Cover page
Cover page - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 06, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-33805 | |
Entity Registrant Name | SCULPTOR CAPITAL MANAGEMENT, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-0354783 | |
Entity Address, Address Line One | 9 West 57th Street | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10019 | |
City Area Code | 212 | |
Local Phone Number | 790-0000 | |
Title of 12(b) Security | Class A Shares | |
Trading Symbol | SCU | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001403256 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Class A Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 29,352,181 | |
Restricted Class A Shares (“RSAs”) | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 4,650,661 | |
Class B Shares | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 33,017,247 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Cash and cash equivalents | $ 159,446 | $ 258,863 |
Restricted cash | 8,297 | 7,895 |
Investments (includes assets measured at fair value of $296,951 and $231,929 including assets sold under agreements to repurchase of $173,156 and $157,107 as of September 30, 2023 and December 31, 2022, respectively) | 383,984 | 299,059 |
Income and fees receivable | 26,569 | 56,360 |
Other Receivables | 26,706 | 32,846 |
Deferred income tax assets | 252,911 | 257,939 |
Operating lease assets | 68,726 | 75,861 |
Total Other Assets, Net | 75,424 | 106,442 |
Assets of consolidated entities: | ||
Cash and cash equivalents | 413 | 3 |
Restricted cash and cash equivalents | 9,800 | 9,805 |
Investments of Consolidated Entities | 322,516 | 544,554 |
Other assets | 11,266 | 2,579 |
Total Assets | 1,346,058 | 1,652,206 |
Liabilities | ||
Compensation payable | 74,012 | 127,209 |
Unearned income and fees | 40,510 | 53,869 |
Tax receivable agreement liability | 173,124 | 190,245 |
Operating lease liabilities | 83,168 | 92,045 |
Debt obligations | 115,486 | 124,176 |
Warrant liabilities, at fair value | 34,140 | 24,163 |
Securities sold under agreements to repurchase | 177,503 | 166,632 |
Other liabilities | 43,178 | 43,049 |
Liabilities of consolidated entities: | ||
Notes payable, at fair value | 220,702 | 196,106 |
Warrant liabilities, at fair value | 0 | 596 |
Other liabilities of consolidated entities | 5,070 | 9,669 |
Total Liabilities | 966,893 | 1,027,759 |
Commitments and Contingencies | ||
Redeemable noncontrolling interests of consolidated entities | 0 | 237,864 |
Shareholders’ Equity | ||
Treasury stock, at cost; 3,022,380 as of September 30, 2023 and December 31, 2022 | (32,495) | (32,495) |
Additional paid-in capital | 294,665 | 255,293 |
Accumulated deficit | (309,569) | (276,149) |
Accumulated other comprehensive loss | (546) | (119) |
Shareholders’ deficit attributable to Class A Shareholders | (47,365) | (52,896) |
Shareholders’ equity attributable to noncontrolling interests | 426,530 | 439,479 |
Total Shareholders’ Equity | 379,165 | 386,583 |
Total Liabilities and Shareholders’ Equity | 1,346,058 | 1,652,206 |
Class A Shares | ||
Shareholders’ Equity | ||
Common stock value | 250 | 238 |
Class B Shares | ||
Shareholders’ Equity | ||
Common stock value | $ 330 | $ 336 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Investments measured at fair value | $ 296,951 | $ 231,929 |
Assets sold under agreements to repurchase | $ 173,156 | $ 157,107 |
Treasury stock (in shares) | 3,022,380 | 3,022,380 |
Class A Shares | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 28,033,472 | 26,729,608 |
Common stock, shares outstanding (in shares) | 25,011,092 | 23,707,228 |
Class B Shares | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 33,017,247 | 33,569,188 |
Common stock, shares outstanding (in shares) | 33,017,247 | 33,569,188 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | ||||
Other revenues | $ 7,683 | $ 3,576 | $ 20,931 | $ 8,526 |
(Loss) income of consolidated entities | (23) | 1,453 | 4,535 | 1,603 |
Total Revenues | 85,655 | 78,831 | 274,193 | 295,360 |
Expenses | ||||
Compensation and benefits | 62,081 | 67,130 | 188,187 | 224,658 |
Interest expense | 6,712 | 3,876 | 18,462 | 10,588 |
General, administrative and other | 42,088 | 28,290 | 105,811 | 82,031 |
Expenses of consolidated entities | 229 | 1,031 | 2,080 | 2,943 |
Total Expenses | 111,110 | 100,327 | 314,540 | 320,220 |
Other (Loss) Income | ||||
Changes in fair value of warrant liabilities | (9,717) | (2,386) | (9,977) | 40,690 |
Changes in tax receivable agreement liability | 225 | (14) | (302) | 206 |
Net gains (losses) on investments | 7,051 | (2,989) | 17,187 | (39,171) |
Net (losses) gains of consolidated entities | (9,440) | (3,498) | 303 | (5,792) |
Other | (1,406) | 0 | (1,406) | 0 |
Total Other (Loss) Income | (13,287) | (8,887) | 5,805 | (4,067) |
Loss Before Income Taxes | (38,742) | (30,383) | (34,542) | (28,927) |
Income taxes | (280) | 227 | 11,277 | (720) |
Consolidated Net Loss | (38,462) | (30,610) | (45,819) | (28,207) |
Less: Net loss attributable to noncontrolling interests | 7,349 | 9,410 | 23,376 | 15,837 |
Less: Comprehensive income attributable to redeemable noncontrolling interests | 0 | (1,492) | (3,350) | (5,257) |
Net Loss Attributable to Sculptor Capital Management, Inc. | (31,113) | (22,692) | (25,793) | (17,627) |
Change in redemption value of redeemable noncontrolling interests | 0 | 174 | 6,826 | 3,939 |
Net Loss Attributable to Class A Shareholders | $ (31,113) | $ (22,518) | $ (18,967) | $ (13,688) |
Earnings Per Share [Abstract] | ||||
Loss per Class A Share - basic (in dollars per share) | $ (1.23) | $ (0.91) | $ (0.75) | $ (0.53) |
Loss per Class A Share - Diluted (in dollars per share) | $ (1.23) | $ (0.91) | $ (1) | $ (1.79) |
Weighted-average Class A Shares outstanding - Basic (in shares) | 25,204,848 | 24,772,098 | 25,186,162 | 25,620,996 |
Weighted-average Class A Shares outstanding - Diluted (in shares) | 25,204,848 | 24,772,098 | 40,212,156 | 26,818,176 |
Management fees | ||||
Revenues | ||||
Investment management revenues | $ 60,194 | $ 66,236 | $ 186,344 | $ 211,443 |
Incentive income | ||||
Revenues | ||||
Investment management revenues | $ 17,801 | $ 7,566 | $ 62,383 | $ 73,788 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Consolidated net loss | $ (38,462) | $ (30,610) | $ (45,819) | $ (28,207) |
Other Comprehensive Loss, Net of Tax | ||||
Currency translation adjustment | (1,266) | (1,430) | (427) | (3,406) |
Comprehensive Loss | (39,728) | (32,040) | (46,246) | (31,613) |
Less: Comprehensive loss attributable to noncontrolling interests | 7,349 | 9,410 | 23,376 | 15,837 |
Less: Comprehensive income attributable to redeemable noncontrolling interests | 0 | (1,492) | (3,350) | (5,257) |
Comprehensive Loss Attributable to Sculptor Capital Management, Inc. | $ (32,379) | $ (24,122) | $ (26,220) | $ (21,033) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Class A Shares | Class B Shares | Shareholders’ Deficit Attributable to Class A Shareholders | Common Stock Par Value Class A Shares | Common Stock Par Value Class B Shares | Treasury Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Shareholders’ Equity Attributable to Noncontrolling Interests |
Common stock, beginning balance (in shares) at Dec. 31, 2021 | 25,668,987 | 33,613,023 | |||||||||
Treasury stock, beginning balance (in shares) at Dec. 31, 2021 | 0 | ||||||||||
Beginning balance at Dec. 31, 2021 | $ 378,283 | $ (68,186) | $ 257 | $ 336 | $ 0 | $ 184,691 | $ (253,521) | $ 51 | $ 446,469 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Equity-based compensation, net of taxes (in shares) | 943,385 | (43,835) | |||||||||
Equity-based compensation, net of taxes | 55,205 | 49,176 | 9 | 49,167 | 6,029 | ||||||
Repurchase of Class A Shares (in shares) | (2,577,605) | 2,577,605 | |||||||||
Repurchase of Class A Shares | (28,258) | (28,258) | (26) | $ (28,232) | |||||||
Dividend equivalents on Class A restricted share units | 143 | (143) | |||||||||
Change in redemption value of SPAC Class A Shares | 3,939 | 3,939 | 3,939 | ||||||||
Cash dividends declared on Class A Shares | (6,001) | (6,001) | (6,001) | ||||||||
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests | (33,464) | (17,627) | (17,627) | (15,837) | |||||||
Currency translation adjustment | (3,406) | (3,406) | (3,406) | ||||||||
Capital contributions | 14,469 | 14,469 | |||||||||
Capital distributions | (6,570) | (6,570) | |||||||||
Common stock, ending balance (in shares) at Sep. 30, 2022 | 24,034,767 | 33,569,188 | |||||||||
Treasury stock, ending balance (in shares) at Sep. 30, 2022 | 2,577,605 | ||||||||||
Ending balance at Sep. 30, 2022 | 374,197 | (70,363) | 240 | 336 | $ (28,232) | 237,940 | (277,292) | (3,355) | 444,560 | ||
Common stock, beginning balance (in shares) at Jun. 30, 2022 | 24,885,028 | 33,633,474 | |||||||||
Treasury stock, beginning balance (in shares) at Jun. 30, 2022 | 1,641,589 | ||||||||||
Beginning balance at Jun. 30, 2022 | 395,899 | (52,186) | 249 | 336 | $ (19,492) | 219,705 | (251,059) | (1,925) | 448,085 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Equity-based compensation, net of taxes (in shares) | 85,755 | (64,286) | |||||||||
Equity-based compensation, net of taxes | 19,888 | 17,742 | 17,742 | 2,146 | |||||||
Repurchase of Class A Shares (in shares) | (936,016) | 936,016 | |||||||||
Repurchase of Class A Shares | (8,749) | (8,749) | (9) | $ (8,740) | |||||||
Dividend equivalents on Class A restricted share units | 0 | 319 | (319) | ||||||||
Change in redemption value of SPAC Class A Shares | 174 | 174 | 174 | ||||||||
Cash dividends declared on Class A Shares | (3,222) | (3,222) | (3,222) | ||||||||
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests | (32,102) | (22,692) | (22,692) | (9,410) | |||||||
Currency translation adjustment | (1,430) | (1,430) | (1,430) | ||||||||
Capital contributions | 5,490 | 5,490 | |||||||||
Capital distributions | (1,751) | (1,751) | |||||||||
Common stock, ending balance (in shares) at Sep. 30, 2022 | 24,034,767 | 33,569,188 | |||||||||
Treasury stock, ending balance (in shares) at Sep. 30, 2022 | 2,577,605 | ||||||||||
Ending balance at Sep. 30, 2022 | $ 374,197 | (70,363) | 240 | 336 | $ (28,232) | 237,940 | (277,292) | (3,355) | 444,560 | ||
Common stock, beginning balance (in shares) at Dec. 31, 2022 | 23,707,228 | 33,569,188 | |||||||||
Treasury stock, beginning balance (in shares) at Dec. 31, 2022 | 3,022,380 | 3,022,380 | |||||||||
Beginning balance at Dec. 31, 2022 | $ 386,583 | (52,896) | 238 | 336 | $ (32,495) | 255,293 | (276,149) | (119) | 439,479 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Equity-based compensation, net of taxes (in shares) | 1,303,864 | (551,941) | |||||||||
Equity-based compensation, net of taxes | 35,676 | 31,417 | 12 | (6) | 31,411 | 4,259 | |||||
Repurchase of Class A Shares | $ (32,500) | ||||||||||
Dividend equivalents on Class A restricted share units | 1,135 | (1,135) | |||||||||
Change in redemption value of SPAC Class A Shares | 6,826 | 6,826 | 6,826 | ||||||||
Cash dividends declared on Class A Shares | (6,492) | (6,492) | (6,492) | ||||||||
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests | (49,169) | (25,793) | (25,793) | (23,376) | |||||||
Currency translation adjustment | (427) | (427) | (427) | ||||||||
Capital contributions | 9,177 | 9,177 | |||||||||
Capital distributions | $ (3,009) | (3,009) | |||||||||
Common stock, ending balance (in shares) at Sep. 30, 2023 | 25,011,092 | 33,017,247 | |||||||||
Treasury stock, ending balance (in shares) at Sep. 30, 2023 | 3,022,380 | 3,022,380 | |||||||||
Ending balance at Sep. 30, 2023 | $ 379,165 | (47,365) | 250 | 330 | $ (32,495) | 294,665 | (309,569) | (546) | 426,530 | ||
Common stock, beginning balance (in shares) at Jun. 30, 2023 | 24,971,561 | 33,017,247 | |||||||||
Treasury stock, beginning balance (in shares) at Jun. 30, 2023 | 3,022,380 | ||||||||||
Beginning balance at Jun. 30, 2023 | 402,072 | (26,503) | 250 | 330 | $ (32,495) | 283,057 | (278,365) | 720 | 428,575 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Equity-based compensation, net of taxes (in shares) | 39,531 | ||||||||||
Equity-based compensation, net of taxes | 12,968 | 11,517 | 11,517 | 1,451 | |||||||
Dividend equivalents on Class A restricted share units | 0 | 91 | (91) | ||||||||
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests | (38,462) | (31,113) | (31,113) | (7,349) | |||||||
Currency translation adjustment | (1,266) | (1,266) | (1,266) | ||||||||
Capital contributions | 4,649 | 4,649 | |||||||||
Capital distributions | $ (796) | (796) | |||||||||
Common stock, ending balance (in shares) at Sep. 30, 2023 | 25,011,092 | 33,017,247 | |||||||||
Treasury stock, ending balance (in shares) at Sep. 30, 2023 | 3,022,380 | 3,022,380 | |||||||||
Ending balance at Sep. 30, 2023 | $ 379,165 | $ (47,365) | $ 250 | $ 330 | $ (32,495) | $ 294,665 | $ (309,569) | $ (546) | $ 426,530 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividends Paid per Class A Share (in dollars per share) | $ 0.13 | $ 0.26 | $ 0.24 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flows from Operating Activities | ||
Consolidated net loss | $ (45,819) | $ (28,207) |
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities: | ||
Amortization of equity-based compensation | 44,263 | 66,664 |
Depreciation, amortization and net gains and losses on fixed assets | 3,085 | 3,815 |
Changes in fair value of warrant liabilities | 9,977 | (40,690) |
Other loss | (1,406) | 0 |
Deferred income taxes | 5,463 | (4,103) |
Non-cash lease expense | 14,030 | 14,311 |
Net (gains) losses on investments, net of dividends | (14,517) | 42,831 |
Operating cash flows due to changes in: | ||
Income and fees receivable | 29,873 | 167,168 |
Due from related parties | 6,159 | (93) |
Other assets, net | (912) | (11,635) |
Compensation payable | (59,312) | (178,630) |
Unearned income and fees | (13,360) | 3,388 |
Tax receivable agreement liability | (17,121) | (16,979) |
Operating lease liabilities | (15,770) | (16,486) |
Other liabilities | 148 | (819) |
Consolidated entities related items: | ||
Net losses of consolidated entities | 689 | 5,792 |
Purchases of investments | (44,537) | (493,970) |
Proceeds from sale of investments | 59,198 | 180,669 |
Other assets of consolidated entities | (11,917) | (10,320) |
Other liabilities of consolidated entities | (5,195) | (7,213) |
Net Cash Used in Operating Activities | (54,169) | (324,507) |
Cash Flows from Investing Activities | ||
Purchases of fixed assets | (66) | (2,317) |
Purchases of United States government obligations | (88,222) | (98,082) |
Maturities and sales of United States government obligations | 35,000 | 224,386 |
Investments in funds | (33,502) | (136,734) |
Return of investments in funds | 44,533 | 152,517 |
