to potential tax variance and will be payable to shareholders of record on December 3rd. If we turn to slide six, let me give a little more color on Bridge's achievements over the quarter that drive the types of financial results I just reviewed. Bridge had another strong fundraising quarter at over $1.5 billion. The fundraising in 3Q was largely comprised of our housing-oriented funds, which include Opportunity Zone Fund 4, Multifamily Fund 5, and Debt Strategies Fund 4. We also had our first successful closing of our Logistics Net Lease Fund and continued capital raising into our AMBS Fund. We are seeing strong demand in next generation funds such as multifamily fund five and also in new strategies like logistics net lease and logistics value. In the aggregate, our fundraising in the third quarter was a record for a third quarter and nearly double the previous third quarter fundraising record. Year to date, Bridge has raised $2.7 billion and we expect our full year 2021 fundraising to meet or exceed our expectations for the year. If we move to the second heading, strong fundraising fueled an equally strong pace of development in Bridge funds. Our teams excelled in identifying and executing against our disciplined investment opportunity pipeline. In total, deployments for the quarter were $1.3 billion, which is a 127% increase over a year ago and marks another record in Bridge's history. In addition to our record deployment, we had $241 million of realizations at attractive valuations that resulted in $31 million in performance fees. Turning to slide seven, let me give a quick update on our fund performances to date. As mentioned, 3Q 2021 was a strong quarter which followed earlier performance in our specialized strategies. Across the board, our funds recorded impressive results in the third quarter. as a result of growing occupancy, especially pronounced in our seniors housing assets, which were disproportionately affected by the COVID pandemic, strong rent growth in residential strategies and careful expense controls. We believe that the quality assets we operate coupled with a compelling suite of social and community services and amenities resonate well with our target audiences. On this slide, we show the returns for those funds for which the capital raising period and deployment period have expired. Our later funds have performed equally well, and in some cases even better. Bridge is recognized by the value it offers for residents and tenants, and that positively influences occupancy and the rents that we can charge. In fact, in many of our assets, we believe that we are in effect under market in terms of rent charge, so there's more upside looking forward, all things being equal. I want to speak to three key takeaways regarding our fund performance and track record. First, I want to re-emphasize how CriticalBridge's specialized and operational approach to commercial real estate is to our investment performance. Bridge manages the majority of the assets we acquire or develop. We have a nationwide operating team, and we strongly believe that local knowledge is key to making smart investment decisions. We strive to know more about the markets we invest in and act more quickly than other institutional investors, which translates into alpha and the types of performance results that we've been able to post. Secondly, we are operating in an environment with substantial tailwinds. Household formation is high. Migration to the select cities in which we invest, both personally and by companies, continues. And the economic health of the middle class and lower economic cohort of the US workforce is growing, in part by needed wage growth and in part by the massive fiscal stimulus coursing through the economy. The bridge focus on prime growth markets in Class B and Class C multifamily puts our investments directly in the intersection of these positive trends. Third, our track record is a key driver to fundraising success. When our funds outperform, that performance is one of the best tools to broaden our investor base, and we are doing just that. More on that later when we talk about fundraising for the quarter. In connection with slide eight, I'll give a brief market commentary. First, commercial real estate continues to be an asset class with significant demand. Allocations among institutional investors continue to rise and are expected to rise further in the coming years. We believe bridge should disproportionately benefit from this overall trend given our investment track record. As to the topic of inflation and rates, we would also note that many of our investors are specifically allocating to commercial real estate because of the natural inflation hedge embedded in the underlying cash flows. For instance, the average multifamily asset has seen an over 10% increase in rental rates over the past year. Similarly, industrial warehouse or logistics assets have seen a 7% increase in rents over that same period. This point dovetails with the second heading, which is that BRIDGES strategically focused on fundraising and investment within the fastest growing property sectors. specifically residential and logistics. To be clear, while the inflation hedge is a positive attribute for these asset classes, the rental rate increases are a byproduct of what we believe are long-lasting demand drivers for each sector. First, we have long believed and continue to see the U.S. residential market as significantly undersupplied in the wake of the great financial crisis. We believe the drivers of e-commerce combined with issues we are seeing in the supply chain are key multi-year drivers for demand in the logistics space. Lastly, I will quickly reiterate that while bridge benefits from industry or market trends, we will always be most focused on the value our unique forward integration model creates as defined by our relative fund performance. On slide nine, I want to share with our constituency some of the commitment and progress we have made towards our ESG and DEI objectives, all as a part of our mission and core values, which include the core value that the only way to achieve excellence is through diversity and inclusion. Specifically, our Workforce and Affordable Housing Strategy recently received several awards, including the ESG Private Market Strategy of the Year by PensionBridge. That strategy also won Social Fund of the Year from Environmental Finance and Best ESG Investment Fund in the Private Equity category from ESG Investing. In our Workforce and Affordable Housing Strategy, bridge partners also contribute individually and collectively towards amplifying the social and community programming at our communities. In fact, across all of our residential activities, we invest to provide numerous opportunities for our residents, and we celebrate their accomplishments as our own. And while I won't detail each, the whole team at Bridge is very proud of our broad efforts to drive diversity and inclusion. We supported the establishment of multiple new employee affinity groups to support our commitment to diversity. Our more than 1,650 colleagues are the cornerstones of our business success, and we continue to invest in them. Bridge believes that the best ideas come from the collaboration of many. Our teams have always been built that way, and we are very happy to work at a place that fosters that goal as part of our core business strategy. Our demonstrated commitment to the well-being of our residents and tenants is one of the key factors that distinguishes us in the marketplace. With that, let me turn the call to Jonathan. Jonathan?