Bridge Investment Group Holdings Inc.

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 ir.bridgeig.com. These slides can be found under the events and presentations portion of the site along with the fourth quarter and full year 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, Bonnie, and let me be the first to publicly welcome you to Bridge. Your impressive IR and real estate experience will undoubtedly augment our shareholder communications as we continue to share the Bridge story. 2021 was a watershed year for our company. As you can see on slide five, our financial results for the year achieved records across most key performance indicators. Jonathan and Katie will review our financial results in more detail, so I will be brief here. The second set of data metrics show over 50% growth across both our fee-related earnings and distributable earnings. This year-over-year growth reflects the upward trajectory of our company, the continued expansion of our mature strategies, the launch of new and exciting verticals, and the inorganic expansion into attractive sectors of U.S. real estate. As you will see, our structure and purpose-built organization has delivered outstanding returns, which performance has powered additional capital commitments from existing and new investors. Please turn to slide six. Our successful IPO in July 2021 was a catalyst for Bridge in so many ways, visibility and profile enhancement, which is translated to record capital raising across both retail and institutional platforms, strong and continuing dialogue with our shareholders, and an enhanced competitive profile as an attractive consolidator in the selected verticals in which we have an interest to expand. It is also worth noting that of the 270-plus IPOs in 2021, the average return through year-end was negative 4%. In contrast, Bridge ended the year 56% above our initial offer price, making our company the 26th best performing IPO in the U.S. Thank you to all who made this possible. The IPO amplified our ability to leverage our expertise and differentiated investment approach in new and adjacent verticals. We have communicated some of the areas of interest in the past, And we completed the acquisition of Gorelick Brothers and Gold Property Management as of January 31st to create what we believe will be one of the most competitive participants in the large, growing, and still nascent single-family rental sector. In a short period of time, we feel validated in our decision to bring Bridge public and are excited about the wide opportunity set and potential for continued growth in 2022 and beyond. Before we talk about the future, let me quickly summarize what we believe are impressive results for 2021. First, Bridge raised $5 billion of capital in 2021. Dean will provide more detail, but from my perspective, the most impressive aspect of the capital raise is how broad-based it was, both by investor type and fund strategy. We have grown our client solutions group organization. We have dramatically expanded our stable of institutional investors. We have expanded the wire house platforms with whom we do business, and we have deep penetration across the spectrum of sovereign wealth funds, pension plans, the insurance sector, endowments and foundations, and family offices. Best of all, we are only scratching the surface, notwithstanding the record capital raising results for 2021. Our pipeline is as strong as ever. All CSG members are traveling again. We currently have in-person meetings confirmed with a literal who's who of institutional investors, and we've substantially invested in our CSG organization. Moving down the page, investing capital at scale both selectively and without sacrificing strategy or returns is critical. In 2021, Bridge deployed a record $4.6 billion. Bridge is able to do this due to our purpose-built structure, our focus, on the U.S., on selected prime growth markets within the U.S., our specialized investment teams oriented towards the most high-growth sectors of U.S. real estate, and our investment in and commitment to forward integration to generate alpha at the asset level. Not only does deep knowledge of our assets and markets drive alpha for fund investors, but it also allows us to be nimble in markets without marginalizing our differentiated and proven diligence. And this same concept also applies to fund realizations, where in 2021, we realized $1.3 billion, which netted over 83 million in realized performance fees. First and foremost, we're thrilled to add to our track record of performance for our fund investors. But similarly, we believe our platform to drive both AUM growth and scaled investment and realizations of those funds offer a compelling value engine for our shareholders. In addition, Our unrealized accrued carry, which Jonathan will discuss further, has increased to $440 million, demonstrating the pipeline for future performance-driven, distributable earnings is significant. Lastly, we are proud to say that Bridge got stronger as a company with key additions to our talented team of professionals and to the continued evolution of our funds management infrastructure. After several years of hard work, we expect to complete both SOC 1 and SOC 2 audits and have internalized fund administration, which we believe will allow us to be more accurate and more responsive. If we turn to slide seven, I'll wrap up my comments on 2021 by framing them against our history. As we noted on the IPO Roadshow, we believe BRIDGES' unique approach to forward integration in property management and our focus on carefully selected commercial real estate sectors positions us very well to replicate strong and steady growth for years to come. As you can see here, the foundation of our most visible earnings streams has grown at an impressive rate over the past five years, including 2021, the five-year compound average growth rates of our gross AUM and our fee-paying revenues are 41% and 30%, respectively. We believe the drivers of these key performance indicators have only become stronger in the past year for Bridge. Many of our legacy fund strategies continue to rank in the top quartile. Our vertical integration continues to drive alpha and synergy across strategies and broaden the investment opportunity set available to Bridge. If we turn to slide eight, let's talk a little bit about 2022 and beyond with our view of the environment and how we're structured to succeed. First, the backdrop for institutional investment in commercial real estate remains robust. According to Hodesweil, the average institutional investor remains underweight commercial real estate as an asset class. Said another way, the average investor has a target allocation of 10.7% compared to current investment mix of just 9.3%. For reference, these small percentages represent very big dollars. Each percentage point of allocation shifts represents approximately $134 billion. We believe this trend will likely accelerate given the global search for yield and commercial real estate's natural inflation hedge, especially in property sectors that we focus on like residential and logistics. Altogether, these factors provide a strong foundation for liquid commercial real estate markets in the coming years, and our platform is well positioned. Next, I'd like to speak to how Bridge succeeds in what is a competitive commercial real estate investment market. As you may know, 2021 was an incredibly active year for asset transactions. According to Real Capital Analytics, total U.S. commercial real estate transaction volumes were $840 billion, nearly double 2020's total and exceeded the previous record of $600 billion in 2019. an impressive 42% of the volume transacted in the fourth quarter alone due to the typical seasonality of the business. In markets that are liquid and competitive, it's hard to overstate how important our approach is to our fund performance. We have purposely constructed fund strategies investment teams focused on real estate markets with the best and most durable secular demand drivers. Specifically, Bridges overweight the U.S. residential market because of the chronic undersupply of housing in the country since the great financial crisis. We are focused on logistics and infrastructure and on multiple strategies that offer high-yielding returns in both open-end and closed-end structures. And our Opportunity Zone vertical was recently ranked number one out of 613 Opportunity Fund vehicles that have been offered. This is important context, especially when considered against our performance track record. Bridge does not drive alpha by participating in markets the same way that the broader herd does. Bridge instead is structured to drive better returns with superior local knowledge of markets, faster speed to market, and a full set of capabilities across the capital stack to finance our investments. Our property management and development capabilities also serve a distinct advantage in our ability to source and execute value-add or redevelopment investments. The value-add market is inherently less competitive, and as a result, Bridge wins often. It is for these reasons that our fund performance has been strong, as you can see on slide nine. We're equally excited about our prospects in our new strategies in logistics, net lease income, single family for rent, opportunity zone development, and agency MBS. We published our inaugural firm-wide ESG report last spring and will release our second annual ESG report later this quarter. As a United Nations PRI signatory, BRIDGE completed its first PRI report submission in 2021 for our equity strategies. Our commitment to sustainability reporting also included two first-time Gradsby reporting submissions for the BRIDGE Workforce and Affordable Housing Fund and the BRIDGE Office Fund, too. Bridge became a supporter of the Task Force on Climate-Related Financial Disclosures, as well as completed a TCFD maturity assessment in 2021. In early 22, we launched a dedicated climate change task force comprised of senior leadership. Over the course of 2021, our Diversity, Equity, and Inclusion Committee and passionate advocates drove company-wide programming that supported diverse hiring and retention, education and awareness building, a firm-wide diversity assessment, and the launch of six additional employee resource groups, or ERGs. Bridge was also a leader in the real estate industry in recognizing Juneteenth as a paid company holiday. We are also thrilled to share that 55 Bridge-owned commercial office buildings earned the highly acclaimed Well health safety rating in early 2022, an example of our commitment to implement evidence-based strategies that support the overall wellness of our properties. Furthermore, the Bridge Workforce and Affordable Housing Strategy received multiple awards in 2021, including Best ESG Fund in Private Equity by ESG Investing, Social Fund of the Year by Environmental Finance, and ESG Private Market Strategy of the Year by Pension Bridge. Before I turn the call to Jonathan, I'd just like to reiterate the importance we place in serving all of our stakeholders. As I noted, we are proud of the returns we drive for our shareholders and fund investors, but we also view the value we create for our employees, partners, and those that occupy our properties as imperative to our strategy and success. Whether it be our commitment to investments in alternative energy, such as solar, or through our work with employee resource groups, we are proud of the difference that Bridge makes every day. And with that, let me turn the call to Jonathan. Thank you, Bob, and good to speak to you all again.