Consolidated entities related items: | ||
Proceeds from sale of investment in government obligations of consolidated SPAC | 242,272 | |
Purchases of United States government obligations by SPAC | (235,040) | |
Net Cash Provided by (Used in) Investing Activities | 200,015 | (95,270) |
Cash Flows from Financing Activities | ||
Contributions from noncontrolling interests | 9,177 | 14,469 |
Distributions to noncontrolling interests | (3,009) | (6,570) |
Dividends on Class A Shares | (6,492) | (6,001) |
Proceeds from debt obligations, net of issuance costs | 1,154 | 5,881 |
Repayment of debt obligations, including prepayment costs | (11,145) | (9,424) |
Proceeds from securities sold under agreements to repurchase, net of issuance costs | 13,299 | 20,395 |
Purchases of treasury stock | 0 | (28,232) |
Other, net | (3,123) | (6,254) |
Consolidated entities related items: | ||
Redemption of SPAC Class A Shares | (242,172) | 0 |
Proceeds from debt obligations of consolidated entities, net of issuance costs | 0 | 215,733 |
Net Cash (Used in) Provided by Financing Activities | (242,311) | 199,997 |
Effect of exchange rate changes on cash and cash equivalents and restricted cash | (2,145) | (5,478) |
Net change in cash and cash equivalents and restricted cash | (98,610) | (225,258) |
Cash and cash equivalents and restricted cash, beginning of period | 276,566 | 412,671 |
Cash and Cash Equivalents and Restricted Cash, End of Period | 177,956 | 187,413 |
Cash paid during the period: | ||
Interest | 16,062 | 8,746 |
Income taxes | 8,625 | 7,199 |
Non-cash transactions: | ||
Assets related to initial consolidation of funds | 0 | 16,699 |
Liabilities related to initial consolidation of funds | 0 | 2,364 |
Assets related to deconsolidation of funds | 0 | 44,042 |
Liabilities related to deconsolidation of funds | 0 | 29,632 |
Reconciliation of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents | 159,446 | 170,304 |
Restricted cash | 8,297 | 7,144 |
Cash and cash equivalents | 413 | 83 |
Restricted cash and cash equivalents | 9,800 | 9,882 |
Total Cash and Cash Equivalents and Restricted Cash | $ 177,956 | $ 187,413 |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION | ORGANIZATION Sculptor Capital Management, Inc. (the “Registrant”), a Delaware corporation, together with its consolidated subsidiaries (collectively, the “Company” or “Sculptor Capital”), is a leading global alternative asset manager and a specialist in opportunistic investing with offices in New York, London, Hong Kong and Shanghai. The Company provides asset management services and investment products across Credit, Real Estate, and Multi-Strategy. The Company serves its global client base through commingled funds, separate accounts and specialized products (collectively, the “funds”). The Company’s model is driven by a global team that is predominantly home-grown, long tenured and incentivized to put client outcomes first. The Company’s capabilities span all major geographies and asset classes, including corporate credit, structured credit, real estate debt and equity, fundamental equities, merger arbitrage, and convertible and derivative arbitrage. The Company manages dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds, multi-strategy funds, and other alternative investment vehicles. Through Institutional Credit Strategies, the Company’s asset management platform that invests in performing credits, the Company manages collateralized loan obligations (“CLOs”), aircraft securitization vehicles, collateralized bond obligations (“CBOs”), structured alternative investment solutions, commingled products and other customized solutions for clients. The Company’s primary sources of revenues are management fees, which are generally based on the amount of the Company’s assets under management (“Assets Under Management” or “AUM”), as defined below, and incentive income, which is based on the investment performance of its funds. Accordingly, for any given period, the Company’s revenues will be driven by the combination of Assets Under Management and the investment performance of the funds. AUM refers to the assets of the funds to which the Company provides investment management and advisory services. The Company’s AUM are a function of the capital that is allocated to it by the investors in its funds and the investment performance of its funds. The Company conducts its business and generates substantially all of its revenues primarily in the United States (the “U.S.”) through one operating and reportable segment. The single reportable segment reflects how the Company’s chief operating decision makers allocate resources, make operating decisions and assess financial performance on a consolidated basis under the Company’s ‘one-firm approach’, which includes operating collaboratively across business lines, with predominantly a single expense pool. The Company conducts its operations through Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP (collectively, the “Sculptor Operating Partnerships” and collectively with their consolidated subsidiaries, the “Sculptor Operating Group”). The Registrant holds its interests in the Sculptor Operating Group indirectly through Sculptor Capital Holding Corporation (“Sculptor Corp”), a wholly owned subsidiary of the Registrant. References to the Company’s “executive managing directors” include the current executive managing directors of the Company, and, except where the context requires otherwise, also include certain former executive managing directors who are no longer active in the Company’s business. On July 23, 2023, the Company entered into an Agreement and Plan of Merger, as amended on October 12, 2023 by Amendment No. 1 to Agreement and Plan of Merger, as further amended on October 26, 2023 by Amendment No. 2 to Agreement and Plan of Merger, with Rithm Capital Corp. and certain of its affiliates. Refer to Note 17 for details of the proposed transaction with Rithm Capital Corp. Company Structure The Registrant is a holding company that, through Sculptor Corp, holds equity ownership interests in the Sculptor Operating Group. The Registrant had issued and outstanding the following share classes: • Class A Shares —Class A Shares are publicly traded and entitle the holders thereof to one vote per share on matters submitted to a vote of shareholders. The holders of Class A Shares are entitled to any distributions declared on the Class A Shares by the Registrant’s board of directors (the “Board of Directors” or the “Board”) (other than RSAs, where entitlement to distributions may be subject to limitations and conditions). • Class B Shares —Class B Shares are held by executive managing directors, as further discussed below. These shares are not publicly traded but rather entitle the executive managing directors to one vote per share on matters submitted to a vote of shareholders. These shares do not participate in the earnings of the Registrant, as the executive managing directors participate in the related economics of the Sculptor Operating Group through their direct ownership in the Sculptor Operating Group, subject to the Distribution Holiday discussed below. The Company conducts its operations through the Sculptor Operating Group. The following is a list of the outstanding units of the Sculptor Operating Partnerships as of September 30, 2023: • Group A Units —Group A Units are limited partner interests issued to certain executive managing directors. In connection with the Recapitalization, as defined below, the Sculptor Operating Partnerships initiated a distribution holiday (the “Distribution Holiday”). Holders of Group A Units do not receive distributions on such units during the Distribution Holiday. Each executive managing director may exchange his or her vested and booked-up (as defined below) Group A Units for an equal number of Class A Shares (or the cash equivalent thereof) over a period of two years in three equal installments commencing upon the final day of the Distribution Holiday and on each of the first and second anniversary thereof (or, for units that become vested and booked-up Group A Units after the final day of the Distribution Holiday, from the later of the date on which they would have been exchangeable in accordance with the foregoing and the date on which they become vested and booked-up Group A Units) (and thereafter such units will remain exchangeable), in each case, subject to certain restrictions. A “book-up” is achieved when sufficient appreciation has occurred to meet a prescribed capital account book-up target under the terms of the Sculptor Operating Partnership limited partnership agreements. Group A Unit grants are accounted for as equity-based compensation. See Note 3 and Note 13 in the Company's Annual Report for additional information. The Company completed a recapitalization in February 2019 (“Recapitalization”). In connection with the Recapitalization, each Group A Unit outstanding on the Recapitalization date was recapitalized into 0.65 Group A Units and 0.35 Group A-1 Units. • Group A-1 Units —Group A-1 Units are limited partner interests into which 0.35 of each Group A Unit was recapitalized in connection with the reallocation that was effectuated by the Recapitalization. The Group A-1 Units will be canceled at such time and to the extent that the Group E Units granted in connection with the Recapitalization vest and achieve a book-up. Group A-1 Units are not eligible to receive distributions at any time and do not participate in the net income (loss) of the Sculptor Operating Group. However, the holders of Group A-1 Units shall participate in any sale, change of control or other liquidity event that takes place prior to cancellation of the Group A-1 Units. In the Recapitalization, the holders of the 2016 Preferred Units, as defined below, forfeited an additional 749,813 Group A Units, which were recapitalized into Group A-1 Units. • Group B Units —Sculptor Corp holds a general partner interest and Group B Units in each Sculptor Operating Partnership. Sculptor Corp owns all of the Group B Units, which represent equity interest in the Sculptor Operating Partnerships. Except during the Distribution Holiday as described above, the Group B Units are economically identical to the Group A Units held by executive managing directors but are not exchangeable for Class A Shares and are not subject to vesting, book-up, forfeiture or minimum retained ownership requirements. • Group E Units —Group E Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains upon satisfaction of a certain performance condition. Each Group E Unit converts into a Group A Unit and becomes exchangeable for one Class A Share (or the cash equivalent thereof) to the extent there has been a sufficient amount of appreciation for a Group E Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Sculptor Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee, which consists of the Chief Executive Officer and the Chief Financial Officer of Sculptor Capital Management, Inc.). The Group E Units are entitled to share in residual assets upon liquidation, dissolution or winding up and become eligible to participate in any tag along right , in a change of control transaction or other liquidity event only to the extent of their relative positive capital accounts (if any). Holders of Group E Units do not receive distributions during the Distribution Holiday. Group E Unit grants are accounted for as equity-based compensation. See Note 3 and Note 13 in the Company’s Annual Report for additional details. • Group P Units —Group P Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains upon satisfaction of certain service and market conditions. Each Group P Unit becomes exchangeable for one Class A Share (or the cash equivalent thereof), in each case upon satisfaction of certain service and market conditions at such time and, with respect to exchanges, to the extent there has been sufficient appreciation for a Group P Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Sculptor Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee). The Group P Units are entitled to share in residual assets upon liquidation, dissolution or winding up and become eligible to participate in any tag along right, in a change of control transaction or other liquidity event only to the extent that certain market conditions are met and to the extent of their relative positive capital accounts (if any). The terms of the Group P Units may be varied for certain executive managing directors. Group P Unit grants are accounted for as equity-based compensation. See Note 3 and Note 13 in the Company’s Annual Report for additional information. Executive managing directors hold a number of Class B Shares equal to the number of Group A Units, vested Group E Units, Group A-1 Units (to the extent the corresponding Class B Shares have not been canceled in connection with the vesting of certain Group E Units issued in connection with the Recapitalization, as further discussed in Note 3 in the Company’s Annual Report), and Group P Units held. Upon the exchange of a Group A Unit or Group P Unit for a Class A Share, the corresponding Class B Share is canceled and a Group B Unit is issued to Sculptor Corp. Class B Shares that relate to Group A-1 Units will be voted pro rata in accordance with the vote of the Class A Shares. The following table presents the number of shares and units of the Company and the Sculptor Operating Partnerships, respectively, that were outstanding as of September 30, 2023: As of September 30, 2023 Sculptor Capital Management, Inc. Class A Shares 25,011,092 Class B Shares 33,017,247 Restricted Class A Shares (“RSAs”) 4,650,661 Restricted Share Units (“RSUs”) 2,593,305 Performance-based RSUs (“PSUs”) 912,500 Warrants to purchase Class A Shares (Note 7) 4,338,015 Sculptor Operating Partnerships Group A Units 15,025,994 Group A-1 Units 9,244,477 Group B Units 25,011,092 Group E Units 13,020,157 Group P Units 4,734,286 The Company grants RSAs, RSUs and PSUs to its employees and executive managing directors as a form of compensation. These grants are accounted for as equity-based compensation. See Note 13 in the Company's Annual Report for additional information. In addition, the Company has 3,022,380 shares of treasury stock as of September 30, 2023. Share Repurchase Program In February 2022, the Company’s Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock. The Company records its treasury stock repurchases at cost on a trade date basis. As of September 30, 2023, the Company repurchased 3,022,380 Class A Shares at a cost of $32.5 million for an average price of $10.75 per share through open market purchase transactions. No shares were purchased in the three months ended September 30, 2023. As of September 30, 2023, $67.5 million remained available for repurchase of the Company’s common stock under the share repurchase program. All of the repurchased shares are classified as treasury stock in the Company’s consolidated balance sheets. The repurchase program has no expiration date. On July 23, 2023, we entered into an Agreement and Plan of Merger, as amended on October 12, 2023 by Amendment No. 1 to Agreement and Plan of Merger, as further amended on October 26, 2023 by Amendment No. 2 to Agreement and Plan of Merger (including the schedules and exhibits thereto, the “Merger Agreement”) with entities affiliated with Rithm Capital Corp. The Company has not and will not repurchase any shares while the Merger Agreement remains in effect. See Note 17 to the unaudited consolidated financial statements for more information regarding the Merger Agreement. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These unaudited, interim, consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”), and exclude some of the disclosures required in audited financial statements and therefore should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report. Management believes all adjustments considered necessary for a fair presentation of the Company’s unaudited, interim, consolidated financial statements have been included and are of a normal and recurring nature and that estimates made in preparing unaudited, interim, consolidated financial statements are reasonable and prudent. The consolidated financial statements include the accounts of the Company, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which the Company is considered the primary beneficiary, and certain other entities which are not considered variable interest entities but the Company is determined to have control. All significant intercompany transactions and balances have been eliminated in consolidation. The results of operations presented for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. For example, incentive income for the majority of the Company’s multi-strategy AUM is recognized in the fourth quarter each year, based on full year investment performance. See Note 2 in the Company’s Annual Report for the complete listing of our significant accounting policies. Recently Adopted Accounting Pronouncements No changes to GAAP that went into effect in the nine months ended September 30, 2023 had a material effect on the Company’s consolidated financial statements. Future Adoption of Accounting Pronouncements No changes to GAAP that are not yet effective are expected to have a material effect on the Company’s consolidated financial statements. |
NONCONTROLLING INTERESTS
NONCONTROLLING INTERESTS | 9 Months Ended |
Sep. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
NONCONTROLLING INTERESTS | NONCONTROLLING INTERESTS Noncontrolling interests represent ownership interests in the Company’s subsidiaries held by parties other than the Company, and primarily relate to the Group A Units held by executive managing directors. Prior to the Recapitalization, the attribution of net income (loss) of each Sculptor Operating Partnership was based on the relative ownership percentages of the Group A Units (noncontrolling interests) and the Group B Units (indirectly held by the Registrant). In applying the substantive profit-sharing arrangements in the Sculptor Operating Partnerships’ limited partnership agreements to the Company’s consolidated financial statements, for periods subsequent to the Recapitalization and for the duration of the Distribution Holiday, the Company will allocate net income of each Sculptor Operating Partnership in any fiscal year solely to the Group B Units and any net loss on a pro rata basis based on the relative ownership percentages of the Group A Units and Group B Units. To the extent a Sculptor Operating Partnership incurs a net loss in an interim period, any net income recognized in a subsequent interim period in the same fiscal year is allocated on a pro rata basis to the extent of previously allocated net loss. Conversely, to the extent a Sculptor Operating Partnership recognizes net income in an interim period, any net loss incurred in a subsequent interim period in the same fiscal year is allocated solely to the Group B Units to the extent of previously allocated net income. Noncontrolling interests are presented as a separate component of shareholders’ equity on the Company’s consolidated balance sheets. The primary components of noncontrolling interests are separately presented in the Company’s consolidated statements of changes in shareholders’ equity (deficit) to distinguish the shareholders’ equity (deficit) attributable to Class A shareholders and noncontrolling interest holders. Net income (loss) includes the net income (loss) attributable to the holders of noncontrolling interest on the Company’s consolidated statements of operations. Sculptor Operating Group Ownership The Company’s equity interest in the Sculptor Operating Group increased to 47.1% as of September 30, 2023, from 46.2% as of September 30, 2022. Changes in the Company’s interest in the Sculptor Operating Group have historically been, and in the future may be, driven by the following: (i) the exchange of Group A Units and Group P Units for Class A Shares, at which time the related Class B Shares are also canceled; (ii) vesting of RSAs; (iii) the issuance of Class A Shares under the Company’s Amended and Restated 2007 Equity Incentive Plan, 2013 Incentive Plan and 2022 Incentive Plan related to the settlement of RSUs or PSUs; and (iv) the forfeiture of Group A Units and participating Group P Units by a departing executive managing director. The table below sets forth the calculation of noncontrolling interests related to the Group A Units for each Sculptor Operating Partnership (rounding differences may occur). The blended participation percentages presented below take into account ownership changes throughout the periods presented. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Sculptor Capital LP Net (loss) income $ (20,207) $ (9,389) $ 22,832 $ 6,826 Blended participation percentage 0 % 0 % 0 % 0 % Net Income Attributable to Group A Units $ — $ — $ — $ — Sculptor Capital Advisors LP Net loss $ (11,556) $ (14,398) $ (32,107) $ (15,595) Blended participation percentage 37 % 39 % 38 % 38 % Net Loss Attributable to Group A Units $ (4,330) $ (5,548) $ (12,050) $ (5,999) Sculptor Capital Advisors II LP Net loss $ (11,584) $ (9,800) $ (39,238) $ (29,273) Blended participation percentage 37 % 40 % 38 % 38 % Net Loss Attributable to Group A Units $ (4,337) $ (3,930) $ (14,726) $ (11,261) Total Sculptor Operating Group Net loss $ (43,347) $ (33,587) $ (48,513) $ (38,042) Blended participation percentage 20 % 28 % 55 % 45 % Net Loss Attributable to Group A Units $ (8,667) $ (9,478) $ (26,776) $ (17,260) The following table presents the components of the net income loss attributable to noncontrolling interests: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Group A Units $ (8,667) $ (9,478) $ (26,776) $ (17,260) Other 1,318 68 3,400 1,423 $ (7,349) $ (9,410) $ (23,376) $ (15,837) The following table presents the components of the shareholders’ equity attributable to noncontrolling interests: September 30, 2023 December 31, 2022 (dollars in thousands) Group A Units $ 390,424 $ 412,941 Other 36,106 26,538 $ 426,530 $ 439,479 Redeemable noncontrolling interests In the second quarter of 2023, our previously consolidated SPAC was liquidated in accordance with its charter and its Class A shares were redeemed. Therefore, there was no activity for the redeemable noncontrolling interests for the three months ended September 30, 2023. Prior to the liquidation, the investors’ interests in the SPAC were classified as redeemable noncontrolling interests in the consolidated balance sheets as they were redeemable for cash by the public shareholders in the event the SPAC did not consummate an initial business combination within the time period required by its charter. The following table presents the activity in redeemable noncontrolling interests, excluding the reversal of deferred underwriting fees as a result of the SPAC liquidation, for the nine months ended September 30, 2023: Nine Months Ended September 30, 2023 SPAC (dollars in thousands) Beginning balance $ 237,864 Change in redemption value of Class A Shares of consolidated SPAC 958 Capital distributions (242,172) Comprehensive income 3,350 Ending Balance $ — |
INVESTMENTS AND FAIR VALUE DISC
INVESTMENTS AND FAIR VALUE DISCLOSURES | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
INVESTMENTS AND FAIR VALUE DISCLOSURES | INVESTMENTS AND FAIR VALUE DISCLOSURES The following table presents the components of the Company’s investments as reported in the consolidated balance sheets: September 30, 2023 December 31, 2022 (dollars in thousands) U.S. government obligations, at fair value $ 79,408 $ 24,782 CLOs, at fair value 217,543 207,147 Equity method investments 87,033 67,130 Total Investments $ 383,984 $ 299,059 Investments of Consolidated Entities $ 322,516 $ 544,554 The Company invests in U.S. government obligations to manage excess liquidity. CLOs, at fair value, consist of investments in notes of unconsolidated CLOs. These investments are carried at fair value under the irrevocable fair value option election at initial recognition. Changes in fair value are recorded within net gains (losses) on investments in the consolidated statements of operations. Interest income on these investments is accrued using the effective interest method and separately presented from the overall change in fair value and is recognized in other revenues in the consolidated statement of operations. The Company’s equity method investments include investments in funds, which are not consolidated, but in which the Company exerts significant influence, but not control. The Company has not elected the fair value option and accounts for such investments under the equity method. Under the equity method of accounting, the Company recognizes its share of the underlying earnings (losses) from equity method investments within net gains (losses) on investments in the consolidated statements of operations. The carrying amounts of equity method investments are recorded in investments in the consolidated balance sheets. Refer to Note 15 for details of the related party nature of such investments. In the second quarter of 2023, our consolidated SPAC was liquidated in accordance with its charter and the investments held in a SPAC’s trust account were liquidated. Investments of consolidated entities included both investments of the Company’s consolidated SPAC, prior to its liquidation, as well as investments held by the Company’s consolidated structured alternative investment solution. The investments of the consolidated structured alternative investment solution that the Company manages are generally measured at fair value using the NAV per share practical expedient. The Company may determine based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses in accordance with GAAP. The Company does not categorize investments where fair value is measured using the NAV practical expedient within the fair value hierarchy. The following table summarizes the fair value of the investments of the structured alternative investment solution that are measured using the NAV practical expedient by strategy type and ability to redeem such investments as of September 30, 2023: Fund Type (1) Fair Value (as of September 30, 2023) Redemption Frequency (2) Redemption Notice Period (2) (dollars in thousands) Multi-strategy 58,583 Quarterly - Annually 30 days - 90 days Credit 250,321 Monthly - Annually (3) 30 days - 90 days Real estate 13,612 None (4) N/A Total $ 322,516 _______________ (1) The structured alternative investment solution invests in both open-ended and close-ended funds. The investments in each fund may represent investments in a particular tranche of such fund subject to different withdrawal rights. (2) $163.3 million of investments are subject to an initial lock-up period of three years during which time no withdrawals or redemptions are allowed. Once the lock-up period ends, the investments are able to be redeemed with the frequency noted above. (3) 30% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately six years from inception. (4) 100% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately seven As of September 30, 2023, the structured alternative investment solution had unfunded commitments of $72.0 million related to the investments presented in the table above. See Note 2 in the Company’s Annual Report for additional information regarding the investments of consolidated entities. Fair Value Disclosures Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date (i.e., an exit price). The Company and the funds it manages hold a variety of investments, certain of which are not publicly traded or that are otherwise illiquid. Significant judgement and estimation go into the assumptions that drive the fair value of these investments. The fair value of these investments may be estimated using a combination of observed transaction prices, prices from third parties (including independent pricing services and relevant broker quotes), models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable. Due to the inherent uncertainty of valuations of investments that are determined to be illiquid or do not have readily ascertainable fair values, the estimates of fair value may differ from the values ultimately realized, and those differences can be material. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type and the specific characteristics of the financial instrument, including existence and transparency of transactions between market participants. Financial instruments with readily available actively quoted prices or for which fair value can be measured from actively-quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value. Financial instruments measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values: • Level I – Quoted prices that are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments that would generally be included in this category are listed equities, U.S. government obligations and listed derivatives. The Company does not adjust the quoted price for these investments. • Level II – Quotations received from dealers making a market for financial instruments (“broker quotes”), valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly observable as of the reporting date. The types of financial instruments that would generally be included in this category are certain corporate bonds and loans, certain credit default swap contracts, certain bank debt securities, certain commercial real estate debt, less liquid equity securities, forward contracts and certain over the-counter (“OTC”) derivatives where the fair value is based on observable inputs. These financial instruments exhibit higher levels of liquid market observability as compared to Level III financial instruments. • Level III – Pricing inputs that are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value of financial instruments in this category may require significant management judgment or estimation. The fair value of these financial instruments may be estimated using a combination of observed transaction prices, independent pricing services, relevant broker quotes, models or other valuation methodologies based on pricing inputs that are neither directly or indirectly market observable (e.g., cash flows, implied yields, EBITDA multiples). The types of financial instruments that would generally be included in this category include CLOs, certain warrant liabilities, certain credit default swap contracts, certain bank debt securities, certain OTC derivatives, asset-backed securities, collateralized debt obligations and investments in affiliated credit funds. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument when the fair value is based on unobservable inputs. For financial instruments for which the Company uses independent pricing services for valuation, the Company performs analytical procedures and compares independent pricing service valuations to other vendors’ pricing as applicable. The Company also performs due diligence reviews on independent pricing services on an annual basis and performs other due diligence procedures as may be deemed necessary. Fair Value Measurements Categorized within the Fair Value Hierarchy The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy for the periods presented: As of September 30, 2023 Level I Level II Level III NAV Total (dollars in thousands) Assets, at Fair Value Included within cash and cash equivalents: U.S. government obligations $ 9,913 $ — $ — $ — $ 9,913 Included within investments: U.S. government obligations $ 79,408 $ — $ — $ — $ 79,408 CLOs (1) $ — $ — $ 217,543 $ — $ 217,543 Included within investments of consolidated entities: Investments in funds $ — $ — $ — $ 322,516 $ 322,516 Liabilities, at Fair Value Warrants $ — $ — $ 34,140 $ — $ 34,140 Liabilities of consolidated entities: Notes payable $ — $ — $ 220,702 $ — $ 220,702 _______________ (1) As of September 30, 2023, investments in CLOs had contractual principal amounts of $213.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments. As of December 31, 2022 Level I Level II Level III NAV Total (dollars in thousands) Assets, at Fair Value Included within cash and cash equivalents: U.S. government obligations $ 19,937 $ — $ — $ — $ 19,937 Included within investments: U.S. government obligations $ 24,782 $ — $ — $ — $ 24,782 CLOs (1) $ — $ — $ 207,147 $ — $ 207,147 Included within investments of consolidated entities: U.S. government obligations $ 237,964 $ — $ — $ — $ 237,964 Investments in funds — — — 306,590 306,590 Investments of Consolidated Entities $ 237,964 $ — $ — $ 306,590 $ 544,554 Liabilities, at Fair Value Warrants $ — $ — $ 24,163 $ — $ 24,163 Liabilities of consolidated entities: Warrants $ 596 $ — $ — $ — $ 596 Notes payable $ — $ — $ 196,106 $ — $ 196,106 _______________ (1) As of December 31, 2022, investments in CLOs had contractual principal amounts of $212.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments. Reconciliation of Fair Value Measurements Categorized within Level III Gains and losses on investments categorized within Level III, excluding those related to investments of consolidated entities and foreign currency translation adjustments, are recorded within net gains (losses) on investments in the consolidated statements of operations. Gains and losses related to foreign currency translation adjustments are recorded in the statements of comprehensive income (loss), and gains and losses related to investment of consolidated entities are recorded within net (losses) gains of consolidated entities. Amortization of premium, accretion of discount and foreign exchange gains and losses on non-U.S. dollar investments are also included within gains and losses in the tables below. Changes in fair value of warrant liabilities are included in other income (loss) in the consolidated statements of operations. In the first quarter of 2022, the warrants of the consolidated SPAC began to trade publicly, and as such, were transferred from Level III to Level I and in the second quarter of 2023, the warrants expired worthless as the SPAC was liquidated. Changes in fair value of warrant liabilities and notes payable of the consolidated entities are included in net (losses) gains of consolidated entities in the consolidated statements of operations. The Company elected to measure its investments in CLOs, U.S. government obligations and notes payable of the consolidated fund at fair value through consolidated net (loss) income in order to simplify its accounting for these instruments. The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the three months ended September 30, 2023 and 2022: June 30, 2023 Transfers In Transfers Out Purchases / Issuances Investment Sales / Settlements Gains / (Losses) Included in Earnings Gains / (Losses) Included in Other Comprehensive Income September 30, 2023 (dollars in thousands) Assets, at Fair Value Included within investments CLOs $ 208,138 $ — $ — $ 15,687 $ (3,887) $ 2,938 $ (5,333) $ 217,543 Liabilities, at Fair Value Warrants $ 24,423 $ — $ — $ — $ — $ (9,717) $ — $ 34,140 Liabilities of consolidated entities: Notes payable $ 205,290 $ — $ — $ — $ — $ (15,412) $ — $ 220,702 June 30, 2022 Transfers In Transfers Out Purchases / Issuances Investment Sales / Settlements Gains / (Losses) Included in Earnings Gains / (Losses) Included in Other Comprehensive Income September 30, 2022 (dollars in thousands) Assets, at Fair Value Included within investments: CLOs $ 203,631 $ — $ — $ 248 $ (40) $ (4,143) $ (10,482) $ 189,214 Investments of consolidated entities: Bank Debt $ 40,226 $ — $ (16,296) $ — $ (23,930) $ — $ — $ — Liabilities, at Fair Value Warrants $ 22,211 $ — $ — $ (2,386) $ — $ 24,597 Liabilities of consolidated entities: Notes payable $ 201,985 $ — $ — $ — $ — $ (5,993) $ — $ 207,978 The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the nine months ended September 30, 2023 and 2022: December 31, 2022 Transfers In Transfers Out Purchases / Issuances Investment Sales / Settlements Gains / (Losses) Included in Earnings Gains / (Losses) Included in Other Comprehensive Income September 30, 2023 (dollars in thousands) Assets, at Fair Value Included within investments: CLOs $ 207,147 $ — $ — $ 16,231 $ (12,342) $ 8,525 $ (2,018) $ 217,543 Liabilities, at Fair Value Warrants $ 24,163 $ — $ — $ — $ — $ (9,977) $ — $ 34,140 Liabilities of consolidated entities: Notes payable $ 196,106 $ — $ — $ — $ — $ (24,596) $ — $ 220,702 December 31, 2021 Transfers In Transfers Out Purchases / Issuances Investment Sales / Settlements Gains / (Losses) Included in Earnings Gains / (Losses) Included in Other Comprehensive Income September 30, 2022 (dollars in thousands) Assets, at Fair Value Included within investments: CLOs $ 219,510 $ — $ — $ 30,087 $ (12,413) $ (22,931) $ (25,039) $ 189,214 Investments of consolidated entities: Bank Debt $ — $ 3,603 (1) $ (47,258) (1) $ 98,217 $ (51,335) $ (3,227) $ — $ — Liabilities, at Fair Value Warrants $ 65,287 $ — $ — $ — $ — $ 40,690 $ — $ 24,597 Liabilities of consolidated entities: Warrants $ 7,590 $ — $ (3,450) (2) $ — $ — $ 4,140 $ — $ — Notes payable $ — $ — $ — $ 215,733 $ — $ 7,755 $ — $ 207,978 _______________ (1) Transfers into and out of Level III in bank debt include $2.3 million related to the consolidation (Transfers In) and $14.0 million related to the subsequent deconsolidation (Transfers Out) of a fund that the Company manages. (2) Transfers out of Level III into Level I related to warrants of consolidated entities that became publicly traded with available quoted prices during the first quarter of 2022. The table below summarizes the net change in unrealized gains and (losses) on the Company’s Level III financial instruments outstanding as of the reporting date: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Assets, at Fair Value Included within investments: CLOs $ (2,395) $ (14,625) $ 6,507 $ (47,970) Liabilities, at Fair Value Warrants $ (9,717) $ (2,386) $ (9,977) $ 40,690 Liabilities of consolidated entities: Notes payable $ (15,412) $ (5,993) $ (24,596) $ 7,755 Level III Valuation Methodologies Financial instruments classified within Level III of the fair value hierarchy are generally comprised of CLOs, warrant liabilities and notes payable of consolidated entities. Investments in CLOs are valued using independent pricing services. The Company performs procedures over the values provided by the pricing services, as discussed above. Warrant liabilities of the Company are valued by independent pricing services using Black-Scholes option pricing model with a probability-weighted value based upon merger and no merger scenarios. The Company’s Class A share price, warrant exercise price, risk free rate, volatility, term to expiry and probability of merger are the primary inputs to the valuation. The significant unobservable quantitative input used for the fair value measurement of the warrant liabilities of the Company was volatility. The volatility of 58.65% used in the merger scenario was based on a 100-day historical volatility per the warrant contractual terms in case of a change of control and the volatility used in a no merger scenario was a term matched historical volatility of 55.96%, as of September 30, 2023. Notes payable of consolidated entities are valued using independent pricing services. The Company measures the financial liabilities of its consolidated entity based on the fair value of the financial assets of the consolidated entity, as the Company believes the fair value of the financial assets is more observable. Refer to Note 2 in the Company’s Annual Report for additional valuation considerations of the notes payable of consolidated entities. Financial Instruments Not Measured at Fair Value Management estimates that the carrying value of the Company’s financial instruments not measured at fair value, including its debt obligations and repurchase agreements, approximated their fair values as of September 30, 2023. The fair value measurements for the Company’s debt obligations and repurchase agreements are categorized as Level III within the fair value hierarchy. The fair value measurements for the Company’s CLO Investments Loans (as defined in Note 7) and repurchase agreements were determined using independent pricing services. The fair value measurement for the Company’s 2020 Term Loan (as defined in Note 7) was determined using a discounted cash flow model. Loans Sold to CLOs Managed by the Company From time to time the Company may sell loans to CLOs managed by the Company. These loans are purchased by the Company in the open market and simultaneously sold for cash to the CLOs. The loans are accounted for as transfers of financial assets as they meet the criteria for derecognition under U.S. GAAP. No loans were sold in each of the nine months ended September 30, 2023 and 2022. The Company invests in senior secured and subordinated notes issued by certain CLOs to which it sold loans in the past. These investments represent retained interests to the Company and are in the form of a 5% vertical strip (i.e., 5% of each of the senior and subordinated tranches of notes issued by each CLO). The retained interests are reported within investments on the Company’s consolidated balance sheet. As of September 30, 2023 and December 31, 2022, the Company’s investments in these retained interests had a fair value of $71.3 million and $78.6 million, respectively. The Company is subject to risks associated with the performance of the underlying collateral and the market yield of the assets. The Company’s risk of loss from retained interest is limited to its investments in these interests. The Company receives quarterly payments of interest and principal, as applicable, on these retained interests. For the nine months ended September 30, 2023 and 2022, the Company received $13.2 million and $2.0 million, respectively, of interest and principal payments related to the retained interests. The Company may from time to time refinance its investment in CLOs. If a refinanced CLO investment is considered substantially different from the original CLO investment, the refinancing is accounted for as a sale and a new refinanced CLO investment is recognized at fair value that is used to determine the amount of gain or loss on derecognition that is presented within net gains (losses) on investments in the consolidated statements of operations. If the refinancing is not considered substantially different from the original CLO investment, a new effective interest rate that equates the revised cash flows to the carrying amount of the original CLO investment is calculated and applied prospectively. The Company uses independent pricing services to value its investments in the CLOs, including the retained interests, and therefore the only key assumption is the price provided by such service. A corresponding adverse change of 10% or 20% on price would have a corresponding impact on the fair value of the Company’s investments in CLOs. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 9 Months Ended |
Sep. 30, 2023 | |
