Bridge Investment Group Holdings Inc.

for 2023 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 zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bonnie Rosen, Director of Shareholder Relations. Thank you, Bonnie. You may begin.

Good morning, everyone. Welcome to the Bridge Investment Group conference call to review our fourth quarter and full year 2023 financial results. Prepared remarks include comments from our Executive Chairman, Robert Morse, Chief Executive Officer, Jonathan Flager, 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 a discussion of some of the risks that could affect results, please see the risk factor 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 fourth 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 GAAP net income to the company for the fourth quarter of 2023 of approximately $700,000. On a basic and diluted basis, net loss attributable to bridge per share of Class A common stock was 20 cents, mostly due to changes in non-cash items. Distributable earnings of the operating company were $25.3 million, or 14 cents per share after tax, and our board of directors declared a dividend of 7 cents per share, which will be paid to shareholders of record as of March 8th. It is now my pleasure to turn the call over to Bob.

Thank you, Bonnie, and good morning to all. Despite difficult fourth quarter results impacted by low transaction volumes as asset prices continued to reset and modest year-end capital raising activity, Bridge continues to have a resilient business with a distinctive competence in targeted real estate, credit, and secondary strategies. Even with challenging financial results for the fourth quarter, Our yearly results and outlook for 2024 present a brighter perspective. On a general basis, projected growth for alternatives broadly defined remains strong, the bridge brand continues to grow globally, and the discipline we practiced in 2023 serves us well as a patient and capable steward of capital. Financially, for the full year, Our fee earning AUM increased 25% year-over-year to $21.7 billion, and recurring management fees increased 18% to $228 million. The Federal Reserve's recent actions and announcements, including an appearance by Jay Powell on 60 Minutes, highlight how 2024 should represent a pivot point to interest rate cuts, which in our view has meaningfully positive implications for real assets, transaction markets and the broader private markets ecosystem. While rates may be slow to decline, they are likely headed in a more constructive direction with respect to asset pricing in a departure from the past 18 months. We believe our patience over the last couple of years has been warranted and rewarded and further believe that now is the time to lean in on attractive values. As an example, we are seeing quality value-add residential rental assets, in some cases priced at 6-plus percent cap rates. As difficult as cap rate expansion has been, in our portfolios, this has been meaningfully offset by improved operating metrics. Today, we believe the generational opportunity to acquire at attractive entry prices is compelling. While transaction volumes broadly have not yet recovered, We are seeing signs of optimism with bid-ask spreads narrowing and seller reluctance giving way to seller capitulation. With $3.4 billion of dry powder, we believe now is the time to start wading back into the water. Our recently published 2024 outlook called Navigating the Curve outlines our perspective and provides details on why we feel so strongly about investing in the areas where Bridges developed distinctive competencies. We see this cycle of opportunities across many sectors of real estate equity, private credit, and private equity secondaries. With this as a backdrop, Bridges selected areas of focus, residential rental, logistics, private real estate credit, and secondaries, are poised to outperform. First, the residential rental sector, a core area for Bridge, continues to experience robust long-term secular growth drivers. The interplay between chronically low supply growth and durable demographic tailwinds has created a persistent imbalance that is expected to propel rent growth. While certain markets experienced overbuilding during the pandemic, Near-term supply pipelines have begun to wane due to higher development costs and lower availability of construction debt and equity capital. With the long-term investment thesis intact in residential rental housing, our platforms and strategies have a generational opportunity to capitalize on cyclically lower asset values with the ability to further drive above average returns from select distressed situations. Of course, Navigating markets, sub-markets, asset characteristics, and other criteria is neither easy nor straightforward. And optimizing what one acquires or develops takes focus and expertise. Our specialized teams bring these capabilities to every transaction from first look to final disposition. In real estate credit, we are equally bullish. We see continued demand for real estate credit in an increasingly bifurcated marketplace. Regional and local bank lenders are effectively out of the markets. JP Morgan's Jamie Dimon has stated that private debt funds should be, quote, dancing in the streets, close quote. And although we are showing some more restraint, we see enormous opportunity to provide critical capital to asset owners at pricing, terms, and covenants that are attractive. With the market options narrowed for borrowers, private credit providers like Bridge are in a prime position to be selective. attracting high-quality borrowers under favorable terms. Our historical focus on residential rental lending has