Bridge had a great fourth quarter, which is a perfect way to cap off a momentous year for our company. As you can see on slide 12, Bridge's total revenues for the fourth quarter grew 50% over the same quarter last year to $107 million. This is our highest quarter on record, and notably, three of our top five highest quarters have been reported in the last year. Our investment income of $148 million was nearly double the same period a year ago. For context, this exceeded last quarter by nearly 75%. Similarly, net income of $166 million was up 79% year over year. Fee-related earnings for the quarter increased 57% over the same quarter last year to $36 million. This growth has been driven by record deployment combined with record capital raising. Our realized performance fees for Q4 totaled $10 million, but most impressively, our unrealized accrued carry grew to $440 million. In line with Bob's comments on Bridge's strategic advantages, this performance is both from Bridge being in the right sectors as well as our outperformance in these sectors driven by our unique approach to our in-house management. Distributable earnings of $39 million for the quarter increased 12% from the same period in 2020. All of this helped drive impressive results for the full year of 2021. Total revenue increased 42% from 2020 to $330 million. Realized performance fees of 83.4 million were up 97%. An unrealized carry of 440 million, which represents approximately $164 million of future distributable earnings to the company. Turning to slide 13, You can see in these graphs the tremendous growth I just reviewed. I'd like to give some color on the drivers of these metrics relative to the business strategy and capabilities we spoke about at the top of the call. Our fee-earning AUM grew 31% in 2021, largely by outstanding LP capital raising and deployment over the year. And as you can see in the lower right, distributable earnings grew by 57%. Dean will speak to our capital raising in a minute. What is important to understand is that Bridge continues to be able to scale both in capital raising and deployment while seeking top quartile returns. We believe Bridge has a significant strategic advantage because we have local knowledge from our boots on the ground and our in-house management of our assets at a national scale. This helps our investment teams. These strategic advantages are really what drive returns and earnings for Bridge shareholders that you see on the remaining three charts on this page, each of them new records for our company. One thing I will highlight is that there is seasonality to our business, particularly as it relates to first quarter of each year. Historically, Rich has generated less than 15% of its annual fee-related earnings from Q1, and nearly two-thirds of the fee-related earnings have come in the last two quarters. In 2021, 66% of our fee-related earnings came from our last two quarters. Katie will elaborate on this, but we'd expect a similar pattern in 2022, where our earnings are stronger in the back half of the year. On slide 14, we can see the visibility and duration of Bridges' fee streams. Over the past five years, Bridges' fee-related revenues have grown at a compounded annual growth rate of 30%. More importantly, the growth of our recurring fund management fees has increased by a compounded annual growth rate of 44% over that same period. As noted, the macroeconomic demand drivers related to the shortage of residential housing, logistics, real estate, combined with the deep and growing demand for commercial real estate exposure among institutional investors gives us confidence this growth will continue. Specifically, the trend toward more open-end capital, longer-duration funds, combined with larger vehicles and new strategies singles strong visibility into more durable and stable fee-related revenue streams. In the fourth quarter, capital commitments had an average duration of 10.8 years. And as you can see on the chart on the right, As of year end, over 76% of our fee-earning AUM had a duration over five years, and we increased our weighted average duration of our fee-earning AUM from 7.2 years in 2020 to eight years at the end of 2021. In total, a deep market with strong demand drivers and long-dated capital is a powerful backdrop for our model, and we are excited about what lies ahead. Turning to slide 15, I'll take a minute on our performance fees for the quarter. As mentioned, we generated $10.3 million over Q4. That was driven mainly by realizations in multifamily and debt strategies. As we have noted in the past, realization of performance fees varies substantially from quarter to quarter, but the market conditions were strong in both Q4 and the full year of 2021. Rising interest rates and inflation have not materially impacted commercial real estate pricing or cap rates. Instead, we are seeing demand tailwinds for assets like residential rental and logistics that have been so strong that we continue to see values rise and cap rates compress. As we introduced last quarter, we believe the best view of our performance pipeline can be seen in our accrued performance allocation. We've updated on the upper right of this page, and you can see that the market remains very strong as evidenced by a 46% increase in that accrual to $440 million. Timing of realization of these performance fees will vary, but at the bottom right, we present unrealized performance allocation by fund vintage. While the majority is in funds that are less than four years old, nearly 22% are nearing their seventh year, which is a typical seasoning or the realizations. Again, the trend for larger, longer duration funds combined with our ability to scale deployment presents a strong backdrop for performance fees to continue on a strong growth pattern. As previously noted, we have approximately $164 million of potential future distributable earnings to the operating company on the balance sheet. Turning to slide 16. It is my pleasure to present an exciting new growth driver for Bridge in the single-family rental sector. As you likely saw, we announced the launch of single-family residential strategy along with the majority acquisition of the management platform of Gorelick Brothers Capital. In partnership with the principals of Gorelick, which can execute against another investment class with significant secular demand drivers. As we mentioned, The chronic undersupply of housing in the U.S. has driven our focus in the multifamily housing space for years abridge. While home building has increased, it continues to lag and in many ways has widened the affordability gap for many first-time homebuyers. Additionally, demographic tailwinds for young Americans beginning families and creating households is still in its early years. We also believe that the single-family residential sector offers a broad, addressable market with lower institutional competition, and our local approach, which we believe can be highly effective, will succeed in this area. For context, the market for institutionally managed single-family rental housing has grown substantially in the past decade, but remains highly fragmented, and only 2% is institutionally owned. Better yet, our new partners from Gorelick share our passion and belief that value is driven through operations. and they are experienced, vertically integrated operators of single-family residential. So they bring breadth and capabilities that fit very well with Bridge's model and will be synergistic to our existing portfolio in multifamily. On page 17, you can see Bridge now has a significant presence across all residential for rent asset classes that cover the full cycle and can leverage our market knowledge and tenant-based across the country, including our single-family residential investments and operations, as well as our other existing sectors. Bridge's portfolio currently includes over 47,000 multifamily units, with another almost 20,000 under construction in the Opportunity Zone platform. Adding a growing portfolio of single-family for rent and the almost 12,000 seniors housing allows us to leverage our relationship with our renter base throughout the life cycle of every household. Our procurement capabilities, our insurance services, our community service, and other resident programs allow us to deliver better value to our residents and to our shareholders. With that, let me turn the call to Dean to give you the highlights of a very successful year of capital raising at Bridge.