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Determination Methodology and Factors [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES In the ordinary course of business, the Company sponsors the formation of entities that are considered VIEs. In accordance with GAAP consolidation guidance, the Company consolidates certain VIEs for which it is the primary beneficiary either directly or indirectly through a consolidated entity. See Note 2 in the Company’s Annual Report for a discussion of entities that are VIEs and the evaluation of those entities for consolidation by the Company. The table below presents the assets and liabilities of VIEs consolidated by the Company. September 30, 2023 December 31, 2022 (dollars in thousands) Assets Assets of consolidated entities: Cash and cash equivalents $ 391 $ 3 Restricted cash and cash equivalents 9,800 9,805 Investments, at fair value 322,516 306,590 Other assets 11,266 2,016 Total Assets $ 343,973 $ 318,414 Liabilities Liabilities of consolidated entities: Notes payable $ 220,702 $ 196,106 Other liabilities 5,070 1,601 Total Liabilities $ 225,772 $ 197,707 The assets of consolidated variable interest entities may only be used to settle obligations of these entities and are not available to creditors of the Company. The investors in these consolidated entities have no recourse against the assets of the Company. There is no recourse to the Company for the consolidated VIEs’ liabilities. The Company’s involvement with VIEs that are not consolidated is generally limited to providing asset management services and, in certain cases, insignificant investments in the VIEs. The maximum exposure to loss represents the potential loss of current investments or income and fees receivables from these entities, as well as the obligation to repay unearned revenues, primarily incentive income subject to clawback, in the event of any future fund losses, as well as unfunded commitments to certain funds that are VIEs, as discussed in Note 16. The Company does not provide, nor is it required to provide, any type of non-contractual financial or other support to its VIEs that are not consolidated other than its own capital commitments. The table below presents the net assets of unconsolidated VIEs in which the Company has variable interests along with the maximum exposure to loss as a result of the Company’s involvement with non-consolidated VIEs: September 30, 2023 December 31, 2022 (dollars in thousands) Net assets of unconsolidated VIEs in which the Company has a variable interest $ 12,598,243 $ 12,738,164 Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs: Unearned income and fees 40,359 53,869 Income and fees receivable 13,452 41,890 Investments 266,122 245,583 Investments of consolidated entities 263,932 237,699 Unfunded commitments (1) 202,916 182,797 Maximum Exposure to Loss $ 786,781 $ 761,838 _______________ (1) Includes commitments from certain employees and executive managing directors in the amounts of $89.7 million and $65.4 million as of September 30, 2023 and December 31, 2022, respectively. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
LEASES | LEASES The Company has non-cancelable operating leases for its headquarters in New York and its offices in London, Hong Kong, Shanghai, and various other locations and data centers. The Company does not have renewal options for any of its current leases. The Company also subleases a portion of its office space in London and New York through the end of the lease term. In addition, the Company has finance leases for computer hardware. As of September 30, 2023, the Company has pledged collateral related to its lease obligations of $6.2 million, which is included within restricted cash in the consolidated balance sheets. The tables below represent components of lease expense and associated cash flows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Lease Cost Operating lease cost $ 4,825 $ 4,628 $ 14,030 $ 13,992 Short-term lease cost 22 21 66 75 Finance lease cost - amortization of leased assets 51 113 222 296 Finance lease cost - imputed interest on lease liabilities 15 19 45 23 Less: Sublease income (902) (779) (2,539) (2,413) Net Lease Cost $ 4,011 $ 4,002 $ 11,824 $ 11,973 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Supplemental Lease Cash Flow Information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 5,311 $ 5,140 $ 15,764 $ 15,631 Operating cash flows for finance leases $ — $ 6 $ 5 $ 6 Finance cash flows for finance leases $ — $ 155 $ 223 $ 318 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 1,818 $ — $ 1,818 $ 1,079 Finance leases $ — $ 1,016 $ — $ 1,016 September 30, 2023 December 31, 2022 Lease Term and Discount Rate Weighted average remaining lease term Operating leases 6.1 years 6.7 years Finance leases 3.8 years 4.5 years Weighted average discount rate Operating leases 8.0 % 7.8 % Finance leases 7.9 % 7.9 % Operating Finance (dollars in thousands) Maturity of Lease Liabilities - Contractual Payments to be Paid October 1, 2023 to December 31, 2023 $ 4,786 $ — 2024 17,520 228 2025 14,989 228 2026 15,353 228 2027 17,675 228 Thereafter 35,015 — Total Lease Payments 105,338 912 Imputed interest (22,170) (116) Total Lease Liabilities - Contractual Payments to be Paid $ 83,168 $ 796 Operating Leases (dollars in thousands) Sublease Rent - Contractual Payments to be Received October 1, 2023 to December 31, 2023 $ 904 2024 1,920 2025 1,920 2026 1,920 2027 1,960 Thereafter 4,160 Total Sublease Rent - Contractual Payments to be Received $ 12,784 |
LEASES | LEASES The Company has non-cancelable operating leases for its headquarters in New York and its offices in London, Hong Kong, Shanghai, and various other locations and data centers. The Company does not have renewal options for any of its current leases. The Company also subleases a portion of its office space in London and New York through the end of the lease term. In addition, the Company has finance leases for computer hardware. As of September 30, 2023, the Company has pledged collateral related to its lease obligations of $6.2 million, which is included within restricted cash in the consolidated balance sheets. The tables below represent components of lease expense and associated cash flows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Lease Cost Operating lease cost $ 4,825 $ 4,628 $ 14,030 $ 13,992 Short-term lease cost 22 21 66 75 Finance lease cost - amortization of leased assets 51 113 222 296 Finance lease cost - imputed interest on lease liabilities 15 19 45 23 Less: Sublease income (902) (779) (2,539) (2,413) Net Lease Cost $ 4,011 $ 4,002 $ 11,824 $ 11,973 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Supplemental Lease Cash Flow Information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 5,311 $ 5,140 $ 15,764 $ 15,631 Operating cash flows for finance leases $ — $ 6 $ 5 $ 6 Finance cash flows for finance leases $ — $ 155 $ 223 $ 318 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 1,818 $ — $ 1,818 $ 1,079 Finance leases $ — $ 1,016 $ — $ 1,016 September 30, 2023 December 31, 2022 Lease Term and Discount Rate Weighted average remaining lease term Operating leases 6.1 years 6.7 years Finance leases 3.8 years 4.5 years Weighted average discount rate Operating leases 8.0 % 7.8 % Finance leases 7.9 % 7.9 % Operating Finance (dollars in thousands) Maturity of Lease Liabilities - Contractual Payments to be Paid October 1, 2023 to December 31, 2023 $ 4,786 $ — 2024 17,520 228 2025 14,989 228 2026 15,353 228 2027 17,675 228 Thereafter 35,015 — Total Lease Payments 105,338 912 Imputed interest (22,170) (116) Total Lease Liabilities - Contractual Payments to be Paid $ 83,168 $ 796 Operating Leases (dollars in thousands) Sublease Rent - Contractual Payments to be Received October 1, 2023 to December 31, 2023 $ 904 2024 1,920 2025 1,920 2026 1,920 2027 1,960 Thereafter 4,160 Total Sublease Rent - Contractual Payments to be Received $ 12,784 |
LEASES | LEASES The Company has non-cancelable operating leases for its headquarters in New York and its offices in London, Hong Kong, Shanghai, and various other locations and data centers. The Company does not have renewal options for any of its current leases. The Company also subleases a portion of its office space in London and New York through the end of the lease term. In addition, the Company has finance leases for computer hardware. As of September 30, 2023, the Company has pledged collateral related to its lease obligations of $6.2 million, which is included within restricted cash in the consolidated balance sheets. The tables below represent components of lease expense and associated cash flows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Lease Cost Operating lease cost $ 4,825 $ 4,628 $ 14,030 $ 13,992 Short-term lease cost 22 21 66 75 Finance lease cost - amortization of leased assets 51 113 222 296 Finance lease cost - imputed interest on lease liabilities 15 19 45 23 Less: Sublease income (902) (779) (2,539) (2,413) Net Lease Cost $ 4,011 $ 4,002 $ 11,824 $ 11,973 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Supplemental Lease Cash Flow Information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 5,311 $ 5,140 $ 15,764 $ 15,631 Operating cash flows for finance leases $ — $ 6 $ 5 $ 6 Finance cash flows for finance leases $ — $ 155 $ 223 $ 318 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 1,818 $ — $ 1,818 $ 1,079 Finance leases $ — $ 1,016 $ — $ 1,016 September 30, 2023 December 31, 2022 Lease Term and Discount Rate Weighted average remaining lease term Operating leases 6.1 years 6.7 years Finance leases 3.8 years 4.5 years Weighted average discount rate Operating leases 8.0 % 7.8 % Finance leases 7.9 % 7.9 % Operating Finance (dollars in thousands) Maturity of Lease Liabilities - Contractual Payments to be Paid October 1, 2023 to December 31, 2023 $ 4,786 $ — 2024 17,520 228 2025 14,989 228 2026 15,353 228 2027 17,675 228 Thereafter 35,015 — Total Lease Payments 105,338 912 Imputed interest (22,170) (116) Total Lease Liabilities - Contractual Payments to be Paid $ 83,168 $ 796 Operating Leases (dollars in thousands) Sublease Rent - Contractual Payments to be Received October 1, 2023 to December 31, 2023 $ 904 2024 1,920 2025 1,920 2026 1,920 2027 1,960 Thereafter 4,160 Total Sublease Rent - Contractual Payments to be Received $ 12,784 |
DEBT OBLIGATIONS AND WARRANTS
DEBT OBLIGATIONS AND WARRANTS | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
DEBT OBLIGATIONS AND WARRANTS | DEBT OBLIGATIONS AND WARRANTS 2020 Term Loan CLO Investments Loans Total (dollars in thousands) Maturity of Debt Obligations October 1, 2023 to December 31, 2023 $ — $ — $ — 2024 — — — 2025 — 1,120 1,120 2026 95,000 — 95,000 2027 — — — 2028 — — — Thereafter — 29,800 29,800 Total Payments 95,000 30,920 125,920 Unamortized discounts & deferred financing costs (10,256) (178) (10,434) Total Debt Obligations $ 84,744 $ 30,742 $ 115,486 2020 Credit Agreement On September 25, 2020, Sculptor Capital LP, as borrower, (the “Borrower”), and certain other subsidiaries of the Company, as guarantors, entered into a credit and guaranty agreement, as amended on December 20, 2022, (the “2020 Credit Agreement”), consisting of (i) a senior secured term loan facility in an initial aggregate principal amount of $320.0 million (the “2020 Term Loan”) and (ii) a senior secured revolving credit facility in an initial aggregate principal amount of $25.0 million (the “2020 Revolving Credit Facility”). The proceeds from the 2020 Term Loan were first allocated to the full fair value of the warrants issued in connection with the 2020 Credit Agreement (which establishes both a liability and a debt discount, as described below), and the residual proceeds, net of deferred offering costs and discounts, of $275.8 million was then recognized as the initial carrying value of the 2020 Term Loan. Certain prepayments of the 2020 Term Loan are subject to a prepayment premium (the “Call Premium”) equal to (a) prior to the second anniversary of the Closing Date, a customary “make-whole” premium equal to the present value of all required interest payments that would be due from the date of prepayment through and including the second anniversary of the Closing Date plus a premium of 3.0% of the principal amount of loans prepaid, (b) on or after the second anniversary of the Closing Date but prior to the third anniversary of the Closing Date, a premium of 3.0% of the principal amount of loans prepaid, (c) on or after the third anniversary of the Closing Date but prior to the fourth anniversary of the Closing Date, a premium of 2.0% of the principal amount of loans prepaid and (d) thereafter, 0%. On June 21, 2021, the Company entered into a letter agreement amending the 2020 Credit Agreement to increase the amount of voluntary prepayments for which the Call Premium shall not apply from $175.0 million to $225.0 million in exchange for an amendment fee of $1.75 million. As such, no Call Premium was due on the first $225.0 million prepaid by the Company. The amendment fee was recorded as an additional discount to the 2020 Term Loan in the second quarter of 2021. In 2021, the Company prepaid $224.4 million of the 2020 Term Loan, resulting in an outstanding balance of $95.0 million, which is due at maturity. The Company recognized a $30.2 million loss on this retirement of debt. As a result of the $175.0 million of aggregate prepayments made through March 31, 2021, the Company is no longer subject to the cash sweep or financial maintenance covenants, other than the covenant requiring $20.0 billion minimum fee-paying Assets Under Management described below. The 2020 Term Loan and the 2020 Revolving Credit Facility mature on the seventh and sixth anniversary, respectively, of the initial funding of the 2020 Term Loan, which occurred on November 13, 2020 (the “Closing Date”). Borrowings under the 2020 Credit Agreement bear interest at a per annum rate equal to, at the Company’s option, the one, three or six-month Secured Overnight Financing Rate (“SOFR”) (subject to a 0.75% floor), plus 6.25%. With respect to interest calculated using one-month SOFR, additional rate equal to 0.05% is applied and with respect to interest calculated using three-month or six-month SOFR, additional rate equal to 0.10% is applied. The Borrower is also required to pay an undrawn commitment fee at a rate per annum equal to 0.50% of the undrawn portion of the 2020 Revolving Credit Facility. The 2020 Credit Agreement prohibits the total fee-paying Assets Under Management, subject to certain exclusions, of the Borrower, the guarantors and their consolidated subsidiaries as of the last day of any fiscal quarter to be less than $20.0 billion. The 2020 Credit Agreement contains customary events of default for a transaction of this type, after which obligations under the 2020 Credit Agreement may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Borrower, the guarantors or any of the material subsidiaries of the foregoing after which the obligations under the 2020 Credit Agreement become automatically due and payable. The 2020 Credit Agreement also provided the counterparty the right to appoint an individual to a seat on the Company’s Board of Directors. The Company expects to repay all amounts outstanding under the 2020 Term Loan and the 2020 Revolving Credit Facility in connection with the closing of the proposed transaction between the Company and Rithm Capital Corp. Refer to Note 17 for details of the proposed transaction. Warrants In connection with the 2020 Credit Agreement, the Company has issued and outstanding warrants to purchase 4,338,015 Class A Shares. The warrants have a 10-year term from the Closing Date and an initial exercise price per share equal to $11.93. The exercise price is subject to reduction by an amount equal to any dividends paid on Class A Shares. As a result, the exercise price was $7.95 per share as of September 30, 2023. The warrants provide for customary adjustments in the event