Bridge Investment Group Holdings Inc.

Greetings and welcome to the Bridge Investment Group second quarter 2024 earnings call and webcast. At this time, all participants are in a listen-only mode. A 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. I would now like to turn the conference over to your host, Bonnie Rosen, Head of Shareholder Relations for Bridge Investment Group. Thank you. You may begin.

Good morning, everyone. Welcome to the Bridge Investment Group conference call to review our second quarter 2024 financial results. Prepared remarks include comments from our Executive Chairman, Robert Morse, Chief Executive Officer, Jonathan Slager, and Chief Financial Officer, Katie Elsnap. 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 portions of the site along with the second quarter earnings call event link. They are also available live during the webcast. We reported GAAP net income to the company of approximately $27.5 million for the second quarter of 2024. On a diluted basis, net loss attributable to bridge per share of Class A common stock was 11 cents, mostly due to changes in non-cash items. Distributable earnings of the operating company were $35.5 million or 19 cents per share after tax. And our board of directors declared a dividend of 13 cents per share, which will be paid on September 13th to shareholders of record as of August 30th. It is now my pleasure to turn the call over to Bob.

Thank you, Bonnie. And good morning to all. Ridge reported improved financial results for the second quarter of 2024. with fee-related earnings to the operating company increasing 6% from last quarter and distributable earnings increasing 10%. Despite the challenges posed by malaise in the real estate markets, in large part due to the rapid rise in interest rates and borrowing costs over the past 2.5 years, and also by shifting use cases, both positive and negative, we have successfully navigated through this period. To do so, we focused on selective asset acquisitions of compelling value, industry-leading asset performance with our forward integrated property management capabilities, and carefully selecting the sectors in which to invest. Through this period, Bridge delivered resilient results. Since the peak of the real estate markets in the fourth quarter of 2021, we have increased recurring fund management fees at a 26% compound annual growth rate, from $34 million in 4Q 2021 to $60.4 million in 2Q 2024. This growth trajectory underscores our ability to navigate and capitalize on market dynamics. Fee earning AUM has also shown robust growth, increasing at a 21% compound annual growth rate from $13.4 billion in the fourth quarter of 2021 to $21.5 billion in the second quarter of 2024. This growth has been fueled by successful fundraising efforts, particularly in our flagship real estate strategies, and by the strategic acquisition of Newberry Partners, our bridge secondaries business. We are seeing increasing signs of moderating inflation and further evidence that macro conditions are conducive to Fed actions to reduce interest rates. Rates have already declined meaningfully from higher levels earlier in 2024. and market expectations are that the Fed will implement at least two rate cuts before the end of the year. If this occurs, and especially in conjunction with some of the real estate specific factors that Jonathan will detail, it is expected to benefit the real estate sector and the broader private assets ecosystem. Already, in the past 60 days, yields have declined approximately 93 basis points, or 19% in the two-year Treasury, and 60 basis points, or 14%, in the 10-year Treasury. Lower borrowing costs and a more stable inflation outlook enhance the attractiveness of real estate investments and provide a conducive environment for continued growth. I mentioned earlier that shifting use cases were driving opportunities in selected sectors and bridges well-positioned. Macrodynamics around residential rental, logistics, and credit should provide tailwinds for investment in those sectors. Our focus on middle income and workforce housing is especially attractive at times of slowing economic activity. And in combination with higher mortgage rates, the target renter population is larger than ever. Additionally, our focus on the value-add spectrum of our specialized verticals further amplifies opportunities in the current environment. Our extensive and successful investment history in these sectors reinforces our competitive position. Simultaneously, our newer initiatives in solar renewable energy and penetrating the accredited investor retail channel are starting to bear fruit. Throughout market cycles, our forward integration and sector-specific expertise remain pivotal differentiators. Our sustained operational focus continues to yield results across our real estate portfolios, particularly evident in recent times as the impact of leverage has diminished. Further reinforcing our vertically integrated approach to our residential rental platform, during the quarter we proudly welcomed Allison Brown as President of Bridge Property Management and Deputy CIO for our Bridge Workforce and Affordable Strategies. Allison brings over 25 years of real estate experience and a proven track record of building and supporting successful teams. She joins us from Livcore, a Blackstone portfolio company, where she served as SVP of operations. Allison's leadership and knowledge from overseeing a broad array of property management partners will contribute greatly to the continued improvement of our already best-in-class in-house operating capabilities. Turning to capital raising, throughout the second quarter, we continued to foster robust dialogue with investors, sensing an enthusiasm for what appears to be a promising cyclically attractive entry point in the real estate cycle. While sentiment continues to shift more favorably towards real estate, we acknowledge that investors remain cautious in their approach and that the lack of realizations is influencing their broader cash flow allocations. Since the start of this year, our client solutions group has conducted over 670 discussions and meetings with institutional investors, complemented by over 1,200 engagements with retail investors. Our teams have traveled to key global markets, including Europe, the Middle East, Japan, North and South Asia, Canada, and across the United States. We raised $305 million of capital during the second quarter and another $400 million subsequent to quarter end for an aggregate of $700 million since March 31st. inflows were primarily driven by two of our flagship strategies workforce and affordable housing and debt strategies which have recently re-entered the markets notably the quarter included the first close for the next vintage of our workforce and affordable housing strategy which will have a rolling first close in two parts to accommodate investor timing thus far the response from both existing and new investors has been encouraging with many recognizing the attractiveness of the opportunity based on the significant pricing reset. In addition, we had the final closing for our latest Opportunity Zone strategy, bringing Fund 6 to approximately $240 million. Despite certain tax provisions sunsetting, those that remain still make a compelling case for continued demand for this strategy. We also continue to make progress with our accredited investor strategy launched within our net least industrial income vertical to capitalize on the growing retail investor segment. As discussed last quarter, we are approved with several major custodians, including Fidelity, Schwab, and Pershing, as well as iCapital. We've also added our first independent broker-dealer partner and are in dialogue with many other relationships, which we hope to expand over time. Capital raising for our secondaries platform, Newberry Partners, has been slower than anticipated as investors face the same liquidity challenges that drive the need for secondary solutions. However, the expected re-ups from predecessor investors, coupled with new interest originated by the Bridge Client Solutions Group, is generating momentum and we expect to raise capital well into 2025 for this vintage as we build on this traction. Looking ahead, we seem poised at the beginning of a new real estate investment cycle that presents compelling opportunities for improving fund performance, stronger deployment, and a pickup in fundraising. This favorable market outlook, coupled with our proven track record and strong investor relationships, positions us well to achieve success in the years ahead. With that, I will turn the call over to Jonathan.