Thank you, Jonathan. As Bob and Jonathan mentioned, it was a great year for Bridge's fundraising arm. We raised $5 billion in LP capital, which is over a billion dollars more than our previous peak in 2019. Our success was partially aided by the strong market backdrop that Bob detailed. That said, we believe Bridge benefited most from the continued evolution of our next generation funds, as well as the launch of brand new vertical strategies in 2021. In total, Bridge launched four funds in 2021, with two being next generation funds. A typical fund two has generally raised two times the amount of capital from fund one. Lastly, to dovetail on Jonathan's last page, Bridge had a successful first investor closing of our first single family for rent fund at a size of $240 million to acquire an existing portfolio in connection with the launch of our single family for rent strategy in January 2022. Before I speak to the pipeline demand, it's worth repeating the fundraising success that we had in 2021 is closely related to the strategic advantages that Bob and Jonathan noted. Bridge is built to invest with better information at scale in commercial real estate. As a result, we can deploy capital efficiently and drive better returns. Those returns and track are going to track and retain our investors, which helps Bridge market the new investors and launch new strategies. It really is symbiotic and, as a result, We've built a very efficient flywheel, largely because we control each function. As for uptake and distribution network and pipeline, first on note, that bridge is making great early strides to expand internationally. Over the course of 2021, we've hired key personnel in our clients business group with a specific focus on generating incremental investors in EMEA and Asia. Additionally, we had capabilities in Luxembourg to better serve European investors. For context, the institutional investor universe outside of the US has largely been untapped by BRIDGE historically. And given our ability to scale, we are very excited about the potential in the years ahead and have already put a strong number up in 2021 with over 27% of our capital being raised internationally. Lastly, turning to demand, I believe Bob covered it well in his remarks, but from our seat, it is very clear, especially in light of recent inflation figures, that investors, from wirehouses to largest institutional investors in the world, are all seeking to commit capital to alternatives, and specifically commercial real estate, at an increasingly rapid rate as compared to historical allocation. As Bob mentioned, performance of our funds led to successful next-generation fundraising and scale in our growth. The current post-COVID environment has enabled the expanded team to get back on the road with key domestic international investment meetings, including with sovereign wealth funds, pension plans, insurance investors, family offices, and warehouses. Desire for meetings specific to our follow-on funds and multifamily workforce affordable, as well as new offerings in single-family rent, logistics, and net lease, has enabled us to forge new LP relationships and expand our existing LPs, affirming our ability to cross-sell across all investor types. This is also proved out in the fourth quarter as due diligence meetings were at an all-time high across all of our offerings with further acceleration during meetings this year. This increased investor due diligence along with our continued strong returns parallel with a broadening and more global investor universe. These conditions make for a compelling fundraising dynamic in 2022 and the years ahead. Before I turn the call to Katie, I'd just like to highlight one figure on this page, which we think summarizes the scalability of our model well. If you look at the charts here, the $2.1 billion deployed in the fourth quarter was not just a record for the company, but it was a figure that eclipses every quarter of fundraising in our history except this past one. The internal process in this deployment of capital starts with our top-down approach to prime growth markets with underlying supply, demand, and balances. Our teams literally see thousands of assets that are reviewed and curated down to a select few that match our ability to drive value. This process is embedded throughout the organization with formal deployment approvals in our weekly investment management committee meetings. As Bob and Jonathan said, Bridge is uniquely well-built to execute at a significant scale. With that, I'll turn the call over to Katie.