of a stock split, stock dividend, recapitalization or similar event. In lieu of making a cash payment otherwise contemplated upon exercise, the holder may exercise the warrants in whole or in part to receive a net number of Class A Shares. In addition, the 2020 Credit Agreement provides that, upon exercise in whole or in part by the holder, the Company may decide in its sole discretion whether the holder’s exercise of such warrant will be settled by delivery of Class A Shares (which shares may be reduced to a net number of Class A Shares in accordance with the procedure described in the preceding sentence) or by the Company’s payment to the holder of an amount in cash equal to the Black-Scholes value as provided for in the applicable warrant agreement. If the Company undergoes a change of control prior to the expiration date, the holder will have the right to require the Company to repurchase any remaining portion of the warrants not yet exercised at their Black-Scholes value as provided for in the applicable agreement. Refer to Note 17 for further details. Warrants of the Consolidated SPAC In the second quarter of 2023, the SPAC was liquidated in accordance with its charter and the 11.2 million warrants to the Company and 11.5 million warrants to third parties expired worthless. The warrants had a 5-year term from the day of the SPAC IPO and an initial exercise price per share equal to $11.50. The warrants were subject to other customary terms common for instruments of this type. The Company eliminated the SPAC warrants it held in consolidation. Notes Payable of a Consolidated Entity In the first quarter of 2022, the Company launched a structured alternative investment solution that it consolidated, which issued notes in the aggregate principal amount of $350.0 million, of which approximately $127.8 million were acquired by the Company and eliminated in consolidation. The notes held by the Company consisted of $20.0 million of Class A, $20.0 million of Class C and $87.8 million of subordinated notes. Changes in the fair value of the notes payable of the structured alternative investment solution are presented within net (losses) gains of consolidated entities in the consolidated statements of operations. The fair value of the notes payable as of September 30, 2023, was $220.7 million. The notes payable mature in May 2037. The table below summarizes material terms of the notes payable: Class A Notes Class B Notes Class C Notes Subordinated Notes (1) (dollars in thousands) Type Senior Secured Senior Secured Mezzanine Secured Unsecured Initial principal amount $140,000 $70,000 $35,000 $105,000 Initial interest rate 4.25% 6.00% 6.75% N/A Interest rate after step up and effective date (2) 6.25%; May 2028 8.00%; May 2029 9.50%; May 2025 N/A _______________ (1) Subordinated notes do not have stated interest rates or principal entitlement but instead receive net proceeds from excess cash flows remaining after periodic payments have been made to more senior notes and after fees and expenses in accordance with the priority of payments. (2) Interest rate after a one time step up in basis at the indicated effective date. See Note 2 in the Company’s Annual Report for accounting policies for the notes payables of the consolidated entities. Credit Facility of a Consolidated Entity In the first quarter of 2022, the structured alternative investment vehicle entered into a $52.5 million credit facility which expires March 18, 2025. The credit facility is capped at $20.0 million of the total borrowing capacity per quarter. The facility is subject to a SOFR reference rate, as defined in the agreement, plus 3.00%. The facility is also subject to an annual 1.15% unused commitment fee. As of September 30, 2023, the fund has not drawn on the facility. The credit facility agreement is subject to other customary terms common for instruments of this type. The creditors of the Company’s consolidated entities have no recourse to the Company. CLO Investments Loans The Company entered into loans to finance portions of investments in certain CLOs (collectively, the “CLO Investments Loans”). In general, the Company will make interest payments on the loans at such time interest payments are received on its investments in the CLOs, and will make principal payments on the loans to the extent principal payments are received on its investments in the CLOs, with any remaining balance due upon maturity. The loans are subject to customary events of default and covenants and also include terms that require the Company’s continued involvement with the CLOs. In addition to customary events of default included in financing arrangements of this type, an event of default would also be triggered if there is an event of default at the CLO level. Prior to the relevant CLO’s maturity date, this would include certain material covenant breaches, regulatory and insolvency events for the relevant CLO issuer, as well as a payment default, where the relevant CLO is unable to make interest payments on the senior, non-deferrable interest notes issued by the CLO. The CLO Investments Loans do not have any financial maintenance covenants and are secured by the related investments in CLOs with fair values of $32.3 million and $40.0 million as of September 30, 2023 and December 31, 2022, respectively. Carrying amounts presented in the table below are net of discounts, if any, and unamortized deferred financing costs. The interest rates on the CLO Investments Loans are variable based on SOFR or EURIBOR (subject to a floor of zero percent). The final maturity date for each CLO Investments Loan is the earlier of the contractual maturity date presented in the table below or the date at which the Company no longer holds a risk retention investment in the respective CLO. The timing of principal payments on CLO Investments Loans is contingent on principal payments made to the Company on the investments in CLOs and the CLO Investments Loans may amortize well in advance of their contractual maturity dates. Initial Borrowing Date Contractual Rate Contractual Maturity Date Carrying Value September 30, 2023 December 31, 2022 (dollars in thousands) June 7, 2017 SOFR plus 1.48% November 16, 2029 $ 12,478 $ 16,835 August 2, 2017 SOFR plus 1.41% January 21, 2030 17,144 21,594 January 19, 2022 EURIBOR plus 1.50% December 15, 2023 — 2,285 June 1, 2023 EURIBOR plus 1.85% April 12, 2025 1,120 — $ 30,742 $ 40,714 |
SECURITIES SOLD UNDER AGREEMENT
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE | 9 Months Ended |
Sep. 30, 2023 | |
Transfers and Servicing of Financial Assets [Abstract] | |
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE | SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE The Company has €200.0 million and $100.0 million master credit facility agreements (the “CLO Financing Facilities”) to finance portions of the risk retention investments in certain CLOs managed by the Company. Subject to the terms and conditions of the CLO Financing Facilities, the Company and the counterparty may enter into repurchase agreements on such terms agreed upon by the parties. Each transaction entered into under the CLO Financing Facilities will bear interest at a rate based on the weighted average effective interest rate of each class of securities that have been sold plus a spread to be agreed upon by the parties. As of September 30, 2023, €43.6 million and $86.5 million of the CLO Financing Facilities remained available. Each transaction entered into under the CLO Financing Facilities provides for payment netting and, in the case of a default or similar event with respect to the counterparty to the CLO Financing Facilities, provides for netting across transactions. Generally, upon a counterparty default, the Company can terminate all transactions under the CLO Financing Facilities and offset amounts it owes in respect of any one transaction against collateral it has received in respect of any other transactions under the CLO Financing Facilities; provided, however, that in the case of certain defaults, the Company may only be able to terminate and offset solely with respect to the transaction affected by the default. During the term of a transaction entered into under the CLO Financing Facilities, the Company will deliver cash or additional securities acceptable to the counterparty if the securities sold are in default. In addition to customary events of default included in financing arrangements of this type, an event of default would also be triggered if there is an event of default at the CLO level. Prior to the relevant CLO’s maturity date, this would include certain material covenant breaches, regulatory and insolvency events for the relevant CLO issuer, as well as a payment default where the relevant CLO is unable to make interest payments on the senior, non-deferrable interest notes issued by the CLO. Upon termination of a transaction, the Company will repurchase the previously sold securities from the counterparty at a previously determined repurchase price. The CLO Financing Facilities may be terminated at any time upon certain defaults or circumstances agreed upon by the parties. The repurchase agreements may result in credit exposure in the event the counterparty to the transaction is unable to fulfill its contractual obligations. The Company minimizes the credit risk associated with these activities by monitoring counterparty credit exposure and collateral values. Other than margin requirements, the Company is not subject to additional terms or contingencies which would expose the Company to additional obligations based upon the performance of the securities pledged as collateral. The table below presents securities sold under agreements to repurchase that are offset, if any, as well as securities transferred to the counterparty related to such transactions (capped so that the net amount presented will not be reduced below zero). No other material financial instruments were subject to master netting agreements or other similar agreements: Securities Sold under Agreements to Repurchase Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Liabilities in the Consolidated Balance Sheet Securities Transferred Net Amount (dollars in thousands) As of September 30, 2023 $ 177,503 $ — $ 177,503 $ 173,156 $ 4,347 As of December 31, 2022 $ 166,632 $ — $ 166,632 $ 157,107 $ 9,525 The securities sold under agreements to repurchase have a set scheduled maturity date that corresponds to the maturities of the securities sold under such transaction. The table below presents the remaining final contractual maturity of the securities sold to the counterparty under agreement to repurchase by class of collateral pledged: Investments in CLOs Securities Sold under Agreements to Repurchase Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total (dollars in thousands) As of September 30, 2023 $ — $ — $ — $ 177,503 $ 177,503 As of December 31, 2022 $ — $ — $ — $ 166,632 $ 166,632 |
OTHER ASSETS, NET
OTHER ASSETS, NET | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
OTHER ASSETS, NET | OTHER ASSETS, NET The following table presents the components of other assets, net as reported in the consolidated balance sheets: September 30, 2023 December 31, 2022 (dollars in thousands) Fixed Assets: Leasehold improvements $ 47,826 $ 47,736 Computer hardware and software 44,402 44,603 Furniture, fixtures and equipment 8,013 8,013 Accumulated depreciation and amortization (82,475) (79,390) Fixed assets, net 17,766 20,962 Goodwill 22,691 22,691 Cloud computing costs 13,685 9,940 Prepaid expenses 11,440 16,698 Redemption receivable (1) — 28,721 Other 9,842 7,430 Total Other Assets, Net $ 75,424 $ 106,442 _______________ (1) Represents amounts receivable on a redeemed investment in a fund. |
OTHER LIABILITIES
OTHER LIABILITIES | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
OTHER LIABILITIES | OTHER LIABILITIES The following table presents the components of other liabilities as reported in the consolidated balance sheets: September 30, 2023 December 31, 2022 (dollars in thousands) Accrued expenses $ 21,468 $ 20,925 Uncertain tax positions 8,250 8,250 Due to funds (1) 3,391 3,854 Other 10,069 10,020 Total Other Liabilities $ 43,178 $ 43,049 _______________ (1) To the extent that a fee-paying fund is an investor in another fee-paying fund, the Company rebates a corresponding portion of the management fees charged in the investee fund. Due to funds amounts also reflect certain incentive income and management fee waivers. |
REVENUES
REVENUES | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES The following table presents management fees and incentive income recognized as revenues for the three months ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 2022 Management Fees Incentive Income Management Fees Incentive Income (dollars in thousands) Multi-strategy funds $ 28,566 $ 781 $ 33,579 $ 209 Credit Opportunistic credit funds 11,524 6,290 12,001 698 Institutional Credit Strategies 11,354 — 11,550 — Real estate funds 8,750 10,730 9,106 6,659 Total $ 60,194 $ 17,801 $ 66,236 $ 7,566 The following table presents management fees and incentive income recognized as revenues for the nine months ended September 30, 2023 and 2022: Nine Months Ended September 30, 2023 2022 Management Fees Incentive Income Management Fees Incentive Income (dollars in thousands) Multi-strategy funds $ 88,716 $ 1,504 $ 112,171 $ 329 Credit Opportunistic credit funds 36,205 20,412 37,167 20,603 Institutional Credit Strategies 35,092 — 34,941 — Real estate funds 26,331 40,467 27,164 52,856 Total $ 186,344 $ 62,383 $ 211,443 $ 73,788 The following table presents the composition of the Company’s income and fees receivable as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 (dollars in thousands) Management fees $ 23,652 $ 25,402 Incentive income 2,917 30,958 Income and Fees Receivable $ 26,569 $ 56,360 The Company recognizes management fees over the period in which the performance obligation is satisfied, and are generally recognized at the end of each reporting period. The Company records incentive income when it is probable that a significant reversal of income will not occur. The majority of management fees and incentive income receivable at each balance sheet date is generally collected during the following quarter. The following table presents the Company’s unearned income and fees as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 (dollars in thousands) Management fees $ 151 $ 2 Incentive income 40,359 53,867 Unearned Income and Fees $ 40,510 $ 53,869 A liability for unearned incentive income is generally recognized when the Company receives incentive income distributions from its funds, primarily its real estate funds, whereby the distributions received have not yet met the recognition threshold of being probable that a significant reversal of cumulative revenue will not occur. A liability for unearned management fees is generally recognized when management fees are paid to the Company on a quarterly basis in advance, based on the amount of Assets Under Management at the beginning of the quarter. In the nine months ended September 30, 2023 and 2022, the Company recognized $35.6 million and $47.2 million, respectively, of the beginning balance of unearned incentive income for each respective year. The Company recognized all of the beginning balances of unearned management fees during the respective quarter. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe computation of the effective tax rate and provision at each interim period requires the use of certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in foreign jurisdictions, permanent differences, and the likelihood of recovering deferred tax assets existing as of the balance sheet date. The estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as tax laws and regulations change. Accordingly, the effective tax rate for interim periods is not indicative of the tax rate expected for a full year. The following is a reconciliation of the statutory U.S. federal income tax rate to the Company’s effective income tax rate: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Statutory U.S. federal income tax rate 21.00 % 21.00 % 21.00 % 21.00 % Loss (income) passed through to noncontrolling interests -3.98 % -5.78 % -12.16 % -7.67 % Foreign income taxes -7.39 % -4.58 % -18.11 % -4.76 % RSU/RSA excess income tax benefit or expense -0.08 % -0.49 % -4.74 % 3.76 % State and local income taxes 1.02 % 0.53 % -2.73 % -7.34 % Nondeductible amortization of Partner Equity Units -1.80 % -2.28 % -5.88 % -9.59 % Foreign tax credits and deductions 1.55 % 0.96 % 3.80 % 1.00 % Change in fair value of warrants -4.45 % -3.83 % -5.12 % 25.74 % Disallowed executive compensation -5.02 % -6.08 % -13.72 % -19.29 % Other, net -0.11 % -0.20 % -2.00 % -0.36 % SPAC Loss -0.01 % — % 7.02 % — % Effective Income Tax Rate 0.73 % -0.75 % -32.64 % 2.49 % The Company recognizes tax benefits for amounts that are “more likely than not” to be sustained upon examination by tax authorities. For uncertain tax positions in which the benefit to be realized does not meet the “more likely than not” threshold, the Company establishes a liability, which is included within other liabilities in the consolidated balance sheets. As of September 30, 2023 and December 31, 2022, the Company had a liability for unrecognized tax benefits of $8.3 million. As of and for the nine months ended September 30, 2023, the Company did not accrue interest or penalties related to uncertain tax positions. As of September 30, 2023, the Company does not believe that there will be a significant change to the uncertain tax positions during the next 12 months. The Company’s total unrecognized tax benefits if recognized, would affect its tax expense by $4.8 million as of September 30, 2023. |
GENERAL, ADMINISTRATIVE AND OTH
GENERAL, ADMINISTRATIVE AND OTHER | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
GENERAL, ADMINISTRATIVE AND OTHER | GENERAL, ADMINISTRATIVE AND OTHER The following table presents the components of general, administrative and other expenses as reported in the consolidated statements of operations: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Professional services $ 20,112 $ 7,326 $ 40,480 $ 18,967 Occupancy and equipment 7,315 6,951 20,816 20,941 Information processing and communications 6,673 5,299 18,205 15,500 Recurring placement and related service fees 3,656 4,661 10,938 15,092 Insurance 2,312 2,226 6,947 6,661 Business development 587 799 2,607 2,094 Other expenses 1,433 1,028 5,818 2,776 Total General, Administrative and Other $ 42,088 $ 28,290 $ 105,811 $ 82,031 |
LOSS PER CLASS A SHARE
LOSS PER CLASS A SHARE | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
LOSS PER CLASS A SHARE | LOSS PER CLASS A SHARE Basic loss per Class A Share is computed by dividing the net loss attributable to Class A Shareholders by the weighted-average number of Class A Shares outstanding for the period. For the three months ended September 30, 2023 and 2022, the Company included 207,458 and 165,379 RSUs respectively, that have vested but have not been settled in Class A Shares in the weighted-average Class A Shares outstanding used to calculate basic and diluted loss per Class A Share. For the nine months ended September 30, 2023 and 2022 the Company included 206,360 and 171,739 RSUs respectively, that have vested but have not been settled in Class A Shares in the weighted-average Class A Shares outstanding used to calculate basic and diluted loss per Class A Share. When calculating dilutive loss per Class A Share, the Company applies the treasury stock method to outstanding warrants, unvested RSUs and RSAs, which are only subject to a service condition. At the Sculptor Operating Group Level, the Company applies the if-converted method to vested Group A Units and vested Group E Units. For unvested Group A Units and unvested Group E Units, the Company applies the treasury stock method first to determine the number of incremental units that would be issuable and then applies the if-converted method to those resulting incremental units. The Company did not include unvested RSAs, Group P Units or PSUs subject to service and market conditions in the calculation of dilutive loss per Class A Share, as the applicable market conditions had not yet been met as of the end of each reporting period presented below. The Company also did not include RSUs which will be settled in cash. The effect of dilutive securities on net loss attributable to Class A Shareholders is presented net of tax. The following tables present the computation of basic and diluted loss per Class A Share: Three Months Ended September 30, 2023 Net Loss Attributable to Class A Shareholders Weighted- Average Class A Shares Outstanding Loss Per Class A Share Number of Antidilutive Units and Warrants Excluded from Diluted Calculation (dollars in thousands, except per share amounts) Basic $ (31,113) 25,204,848 $ (1.23) Effect of dilutive securities: Group A Units — — 15,025,994 Group E Units — — 13,020,157 RSUs — — 2,412,996 RSAs — — 1,099,947 Warrants — — 4,338,015 Diluted $ (31,113) 25,204,848 $ (1.23) Three Months Ended September 30, 2022 Net Loss Attributable to Class A Shareholders Weighted- Average Class A Shares Outstanding Loss Per Class A Share Number of Antidilutive Units and Warrants Excluded from Diluted Calculation (dollars in thousands, except per share amounts) Basic $ (22,518) 24,772,098 $ (0.91) Effect of dilutive securities: Group A Units — — 15,025,994 Group E Units — — 13,009,158 RSUs — — 2,565,485 RSAs — — 1,591,507 Warrants — — 4,338,015 Diluted $ (22,518) 24,772,098 $ (0.91) Nine Months Ended September 30, 2023 Net Loss Attributable to Class A Shareholders Weighted- Average Class A Shares Outstanding Loss Per Class A Share Number of Antidilutive Units and Warrants Excluded from Diluted Calculation (dollars in thousands, except per share amounts) Basic $ (18,967) 25,186,162 $ (0.75) Effect of dilutive securities: Group A Units (21,280) 15,025,994 — Group E Units — — 13,019,919 RSUs — — 2,341,331 RSAs — — 1,089,830 Warrants — — 4,338,015 Diluted $ (40,247) 40,212,156 $ (1.00) Nine Months Ended September 30, 2022 Net Loss Attributable to Class A Shareholders Weighted- Average Class A Shares Outstanding Loss Per Class A Share Number of Antidilutive Units and Warrants Excluded from Diluted Calculation (dollars in thousands, except per share amounts) Basic $ (13,688) 25,620,996 $ (0.53) Effect of dilutive securities: Group A Units — — 15,025,994 Group E Units — — 13,009,157 RSUs — — 2,560,287 RSAs — — 1,406,538 Warrants (34,190) 1,197,180 — Diluted $ (47,878) 26,818,176 $ (1.79) |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Due from Related Parties Amounts due from related parties relate primarily to amounts due from the funds for expenses paid on their behalf. These amounts are reimbursed to the Company on an ongoing basis. Certain Amounts Related to Tax Receivable Agreement Liability Amounts due to related parties relate primarily to future payments owed to certain trusts related to Daniel S. Och, under the tax receivable agreement, as discussed further in Note 16. The tax receivable agreement liability was $173.1 million as of September 30, 2023, and $64.6 million of the balance was due to related parties. The Company made payments totaling $17.4 million, and $16.9 million under the tax receivable agreement (inclusive of interest thereon) in the nine months ended September 30, 2023 and 2022, respectively, of which $7.7 million and $7.4 million were paid to related parties, respectively. There were no payments made during the three months ended September 30, 2023 and 2022. Management Fees and Incentive Income Earned from Related Parties and Waived Fees The Company earns substantially all of its management fees and incentive income from the funds, which are considered related parties as the Company manages the operations of and makes investment decisions for these funds. As of September 30, 2023 and December 31, 2022, respectively, approximately $809.9 million and $906.6 million of the Company’s Assets Under Management represented investments by the Company, its executive managing directors, employees and certain other related parties in the Company’s funds. As of September 30, 2023 and December 31, 2022, approximately 41% and 43%, respectively, of these Assets Under Management were not charged management fees or incentive income. The following table presents management fees and incentive income charged on investments held by the Company’s executive managing directors, employees and certain other related parties: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Fees charged on investments held by related parties: Management fees $ 971 $ 1,243 $ 2,832 $ 3,392 Incentive income $ 570 $ 192 $ 1,543 $ 1,005 Investment in SPAC The SPAC, sponsored by the Company, did not consummate an initial business combination within the time period required by its charter. As a result, in the second quarter of 2023, the SPAC redeemed all of its outstanding public shares for cash and the public and private placement of $11.2 million warrants held by the Company became worthless. The SPAC’s dissolution is in progress. The Company, prior to the SPAC liquidation, owned the majority of the Class B ordinary shares outstanding of the SPAC, and consolidated it under the voting interest model, and therefore the private placement warrants and Class B ordinary shares held by the Company were eliminated upon consolidation. Refer to Note 2 in the Company’s Annual Report for additional details on the SPAC. Investment in Structured Alternative Investment Solution In the first quarter of 2022, the Company closed on a $350.0 million structured alternative investment solution, a collateralized financing vehicle consolidated by the Company. The Company invested approximately $127.8 million in the vehicle. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Tax Receivable Agreement The purchase of Group A Units from current and former executive managing directors and the Ziffs with the proceeds from the 2007 Offerings, and subsequent taxable exchanges by them of Group A Units, Group E Units and Group P Units (“Partner Equity Units”) for Class A Shares on a one-for-one basis (or, at the Company’s option, a cash equivalent), resulted, and, in the case of future exchanges, are anticipated to result, in an increase in the tax basis of the assets of the Sculptor Operating Group that would not otherwise have been available. The Company anticipates that any such tax basis adjustment resulting from an exchange will be allocated principally to certain intangible assets of the Sculptor Operating Group, and the Company will derive its tax benefits principally through amortization of these intangibles over a 15-year period. Consequently, these tax basis adjustments will increase, for tax purposes, the Company’s depreciation and amortization expenses and will therefore reduce the amount of tax that Sculptor Corp and any other future corporate taxpaying entities that acquire Group B Units in connection with an exchange, if any, would otherwise be required to pay in the future. Accordingly, pursuant to the tax receivable agreement, such corporate taxpaying entities (including Sculptor Capital Management, Inc. once it became treated as a corporate taxpayer following the Company’s conversion from a partnership to a corporation for U.S. federal income tax purposes, effective April 1, 2019 (the “Corporate Classification Change”), have agreed to pay the executive managing directors and the Ziffs 75% of the amount of cash savings, if any, in federal, state and local income taxes in the U.S. that these entities actually realize related to their units as a result of such increases in tax basis. For tax years prior to 2019, such percentage was 85% of such annual cash savings under the tax receivable agreement. In connection with the Recapitalization, the Company amended the tax receivable agreement to provide that, conditioned on Sculptor Capital Management, Inc. electing to be classified as, or converting into, a corporation for U.S. tax purposes, (i) no amounts are due or payable with respect to the 2017 tax year, (ii) only partial payments equal to 85% of the excess of such cash savings that would otherwise be due over 85% of such cash savings determined assuming that taxable income equals Economic Income are due and payable in respect of the 2018 tax year and (iii) the percentage of cash savings required to be paid with respect to the 2019 tax year and thereafter, as well as with respect to cash savings from subsequent exchanges, is reduced to 75%. In connection with the departure of certain former executive managing directors since the 2007 Offerings, the right to receive payments under the tax receivable agreement by those former executive managing directors was contributed to the Sculptor Operating Group. As a result, the Company expects to pay to the other executive managing directors and the Ziffs approximately 69% of the amount of cash savings, if any, in federal, state and local income taxes in the U.S. that the Company realizes as a result of such increases in tax basis with respect to future tax years. To the extent that the Company does not realize any cash savings, it would not be required to make corresponding payments under the tax receivable agreement. The Company recorded its initial estimate of future payments under the tax receivable agreement as a decrease to additional paid-in capital and an increase