the added benefit of strong collateral to protect principal. Logistics real estate strategies continue to see strong fundamentals. The sector has experienced robust demand tailwinds over the past decade, and we anticipate these will persist with sustained e-commerce growth, global trade alignment, onshoring, and the growth in business inventories. Each of these factors highlight the need for logistics infrastructure across the U.S. over the next decade. Given the sea change in interest rates with valuations down and increased pressures to create liquidity for some asset owners, we anticipate seeing increased opportunities for acquisitions at compelling discounts to replacement costs. Of course, like residential rental, where one invests is critically important. We feel on the ground teams in the most attractive markets, notably Southern California, New York, New Jersey, South Florida, and Dallas-Fort Worth, and we source much of our deal flow off market. Similarly, our private equity secondaries business is also experiencing powerful tailwinds. The overall secondaries market is growing as private markets become increasingly dynamic and complex. driving LT demand for sophisticated liquidity solutions. The surge in primary investment commitments over the past several years, along with a significant decrease in exit activity and distributions, will create meaningful opportunities for the secondary market in the coming years. Real estate capital raising was challenged in 2023 for Bridge and the industry in general, characterized by a reset evaluation parameters, muted transaction activity, and general market uncertainty. Against this backdrop, Bridge raised $334 million of new capital in the fourth quarter and $1.6 billion for the full year 2023. For most of 2023, our large flagship funds were in their investment periods and therefore not actively fundraising. This has changed for 2024. In the fourth quarter of 2023, we held an initial close for our latest debt strategies vehicle, and we will be actively fundraising for this vehicle throughout 2024. In addition, 2024 capital raising activities will include vehicles from our other four horsemen, including the next vintage of our acclaimed workforce and affordable housing strategy, the continued marketing of the current vehicle in our new various partners secondary strategy, and the current vintage of our logistics value-add strategy. Although these strategies will represent the bulk of capital raising focus, we have other attractive vehicles and initiatives to further drive our business and evolution. BIDG wrapped up our first year with our secondaries team, and we're excited about the long-term prospects for this strategy. 2023 for this strategy was largely focused on integrating new business under the bridge umbrella. we are seeing encouraging capital raising activity with repeat Newberry investors and expect 2024 to be successful from both a fundraising and deployment perspective. Looking forward, we are seeing a major shift in sentiment from LPs looking to allocate capital in 2024 versus 2023. Our capital raising teams are averaging 50 plus meetings per week, which is up materially from last year. In addition, this heightened level of client interaction has progressed LP due diligence processes across multiple bridge products, including an increase in cross-selling activity. Based on the pipeline we see today, we expect the fundraising trend experienced in the fourth quarter to persist in the first quarter. However, the high level of activity and constructive dialogue with LPs gives us confidence that inflows should improve over the course of the year. We have continued to invest in and expand our capital raising organization. We're adding sales coverage personnel based in Dubai to deepen our coverage in the Middle East and to enable more focus on continental Europe and Scandinavia. We will continue to invest in capital raising both in international markets as well as in the US. Over the last year, we've added both senior and junior talent to focus on growing and servicing our large institutional and wealth platform coverage, as well as to add true accredited investor retail coverage. One early 2024 bright spot, our wealth platform, which already counts most of the major wealth management platforms as distributors, has added yet another in the first quarter. This new relationship has added our current Opportunity Zone vehicle to their client offering. We're looking forward to pursuing the prospects of additional business with them in the future. As we have discussed on previous earnings calls, we have been exploring ways to expand our retail capital raising efforts by making certain strategies accessible to accredited investors, thereby broadening our potential investor base. We launched an accredited investor focused product within our net lease industrial income strategy earlier this year. Since inception in 2021, The bridge net lease industrial income team has invested more than $700 million into industrial net lease properties, including sale lease backs and built to suit development projects. The combination of the attractiveness of the industrial sector along with the consistent income generation and inflation hedging attributes will be more attractive to this new constituency. With household wealth estimated in excess of $50 trillion in North America alone, and the allocations to alternatives less than 5%, the total addressable market is enormous and growing rapidly. We expect in the future to add additional retail vehicles which offer specialized exposure to areas in which Bridges demonstrated competitive expertise. With that, I will turn the call over to Jonathan.