Thank you, Dean. I'll start on slides 22 and 23. As everyone has noted, it was a record-breaking year and quarter for Bridge related to our capital raising and deployment. As I walk you through our GAAP financial statements and non-GAAP metrics, you will see the impact of the execution on our financial performance. I will mostly focus on our fourth quarter results for purposes of this presentation. Our total revenue for the three months ended December 31st, 2021 was $107.3 million compared to $71.7 million in the same period for the prior year. This is due to a 55% increase in fund management fees, which was primarily due to an increase of 31% of fee-earning AUM year-over-year and $5.2 million of catch-up fees, which will increase our reoccurring fund management fees. On an absolute basis, catch-up fees during the quarter were $13.3 million. Additionally, our transaction fees are up 70% over the prior year, which is driven by $2.1 billion of deployment during the quarter. Bridge continues to trend very strong in the final quarter of the year, with 33% of our revenue coming in the fourth quarter, consistent with the seasonality that we've historically observed within the commercial real estate space. We want to highlight for our analyst investors that the first quarter of any year tends to be slower from a volume perspective, and as a result, we would expect a step down in our transaction-based fees in the first quarter of 2022 from the Q4 2021 level. If we turn to investment performance, you can see the value that has been created through our due diligence, focusing on value-add assets in high-growth markets. Our total investment income for the fourth quarter increased 87% year-over-year, driven mostly by unrealized carried interest of $137.6 million, offset by lower-realized carried interest and incentives of $10.3 million versus $28.5 million in the prior period. As Jonathan and Bob spoke to previously, the runway for future performance-driven distributable earnings is significant, while the quarterly realization pace will vary based upon timing. We also have a corresponding increase in employee compensation and benefits, which is largely due to an increase in our investment professionals and corporate employee headcount related to our increase in fee-earning AUM and new strategies. Additionally, during the fourth quarter, we incurred approximately $1 million in costs related to being a public company, and approximately $1 million of transaction costs related to the SFR acquisition. Overall, it was a strong quarter with GAAP net income to the operating company of $165.8 million versus $92.5 million in the prior year, and our earnings per share was $0.52. Next, onto our non-GAAP measures, turning to slide 23, please. First, our total fund level fees for the quarter grew at 61% over last year to $81.6 million, driven by strong growth in our contractually reoccurring fund management fees, powered by the continued AUM growth. Our transaction fee growth was also very strong, as previously discussed. Total fee-related revenues grew by 63% over last year, to end the quarter at $87.8 million. The performance was driven by continued strong fundraising, fee-earning AUM growth, and effective deployment. As you have heard many times already, we believe that Bridge's performance is driven in large part by our vertical integration. We drive value in our ability to make direct change at the operating level and to create alignment through a common vision with the entire team. And this starts with our deployment and acquisition and through our operations with the fund's assets. This allows for our transaction fees and net earnings from property operators to be an extension of our fund management fees. Based upon the growth in our fee earning AUM and elevated deployment during the quarter, we once again generated strong fee-related margins of 57% for the fourth quarter and 55% for the year. Our margins will vary quarter to quarter. However, on an annual basis, our margins have risen over time, and we are optimistic that they will continue to increase as we scale. This strong growth in fees drove total fee-related earnings to the operating company of $35.5 million, up 57% compared to the fourth quarter last year. As previously mentioned, realized performance and incentives for the fourth quarter totaled $10.3 million. The performance fees were driven by realizations in the multifamily and debt strategy verticals. Lastly, our distributable earnings for the quarter were $38.7 million, or 12% higher compared to a year ago on a pro forma basis, and an impressive $134.6 million for the full year 2021, an increase of 57% year over year. Turning to slide 24, our pre-tax distributable earnings for the fourth quarter to the operating company totaled $38.7 million, or $0.35 per share, up 12% compared to a year ago on a pro forma basis. driven by all of the components of our business suite details, including our strong fee-earning AUM growth, fee-related earnings, and real-life performance allocations. As you saw from our earnings release, Bridge also declared a dividend of 21 cents per share. The share count includes the collapse of the 2019 Profits Interest Program on January 1 of 14 million units, as well as the 2022 restricted awards of 2.2 million shares, and 694,000 operating company units related to the acquisition of the SFR platform. We have laid this out for you on slide 33. The collapse of the 2019 profit interest was accreted to public shareholders. The DE to the operating company for the fourth quarter and year end would have been eight and 19 cents higher per share respectively on a pro forma basis if the collapse of these grants had occurred on January 1st, 2021. As the 2019 tranche was the largest portion of the profits interest, Income allocated to non-controlling interests should decrease significantly, although we'll continue to break this out in the MD&A disclosure going forward. Finally, I would like to note that Bridge continues to have significant available capital and relatively low debt. Among other opportunities to deploy our capital and grow our business, we're excited to announce that since we last talked, we have made $21 million of commitments directly into our funds, to which our public shareholders can share directly in the value creation of these funds. With that, I'll turn the call back to the operator so we can take your questions.

