Bridge Investment Group Holdings Inc.

Thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the Bridge Investments Group 3Q24 earnings call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker remarks, there will be a question and answer session. If you would like to ask a question during this time, click or press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Bonnie Rosen, Head of Shareholder Relations. Bonnie?

Thank you. Good morning, everyone. Welcome to the Bridge Investment Group conference call to review our third quarter 2024 financial results. Prepared remarks include comments from our Executive Chairman, Robert Morse, Chief Executive Officer, Jonathan Slager, and Chief Financial Officer, Katie Elsmab. 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 third quarter earnings call event link. They are also available live during the webcast. We reported gap net income to the company of approximately $10.6 million for the third quarter of 2024. On a diluted basis, net income attributable to bridge per share of Class A common stock was $0.04. Distributable earnings of the operating company were $28.2 million, or $0.15 per share after tax, and our board of directors declared a dividend of $0.10 per share, which will be paid on December 20th to shareholders of record as of December 6th. It is now my pleasure to turn the call over to Bob.

Thank you, Bonnie, and good morning to all. It's a pleasure to speak to you this morning and to share our results and outlook. As we assess our daily activities of interacting with our 13,000-plus investor base to raise capital and of buying and selling assets across our specialized verticals, We believe that the long winter of real estate declines has bottomed and the sector has begun to reemerge. Not in full force, but we are seeing more substantive dialogue with investors, more deals to evaluate, and generally more activities. As we look across the alternative asset investment landscape, there are fundamental reasons why activity has picked up. So many asset classes are trading at or around all-time highs, public equities, gold, even Bitcoin. Real estate, broadly defined, has reset in value in large part due to the rate environment. Although value declines since the 2021 peak vary across sectors within real estate, on average values have decreased by 19%. We see in this environment echoes of the aftermath of the global financial crisis when values declined and offered an attractive entry point for buyers. with assets pricing at a meaningful discount to replacement cost, ultimately resulting in outsized investment performance over the ensuing 10 plus years. Such investment opportunities have reemerged today. As we outlined in our 2024 outlook entitled Navigating the Curve, we think it is appropriate to lean into these opportunities, remaining selective and precise in where we deploy capital, not only taking advantage of a buyer's market in several sectors, but also focusing on segments with secular tailwinds behind them. To that end, which Jonathan will further detail, in the third quarter of 2024, we were selectively active in deploying capital. We acquired $349 million of multifamily and workforce assets at attractive cap rates, $40 million of logistics assets, and deployed $966 million of capital in our debt strategies vertical. including meaningful recycling of investments. We expect deployment opportunities to increase over the next several quarters. In an improving but still muted environment, Bridge's business, operations, and financial results remain resilient and position us well to capitalize on the opportunities ahead. We have expanded our areas of competence since the last cyclical peak. We have three industrial logistics strategies one focused on value-add infill logistics equity, one on developed to core logistics, and one on net lease industrial manufacturing and logistics that have been well-received in the institutional and retail markets. We have a top-performing, albeit small, single-family-for-rent business that performs best in class. We now have a PE secondaries business, which has developed a pre-specified portfolio with attractive marks. and we have a wealth solutions team with distribution in place and a specialized high-performing investment strategy with more to come. All these initiatives have been financed off the bridge balance sheet, either via income statement capital, which previously decreased FRE and DE but are expected to be meaningful contributors over time, or via balance sheet capital. The net result is that going into the anticipated upturn, We have a broader offering of high demand investment capabilities, more distribution and capital raising resources, and more opportunity. I want to further illustrate this point by highlighting our investment in logistics value-add. Since 2021, we have assembled a strong team of professionals, now numbering 33, and opened local offices in major logistics markets of Southern California, Dallas-Fort Worth, South Florida, and the Meadowlands area of New York, New Jersey. We have invested $22 million to build these capabilities, which is substantially less than what it would cost to acquire an existing logistics business. We raised $336 million in our first value-add closed-end vehicle, $428 million in developed-to-core SMAs, and expect the first close of our next vintage fund in the value-add logistics area AREA TO RAISE MORE CAPITAL IN ITS FIRST CLOSING THAN THE ENTIRE FUND SIZE OF OUR FIRST VINTAGE. IN ADDITION, WE ARE IN ADVANCED DIALOGUE WITH A LEADING STATE PENSION PLAN REGARDING A MULTI-YEAR DEVELOP TO CORE SMA. WE BELIEVE THAT THIS INITIATIVE, ALTHOUGH IT SO-CALLED COST US $22 MILLION OF FRE TO THE OPERATING COMPANY TO CREATE, WILL RESULT IN ONE OF THE BEST POSITIONED SPECIALIZED LOGISTICS BUSINESSES AND A MAJOR PROFIT CONTRIBUTOR IN THE FUTURE. Money well spent, often overlooked as an internal initiative, but very characteristic of BRIDGES internal capabilities to recognize opportunity, create and nurture teams, and drive results. An earlier example of the same practice is our development opportunity zone vertical, which has deployed over $4 billion of equity in six vehicles since 2019. In addition to developing the product capabilities mentioned above, we have continued to invest in our distribution capabilities both domestically and abroad. Our institutional coverage efforts are stronger than ever, and we've added or are in the process of closing 11 new institutions as meaningful investors this year. For some time, we have also focused on expanding our penetration with major pension funds and consultants. We've increased penetration to this important segment by 20% year over year based on expected capital raise for 2024. We have opened an office in Dubai to further augment our already significant Middle Eastern investor base, and we continue to add LPs in Europe and Asia as well as domestically. We introduced our retail accredited investor strategy last quarter. We've already made progress in this channel. Our net lease industrial strategy is approved with several major custodians. We have partnered with leading RIAs, independent broker-dealers, and are in discussions with several major wealth platforms to expand our distribution of what we believe to be a differentiated offering to this part of the market. We've demonstrated some early success, expecting to break escrow and have our first closing for the strategy in the fourth quarter. While we are still in the early stages, we're encouraged by the progress we've made to date. As a culmination of capital raising efforts, we raised approximately $607 million in the third quarter, led by $429 million in debt strategies and $115 million in workforce and affordable housing. We also had $48 million of inflows into our solar infrastructure strategy. We continue to have engagement from both repeat and new LPs in our secondaries business, and we expect to see meaningful capital flows in the coming quarters. Third quarter fundraising improved from second quarter, and we expect fourth quarter to be even stronger. This, we believe, will be the manifestation of our determination and focus on high-quality investment teams in the right sectors and explains why we have such confidence in the increasing LP demand in our sectors. With that, I will turn the call over to Jonathan.