Bridge Investment Group Holdings Inc.

Greetings and welcome to the Bridge Investments Group first quarter 2023 earnings call and webcast. At this time, all participants are in 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 and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bonnie Rosen, Head of Shareholder Relations. Thank you, madam. You may begin.

Good morning, everyone. Welcome to the Bridge Investment Group conference call to review first quarter 2023 financial results. Our prepared remarks include comments from our Executive Chairman, Robert Morse, Chief Executive Officer, Jonathan Slager, and Chief Financial Officer, Katie Elsnab. We will hold a Q&A session following the prepared remarks. I'd like to remind you that today's call may include forward-looking statements which are uncertain, outside the firm's control, and may differ materially from actual results. We do not undertake any duty to update these statements. For discussion of some of the risks that could affect results, please see the risk factors section of our Form 10-K. During the call, we will also discuss 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 presentations portion of the site along with the first quarter earnings call event link. They are also available live during the webcast. I will present our GAAP metrics and Katie will review and analyze our non-GAAP data. We reported a GAAP net loss to the operating company for the first quarter of 2023 of $67 million. The net loss was driven by an unrealized loss of $107 million related to our accrued performance allocation due to valuation reductions to selected real estate assets. Basic gap income per share for the first quarter of 2023 was 3 cents, with a loss of 13 cents on a diluted basis. It is now my pleasure to turn the call over to Bob.

Thank you, Bonnie, and good morning, all. In the three months since our last earnings update, market volatility has continued across a number of fronts. Three bank failures, continued interest rate increases by the Fed, coupled with substantial quantitative tightening, ongoing concerns about GDP growth, the state of the labor markets in the context of numerous layoff announcements, and possibility of a hard landing. That's a long list of domestic issues, and added to the list are accelerating global tensions and centered around the US, China, Taiwan, and Russia-Ukraine situations and the implications for global peace, growth, and prosperity. These macro themes have both chilled short-term investment appetites in a risk-off environment and prompted a reset in asset values across many of the markets in which Bridge operates. We believe this has set the stage for a rebound in activity and attractive investment opportunities in the current environment. Through these volatile times, Bridge remains focused on the central theme of conviction, highlighted earlier this year in our 2023 market outlook. We believe that investing with conviction requires acknowledgement of the facts in today's turbulent markets, while focusing on both long-term secular trends and tactical opportunities created by ongoing market dislocation to create value for Bridge's investors. Our perspective is informed by extensive research, deep analysis of both public and proprietary data sources, and ongoing dialogue with investors, banks, and other constituencies with whom we act on a regular basis. Importantly, we believe that in a volatile economic environment, specialization is more important than ever as it relates to strong deal flow and careful selection of opportunities, and in the case of more operationally intensive real estate strategies, forward integration into property management to drive alpha at the asset level. In addition, the benefits from the use of leverage in the current environment is neutral at best, negative in many cases. A different paradigm is required to invest successfully going forward, one that focuses on the investment merits of selected asset classes and creating alpha at the asset level to drive return premiums for equity investing. Our conviction is premised on the resilience of the U.S. economy across many metrics, growth, strength in the labor markets, onshoring slash reshoring, and a manufacturing renaissance. The unemployment rate has been below 4% for over a year now, and wage growth, by many measures, has been strong, accelerating throughout 2022 and holding near 5% year over year. These wage increases have disproportionately benefited those in the lower half of the income band with low and middle skilled occupations actually outpacing higher skilled occupations. These US residents are the cohort bridge serves in much of our leading residential rental investments. We've seen such resilience play out in past cycles. As one point of reference, we compared unlevered NAICREIF investment returns for the multifamily sector against U.S. equities and fixed income indices over the last several decades, which can be found in our investor presentation on slide 15. Key findings from our analysis include, first, the intrinsic value of commercial real estate investments withstand even the deepest recessionary periods, including the 2008 recession, better than these major indices. For multifamily specifically, we believe this speaks to the persistent need for housing and consistent rental income, as well as the enduring value of commercial real estate assets. Second, although this multifamily index isn't a perfect representation for the entire real estate industry, it is one of the largest real estate asset classes and serves as a robust benchmark for the industry and, in our view, our own portfolio, given the high concentration of residential rental assets. we believe the same principles of durable value apply to our logistics investments and all of our residential rental strategies. Our fixed income strategies have been a bright spot in an otherwise difficult investment landscape. We have and continue to raise and deploy meaningful capital across our fixed income strategies at targeted returns that often mirror and sometimes exceed projected equity returns. Each of our debt strategies fund for AMBS, and net lease industrial income vehicles has deployed meaningful capital. As banks and other balance sheet lenders reduce CRE exposure, we believe these opportunities will continue to multiply in the short to intermediate term at least. We expect to report strong performance for each of these vehicles to our investors and continue to see solid demand for performing credit products. Credit represents about 23% of our fee-earning AUM and should continue to grow in importance. Bridge's highly experienced management team has navigated prior cycles, and we are well positioned with cycle-tested specialized leaders in each strategy to make the most of opportunities and navigate the challenges of the current market. During the first quarter, we continued to build momentum in our business with fee-earning AUM increasing 51% year over year. recurring management fee revenue increasing 15%, and we completed a record close for multifamily five at $2.3 billion. We also completed the acquisition of Newberry Partners on March 31, 2023, a leader in the secondaries market. Including the record close of multifamily fund five during the quarter, we raised a total of $674 million across our investment vehicles, with most of that capital oriented towards our credit strategies. Importantly, we did not have any outflows in the first quarter. We continue to enjoy the benefits of long-term, stable capital, which we manage on behalf of our limited partners. Our capital base has an average duration of 7.4 years and is comprised almost entirely of closed-end vehicles with no redemption features. During the quarter, we continue to execute on our strategic vision to combine organic growth with carefully curated acquisitions. The acquisition of Newberry Partners closed on March 31st and integration efforts have been seamless by all accounts. We acquired Newberry at a price that projects to immediate substantial accretion in earnings and at a value that compares well to precedent transactions. We created a transaction structure that aligns encourages and incentivizes management performance, and embraces the one bridge philosophy by which we guide our efforts. We've assigned some of our best and brightest at Bridge to manage the integration along with our partners at Newberry. The acquisition of Newberry further diversifies our investment platform, builds on our highly specialized focus, and provides some modest countercyclicality in our revenue base. Newberry is a leader in the secondaries market. with a focus on acquiring limited partnership interests in established buyout, growth equity, and venture capital funds. Consistent with the way Bridge operates in its real estate investment funds, Newberry's focus has been on small and middle market transactions where there is less competition and more attractive pricing. We're excited about the growth potential for Newberry over both the near and long term as we scale the platform's existing product offerings while developing plans for expanding into adjacent strategies. The outlook for the secondary sector has never been brighter, with limited partners seeking liquidity solutions to achieve their goals. And specific to our business, we're already seeing great dialogue from Newberry's and Bridge's LP bases, which have less than 3% overlap at the time of transaction. The opportunity for cross-sell is enormous. We expect to report more on these revenue synergies and other initiatives as we make further progress. With that, I will turn the call over to Jonathan.