Thank you. And I'll be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. We ask you please ask one question and one follow-up, then return to the queue. Once again, that's star 1 to be placed in the question queue. And please ask one question and one follow-up, then return to the queue. Our first question today is coming from Bill Katz from Citigroup. Your line is now live.

Okay, thank you very much. Good morning, everyone. I appreciate you taking the questions. Maybe if we could sort of zero in on the retail opportunity. I just wanted to give us a snapshot of what kind of volume you got from the retail channel in the fourth quarter where the AUM are. And on one hand, it seems like a tremendous amount of momentum with new products. On the other hand, it seems to be rising competition. Can you talk a little bit about how you sort of see your positioning as you look into 22? Thank you.

Thanks, Bill, for the question. I'll make a couple of comments. This is Bob speaking, and then turn things over to Dean to detail some of the precise volumes. You're right in your assessment. The retail interest in real estate is very high, continues to be very high. I think premised on the fact that real estate provides good yield as an investment. Their returns have been very strong. The tax profile of an investment in real estate is very favorable relative to many different investment alternatives. So we see strong continuing demand. As you know, Bridge has a number of relationships with a variety of warehouse distribution platforms across the U.S. as well as internationally. We've expanded those networks significantly. over the course of 2021 and in particular in the fourth quarter. And we continue to see really great promise there. I think our overall retail focus is further supplemented and augmented by the fact that we have a strong direct family office and high net worth and ultra high net worth coverage effort that's directed individually by our client solutions group. within Bridge as well. So a lot of momentum. We think a lot of demand going forward. Dean, do you want to detail and get a little more specifics what we've raised from the retail channel?

Well, yes. I mean, substantial last year. I think if you include, Bill, retail as well as family office, high net worth, foundation, which some of that funds together from on the wire house side too, because there's some of these FAs cuddle, uh, that, that sector as well, probably about, you know, uh, a good call it 3 billion or so, uh, three, three of our 5 billion came from that channel overall. Um, so it's been good to us. I'd, I'd also comment as we've gone to 2022 here. you know, our, we are now, we're, we're, we're doing multiple products across, across the board with the wire house in particular. So we've been able to not only, you know, deepen our ability to have a product across the, the wire houses, but now we're having multiple products across multiple wire houses too. So it really has been kind of, great not to oversell here a little bit but it's been great we've been able to you know have whether it be opportunity zones workforce affordable housing mobile family five uh discussions about other products where we're sort of queuing them up and the way that the warehouse in particular the way it works is you sort of you gotta you gotta kind of fight for your slots for lack of a better way to put it and uh it feels like we're probably getting more than our share at this point in time hope i can keep saying that into the future quarters and years but it feels pretty good overall.

Okay, terrific. And just as a follow-up, and I apologize, you were sort of giving some signaling on this. Could you sort of go through the seasonality of the platform just from an FRE perspective, maybe level set, exit pace or entry pace for both base management fees as well as maybe expenses? As you look to the first quarter, how would you sort of think about the pacing of that as we look out for the full year? I'd certainly appreciate it. higher margins here, and yes, I want to make sure I have it right on sort of a court-to-court basis. Thank you.

Jonathan, do you want to address that?

Sure. Yeah, I mean, I think that We've always guided you guys about margins, that they are variable. And I think we had a strong margin quarter and year this year. Our margins historically have been kind of in the, you know, call it 50% range. And long-term, that's kind of the range that we expect them to be in. So I think that we have, again, various products that that drive different margins, but most importantly, it's really about the timing of catch-up fees and when we actually see those fees for various closed-end funds, as you know. I think one of the other important things this year is that we have a huge amount of growth in our company, so we're really excited because we've launched the logistics value team. That's going to generate a huge amount of highly profitable business for us going forward. But right now we've invested in a really large team. It's scaled. We're deploying significant amounts of capital. We're raising significant amounts of capital, but we're in that ramp up. So it's kind of a startup. So right now, Those for 2022, we expect to be sort of a drag on our overall earnings. Single family for rent, even though we're launching with really good momentum, same thing. We're building that platform, and that's going to scale really substantially. And even some of our less new but still newer strategies, logistics, net lease, AMVS, all of which in 2022 are really gaining significant momentum as Bob and Dean can address on both the capital raising side and on the deployment side. But that's going to indicate some lower margins. I think the other thing that everyone for 2022, the other thing that we talk about is just the way the bridge has always been, including 2021, where our margins or our total FRE is heavily back-end weighted. And so we expect to see that again. Part of that is, again, the momentum we're actually building in those new strategies that I just described. So we're really excited. I think we're heading in the direction that we had originally, you know, focused everybody. But 2022, you know, is going to be a building year, I think. Still very profitable, but a building year.

Thank you. Thank you. Our next question is coming from Ken Worthington from J.P. Morgan. Your line is now live.

Hi. Thank you. Good morning. I wanted to further flesh out the acquisition of Gorlick and get a number of details around that transaction. Maybe part of that is how did the economics of SFR4 work? What's the target size, fee rate, performance fee structure? Just give us some details about that, that I think probably flagship fund for them. And then in terms of the economics of Gorlick, can you tell us what fee-paying AUM ended the year? and what sort of fee rate we should expect on their business on their fee-paying AUM going forward. And I guess you hinted at the margins are lower. You know, is Gorlick making money? Should we expect that to be, you know, a little drag or a big drag? So, anyway, all that wrapped into a question on Gorlick.

Sure. Thank you. Thank you for the inquiry there. Remember, we closed that transaction on January 31st of this year. no 2021 impact. It'll be a 2022 event. And as we indicated in our press release at the time of the closing, we acquired 60% of the operating platform, Gorelick Brothers, and we recapitalized an approximately $660 million portfolio of about 2,750 homes plus minus as part of that transaction. In doing that, that recapitalization, we launched the fourth fund on the Gorelick platform. We brought in about $230 million plus minus of equity capital to both capitalize that recapitalization as well as provide some dry powder to continue to grow the the single family for rent portfolio. We have a great pipeline of activities. There's been a flurry of early activity, which we think will continue as we integrate the Gorelick Brothers team and approach and platform with our extant multifamily and other residential, both investment and operating platform. We had a We had a really productive series of meetings in our offices to identify areas of overlap, identify areas of coordination and efficiency. And, in fact, the CIO of Gorelick is with a team in New York today meeting with some investors as well. So lots of activity there, and the activity is quite robust. in a lot of respects. We're really excited about the outlook for the single family for rent business. As Jonathan stated, it's just a nascent business from an institutional perspective. We think that Bridge, in combination with Gorelick, now named Bridge Homes, has a highly differentiated competitive profile, particularly because of the 1,000-plus professionals that we have on the operating side in multifamily, which translates so directly to single family for rent. So we think we will offer a really competitive profile in terms of both growing the portfolio and cost-effectively and efficiently managing the portfolio. Our objective is to raise a 10-year closed-end fund Our capital objective for equity is about a billion dollars. We had a strong first closing to affect that and a lot of dialogue going forward. The fees and other revenues related to growing and managing a single family for rent portfolio are somewhat commensurate with what they are. for multifamily, depending on the size of the investment. We charge a management fee and performance incentive fee, along with various ancillary property management fees, et cetera, for services that Bridge provides.

Okay. And is this the only Gorlick vertical? Are there other Gorlick verticals? And what did Gorlick sort of end the year at? So, like, I see what you've raised. Do they have any other fee-paying AUM outside of the money that was just raised in one queue?

They have a modest legacy business with a couple of earlier portfolios that are still being managed and operated. The economics of the vertical, if you will, are pretty directly dependent on what our activities are going forward.

Makes sense. And to follow up on Bill's question, maybe said differently, compensation was $31 million in 4Q. You did talk about the seasonality of activities, seasonality of the business. Of the $31 million in 4Q, what part of that should we think is being recurring in as we start 1Q and 2Q of the year? Should we think about 1Q starting at $31 million? As part of that, it was a great year, and cash bonuses were big, and therefore, we were set lower for 1Q. Anyway, just need some help on what our starting point is as we start the new year for comp.

Jonathan can provide or Katie can provide some more detail. I would maybe start off by saying that, you know, of course, our business is highly dependent on attracting and retaining great people to execute on the business model. We pay semiannual bonuses, and one of those semiannual periods ends at the end of the year. So there is some lumpiness in compensation going forward. We think that Bridge is a great employer. We've been able to attract and retain a great number of fantastic people, and we detailed the hiring that we did over the course of 2021 as well. So we think we're entering 2022 with a very fulsome team. very capable. There are, of course, wage pressures throughout the industry, and we're not immune to that, but we think we're growing revenues well in excess of how we're growing expenses. Jonathan, do you want any other details?

I'm going to let Katie jump on this one, okay, Bob?

Sure, and just to give you a little bit more specific guidance, you know, a lot of our key hires did take place in Q4, so we would anticipate that for Q1 it would be relatively consistent with what you saw for Q4.

Okay, thank you. Thank you. Our next question is coming from Michael.

I think the one thing, sorry, sorry, but the one thing to note probably is that we brought on the GRLIC platform, right, so the SFR platform. will be, you know, layered into what you're going to see, right, for Q1?

Even with SFR, it should be relatively consistent. Okay.

So, we're still good. Okay.

Thank you. Our next question is coming from Michael Cypress from Morgan Stanley. Your line is now live.

Oh, hey. Good morning. Thanks for taking the question. I wanted to circle back to some of the newer adjacent strategies with logistics, net lease, and industrials. I was hoping you could update us on The progress there, the build-out, the headcount, are you guys still hiring there? Talk about some of the initiatives and where you stand today in terms of AUM and how the fundraising is progressing with those newer strategies. Thank you. Sure.

We're really excited about what we're doing in logistics as well as in net lease income. Over the course of 2021, we went through a substantial team building in both of those areas, and we think we feel – fully capable and very competitive teams across both of those sectors. We made an announcement about a joint venture with the Townsend organization to invest in a number of logistics value-add properties. We anticipate launching formally our logistics value-add fund later this year. We have a couple of other corollary initiatives to deploy capital into what is a really attractive space across the logistics value-add side of the business. And as we detailed in the past, logistics today represents a pretty small percentage of our overall business, but we think it has enormous growth prospects going forward. the amount of both institutional and retail interest in logistics is running very, very high. And the team that we've assembled brings literally decades of successful investing experience to that sector. On the net lease side, we view our net lease business, which has a logistics and distribution primary orientation to it, as a great opportunity to offer tax-advantaged, yield-oriented products to investors. And so it fits so well with what we're doing on the real estate-backed fixed income side, on the agency mortgage-backed securities side, with a with an open-ended fund format for net lease income that gives investors exposure to yield with the confidence of collateral that hopefully will be rising in value over the lifetime of the hold there. We've had a couple of closings in that vertical. We continue to have a lot of dialogue around the net lease opportunity, and we have some ambitious targets for the rest of the year as we continue to invest in and grow that vertical. Great.

And just a quick follow-up on the new senior living co-investment venture that you guys announced with StepStone. Maybe you could just talk a little bit about your aspirations there and what the economics could look like for Bridge.

Seniors housing is really one of the components of our overall suite of residential strategies. We feel coming out of the pandemic that seniors housing is poised to perform very well. The COVID lockdowns were not particularly kind to seniors housing. There was a significant diminution in occupancy. just given that the front door was closed and the back door was open in some respects, we see what I think we've characterized as record levels of inquiry and tours and expected growth in occupancy as well as rents going forward. The SMA that we announced with StepStone is a complement to our fund strategy. We're in the market with Seniors Housing Fund 3 following the successful deployment of capital in Funds 1 and 2. We think that the macroeconomics around Seniors Housing are strong, like they are in multifamily, a growing cohort of 75-year-old plus potential residents, the amount of activity is quite high. And there, at least as we know, as far as we know, no other firm that is as well positioned as we are in terms of having an integrated both investment team as well as property management team to deliver great service and value and comfort to the seniors housing residents and their loved ones. So we believe that the StepStone SMA will help to accelerate the growth of exposure for bridge in that sector sitting alongside the fund. Great. Thanks so much. Thanks for the question.

Thank you. Our next question is coming from Adam Beattie from UBS. Your line is now live.

All right. Good morning. Thank you for taking my questions. I wanted to ask about the mix of fundraising. The momentum is obviously quite strong. Results were great last year. And you mentioned that, you know, maybe three out of the five billion raised was, you know, sort of retail and adjacent. Appreciate the point about endowments and others going through like wire house FAAs. Do you expect that sort of mix or proportion to remain similar this year? I know you're expanding internationally. You know, maybe there's a different mix overseas or what have you. But just wanted to get your thoughts on sort of institutional versus retail in the mix of future fundraising. Thank you. Dean?

Yeah, you know, I'd say it's going to – the institutional is going to increase. We've got some – deep dialogues going, some further than dialogue at this point in time. With notable institutions, I would anticipate on our target this year that we maybe get to 40 plus percent, I would think, because these dialogues are very chunky, both domestically and internationally right now. So I would think that would swing. you know, up the institutional rank overall. Still a very strong presence overall. We have, you know, different goals for this year versus last year as we grow. But I would think we're going to definitely go up from 30% to, just because of the chunky nature and, you know, any media, Korea in particular, as well as dialogues in North America we're having today with, you know, you saw, you're hearing the names towns and the steps, though, and you can sort of start piecing together kind of what's coming together across the offerings here.

You know what's interesting is 2021 was a transitional year. There were a lot of particularly institutional investors who still weren't taking meetings with people. We think that that's changing at this point. Of the expanded client solutions group team that we have, As far as I can tell, today, as just one data point, there's almost nobody in the office, and there's nobody in the office because everybody's out seeing clients and potential investors at this point. So the level of activity has really, really ratcheted up in a lot of respects. The amount of dialogue, in-person meetings has ratcheted up as well. As a relatively newer entrant in the markets, that's really important for us, because so often we are not the incumbent, we're winning based on how we performed, based on what our value proposition is going forward. And so being able to have a robust, often in-person dialogue around that is important. So we have some meaningful enthusiasm for 2022 in a revitalized environment.

That's perfect. No, great sense of the kind of the trajectory and the pipeline there. Really appreciate that. And then just to kind of zoom out, you know, in a similar area, I guess, but I was captivated by the statistic around you know, allocation, you know, actual versus target, the 10.7 versus 9.3. Just wanted to get your sense, maybe, Bob, over time, you know, how you've seen that changed. Is the target actually going up, you know, and is the gap, you know, closing or just persisting a little bit? And then where, you know, in terms of segments, maybe you see the greatest opportunity, you know, gap versus, you know, target versus actual. Thank you.

We had a couple of data points in our prepared remarks that in the interest of time we deleted, and we probably shouldn't have, I think that that target allocation has risen every year since 2013, if memory serves me well. Real estate as an investment asset for a long time has been under-allocated. It's projected by people who know about these things to continue to go up as a percentage of overall allocations. I think real estate as an asset class has performed very well also, particularly for taxable investors, and there are some taxable and some tax-exempt investors, the tax efficiency of real estate is really strong as well. So we have a bullish outlook for what allocations will be going forward.

That's great. I really appreciate that. Maybe I can convince Bonnie to send over that draft. Thanks very much.

Good luck with that.

Thank you. Our next question is coming from from Wells Fargo. Your line is now live.

Hi, everyone. Good morning. Back to the topic of inflation. understanding that's a positive on demand for your products and strategies. How meaningful are the portfolio headwinds with cost inputs, for example, when we think about value-add strategies, senior housing, and even generally on traditional multifamily, any color you can provide?

Jonathan?

off mute? Okay. Just making sure I'm off mute. Can you hear me?

Now we can.

Okay. So just can you clarify the question you're concerned about or your question is related to headwinds related to the costs that have moved up, the expense and, you know, call it construction or replacement costs. Is that the question?

Well, yes, a lot of your strategies seem to have, have more, more OpEx, uh, you know, stuff that's value add stuff like senior housing with a lot of labor input. If you see that. Yeah, sure.

Yeah. Okay. Now I think I understand the question. Yeah. I mean, there's no question that, you know, we'll take seniors since you grabbed that one. I mean, seniors, I think, is in a brief moment of where it's maybe the most challenging, right? Because labor costs have gone up for everything everywhere. And I think, you know, Bridges House view is that's a good thing for the world. So we're pretty constructive about people, you know, getting paid what they're worth, essential workers. So, but that being said, it's going to take, because, you know, Bob alluded to or not alluded to, but outright stated that, you know, during the pandemic, the back door was open and the front door was closed. So we lost a lot of occupancy. We've gained back a good portion of that. But until we start to get back to a point where our occupancies are are pushing the 90s, it's going to be difficult to do a lot with rate in terms of costs. and pass through some of those extra expenses. So, you know, I think our teams have done an amazing job. That's one of the great things about being operationally vertically integrated is we've been able to drive some amazing cost savings and really make up for a lot of that ground in operational efficiencies and use of technology. But that being said, it's going to take a little while until we kind of get to the point where that's rebalanced. But because of the strength of, as we like to call it, the silver tsunami and what we know the demand is going to be for the needs-based housing we provide, we're very optimistic that will happen. On the multifamily side, it's a whole other story because the revenue growth has been so strong because of the supply-demand imbalance that the top line is just if you take 100% of the expenses in a typical multifamily, the revenue is two times the expense. So if they're both growing at the exact same rate, that's great for your NOI, right? And the components of the expenses that are growing, there is a heavy component of payroll, but payroll really in the world of expenses of Multifamily is a relatively smaller one. Property taxes are, you know, for example, significantly higher. But there are a lot of expenses that are moving up on the expense side. It's just the revenue is just by far outpacing. The revenue growth is outpacing the expense growth. And it's already, as we said, two times larger. So it actually, you know, margins are really good. You know, the forecast for operationally for multifamily is And frankly, same story with single-family residential. All of this bodes, I think, extremely well. As far as construction costs in development of multifamily and or costs relative to rehab or renovation of our units, Those are going up, but again, you know, the value that you can drive is also going up. So the return on investment continues to be stronger. I mean, we've looked at, you know, since we have like 20,000 units under construction in our Opportunity Zone funds, and we've had some, you know, as you can well imagine when you underwrote those deals pre-pandemic, We've had some cost overruns, but when we look at the revised pro formas with very conservative revenue projections, our return on investment and our stabilized cap rate on costs keep going up. So, overall, it's been constructive. Obviously, I think we'd all like to see the rate of everything, you know, kind of you know, slow down to a more manageable pace, but, you know, so far so good in terms of how it's working in our world.

Very helpful. Thanks so much.

Thank you. We reached the end of our question and answer session. I'd like to turn the floor back over to Mr. Morris for any further closing comments.

Great. Thank you. Thank you all for joining us today. on this call. We hope that we adequately communicated the momentum that we experienced in the fourth quarter, our positive outlook for 2022. I think as somebody said, we do work in a competitive environment. We think that Bridge is built to succeed in that competitive real estate investment environment. We continue to invest in our organization. We continue to invest in our people. And we continue to deliver really strong returns for our fund investors, and with those principles in mind, we hope that we can outperform in the public markets as well. Thank you all for your interest, and we look forward to a continued dialogue. Have a great day.

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.