in the tax receivable agreement liability in the consolidated financial statements. Subsequent adjustments to the liability for future payments under the tax receivable agreement related to changes in estimated future tax rates or state income tax apportionment are recognized through current period earnings in the consolidated statements of operations. The estimate of the timing and the amount of future payments under the tax receivable agreement involves several assumptions that do not account for the significant uncertainties associated with these potential payments, including an assumption that Sculptor Corp will have sufficient taxable income in the relevant tax years to utilize the tax benefits that would give rise to an obligation to make payments. The actual timing and amount of any actual payments under the tax receivable agreement will vary based upon these and a number of other factors. As of September 30, 2023, the estimated future payment under the tax receivable agreement was $173.1 million, which is recorded in the tax receivable agreement liability balance on the consolidated balance sheets. The table below presents management’s estimate as of September 30, 2023, of the maximum amounts that would be payable under the tax receivable agreement assuming that the Company will have sufficient taxable income each year to fully realize the expected tax savings. In light of the numerous factors affecting the Company’s obligation to make such payments, the timing and amounts of any such actual payments may differ materially from those presented in the table. The impact of any net operating losses is included in the “Thereafter” amount in the table below. Potential Payments Under Tax Receivable Agreement (dollars in thousands) October 1, 2023 to December 31, 2023 $ — 2024 18,041 2025 6,652 2026 26,903 2027 30,443 Thereafter 91,085 Total Payments $ 173,124 Litigation From time to time, the Company is involved in litigation and claims incidental to the conduct of the Company’s business. The Company is also subject to extensive scrutiny by regulatory agencies globally that have, or may in the future have, regulatory authority over the Company and its business activities. The Company accrues a liability for legal proceedings only when those matters present loss contingencies that it believes are both probable and reasonably estimable. As of September 30, 2023, the Company does not have any potential monetary liability related to any current legal proceeding or claim that would individually, or in the aggregate, materially affect its results of operations, financial position or cash flows. Disclosure Complaints As of November 6, 2023, the Company has received (i) four demand letters from purported stockholders of the Company claiming that the preliminary proxy statement filed on August 21, 2023 contained material misstatements and omissions with respect to the discussion of the Mergers and (ii) seven demand letters from purported stockholders of the Company claiming that the Original Proxy Statement or the Second Supplement contained material misstatements and omissions with respect to the discussion of the Mergers. In addition, lawsuits have been filed by purported stockholders of the Company making similar allegations with respect to the preliminary proxy: Yale David v. Sculptor Capital Management, Inc. et al., No. 23-cv-07921 (S.D.N.Y. September 7, 2023); Edward Edgerton v. Sculptor Capital Management, Inc., et al. No. 23-cv-07999 (S.D.N.Y. September 11, 2023) (together, the “Disclosure Complaints”). Beauchemin Action On September 11, 2023, stockholder Gilles Beauchemin filed a purported class action against the Company and each of the Company’s directors in the Court of Chancery of the State of Delaware, captioned Gilles Beauchemin v. Marcy Engel, et al., No. 2023-0921- (Del. Ch. September 11, 2023) (the “Beauchemin Action”). The Beauchemin Action alleges, among other things, that the Board and Special Committee violated their fiduciary duties in connection with the Mergers. The Beauchemin Action seeks, among other things, injunctive relief. Along with his September 11 complaint, the plaintiff in the Beauchemin Action filed a motion for a preliminary injunction, and a motion to expedite seeking expedited relief from the court. On September 25, 2023, plaintiff in the Beauchemin Action served requests for production on the defendants and issued subpoenas to certain advisors of the Company and the Special Committee and Saba Capital Management, LP. On September 26, 2023, the Court held argument on the motion to expedite, during which it denied the motion without prejudice on the grounds that it was premature given the ongoing nature of the Special Committee’s deliberations. The Court ordered the parties to negotiate a plan for expedited discovery in the event it ordered such discovery at a later date. On October 15, the plaintiff in the Beauchemin Action filed an amended complaint. A hearing in the matter is scheduled for November 14, 2023. The Company, Board and Special Committee believe that the allegations set forth in the Beauchemin Action are without merit and intend to oppose the request to enjoin the Special Meeting. Former EMD Group Action On October 17, 2023, stockholders and former Executive Managing Directors Daniel S. Och, Harold A. Kelly, Jr., Richard Lyon, James O’Connor, and Zoltan Varga (the “Former EMD Group’’) filed a purported class action complaint on behalf of themselves and purportedly all other similarly situated stockholders of the Company against Marcy Engel, Bharath Srikrishnan, Charmel Maynard, David Bonanno, James Levin, Wayne Cohen, Sculptor Capital Management, Inc., Sculptor Capital LP, Sculptor Capital Advisors LP, Sculptor Capital Advisors II LP, Calder Sub, Inc., Calder Sub I, LP, Calder Sub II, LP, Calder Sub III, LP, and Rithm Capital Corp. in the Court of Chancery of the State of Delaware, captioned Och, et al. v. Engel, et al., C.A. No. 2023-1043-SG (the “Former EMD Group Action”). The complaint in the Former EMD Group Action alleges, among other things, that the Board and Special Committee violated their fiduciary duties in connection with the Mergers. The Former EMD Group complaint sought, among other things, injunctive relief. On October 20, 2023, the parties in the Beauchemin Action and the Former EMD Group Action jointly filed a proposed stipulation coordinating and consolidating the two proceedings in connection with discovery and a preliminary injunction hearing on November 9, 2023. The Court ordered the stipulation coordinating and consolidating the two proceedings on October 23, 2023. On October 27, 2023, Rithm filed a letter with the Court, providing an update regarding the Founder EMD Group’s agreement to vote their shares in favor of a revised merger agreement between Rithm and the Company and seeking the Court’s approval to enter a stipulation and proposed order withdrawing the claims in the Former EMD Group Action with prejudice as to the Former EMD Group. The stipulation provides that stockholder Gilles Beauchemin will continue to represent the putative class in the consolidated action, including with respect to the preliminary injunction hearing. On October 29, 2023, the plaintiff in the Beauchemin Action filed a consolidated amended complaint, adding the Former EMD Group as defendants, alleging that they breached duties to the class in connection with their settlement, and Rithm as a defendant, alleging it aided and abetted the former EMD Group’s breach of duties. The Company, Board and Special Committee believe that the allegations set forth in the Beauchemin Action are without merit and intend to oppose the request to enjoin the Special Meeting. Section 220 Demands The Company has also received four books and records demands pursuant to 8 Del. C. § 220 (the “Section 220 Demands”), including one submitted by the Former EMD Group, seeking, among other things, meeting minutes concerning the Mergers or any strategic alternatives, all materials considered by the Board and Special Committee in connection with its consideration of the Mergers or any strategic alternatives, and communications from the Board, the Special Committee, and the Company’s management related to the same. The Company received the fourth Section 220 Demand on October 9, 2023. The Company has sent a letter objecting to each of the four Section 220 Demands. The Company has commenced production in response to three of the demands, and will produce additional records in response to the Section 220 Demands as deemed appropriate. The Company has entered into an NDA with three of the Section 220 shareholders, which governs the treatment of all materials produced in response to the Section 220 Demands. On October 27, 2023, the Former EMD Group agreed to withdraw its Section 220 Demand. Class E Unitholder Action On November 1, 2023, former executive managing directors and holders of LP Class E Units Akhil Mago, David Becker, Andrew Frank, and Nathaniel Ewing filed an action against the Company in the Supreme Court of the State of New York, captioned Akhil Mago et al. v. Sculptor Capital Management et al. (N.Y. Sup. Ct. Nov. 1, 2023) (the “Class E Unitholder’s Complaint”), along with an order to show cause why the Court should not issue an order preliminarily enjoining the Company from holding the Special Meeting on November 16, 2023. The Class E Unitholders’ Complaint alleges that the proposed cancellation of the LP Class E Units contemplated by the transactions without the consent of the Class E Unitholders violates the terms of the limited partnership agreements of the Operating Partnerships. It seeks a declaration that the consummation of the transactions without the consent of the Class E Unitholders constitutes a breach of those agreements, and an injunction precluding the Company from consummating the transactions. The Company believes that the allegations set forth in the Class E Unitholders’ Complaint are without merit and intends to oppose the request to enjoin the Special Meeting. On November 14, 2023, the Court will hear oral argument on the Class E Unitholders’ request for a preliminary injunction. Investment Commitments The Company has unfunded capital commitments of $203.0 million to certain funds it manages, of which $72.0 million relates to commitments of the Company’s consolidated structured alternative investment solution. The remaining $131.0 million relates to commitments of the Company to unconsolidated funds. Approximately $89.7 million of the Company’s commitments will be funded by contributions to the Company from certain employees and executive managing directors. The Company expects to fund these commitments over the approximately next 5 years. The Company has guaranteed these commitments in the event any executive managing director fails to fund any portion when called by the fund. The Company has historically not funded any of these commitments and does not expect to in the future, as these commitments are expected to be funded by the Company’s executive managing directors individually. Other Contingencies In the normal course of business, the Company enters into contracts that provide a variety of general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications. Additionally, the Company has agreements with certain of the funds it manages to reimburse certain expenses in excess of an agreed-upon cap. During the nine months ended September 30, 2023 and 2022, these amounts were not material. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Agreement and Plan of Merger On July 23, 2023, the Company entered into an Agreement and Plan of Merger, as amended on October 12, 2023 by Amendment No. 1 to Agreement and Plan of Merger, as further amended on October 26, 2023 by Amendment No. 2 to Agreement and Plan of Merger (including the schedules and exhibits thereto, the “Merger Agreement”), by and among the Company, Rithm Capital Corp., a Delaware corporation (“Rithm”), the Sculptor Operating Partnerships, Calder Sub, Inc., a Delaware corporation and subsidiary of Rithm (“Merger Sub Inc.”), Calder Sub I, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub I”), Calder Sub II, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub II”), and Calder Sub III, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub III” and, collectively with Merger Sub I and Merger Sub II, the “LP Merger Subs” and, collectively with Merger Sub Inc., the “Merger Subs”). Pursuant to the terms of the Merger Agreement, (i) Merger Sub Inc. will merge with and into the Company, with the Company surviving such merger as the surviving corporation (the “Surviving Corporation”) (the “Public Merger”), (ii) Merger Sub I will merge with and into Sculptor Capital LP, with Sculptor Capital LP surviving such merger as the surviving partnership, (iii) Merger Sub II will merge with and into Sculptor Capital Advisors LP, with Sculptor Capital Advisors LP surviving such merger as the surviving partnership, and (iv) Merger Sub III will merge with and into Sculptor Capital Advisors II LP, with Sculptor Capital Advisors II LP surviving such merger as the surviving partnership (collectively, the “Mergers”). The merger of Merger Sub Inc. and the Company will become effective at the time the certificate of merger is filed with the Delaware Secretary of State or at such later effective time and date that is agreed to by Rithm and the Company and specified in the certificate of merger (the “Effective Time”) and the mergers of each of the Sculptor Operating Partnerships will become effective at the time the applicable certificates of merger is filed with the Delaware Secretary of State or at such later effective time and date that is agreed to by Rithm and the Company and specified in the applicable certificates of merger. On the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time, (i) each Class A Share issued and outstanding immediately prior to the Effective Time (but excluding (x) any shares of Class A Shares and Class B Shares (the “ Company Common Stock” that are owned directly by Rithm, Merger Sub Inc. or any of their subsidiaries immediately prior to the Effective Time or held in treasury of the Company, (y) any shares of the Company Common Stock as to which appraisal rights have been properly exercised and (z) any unvested and outstanding award of service-based restricted shares of the Company Common Stock granted pursuant to the Company’s equity incentive plans to be cancelled without payment in respect thereof pursuant to Section 3.06(c) of the Merger Agreement) will be cancelled and converted into the right to receive an amount in cash equal to $12.70, without interest (the “Public Merger Consideration”), (ii) each Class B Share issued and outstanding immediately prior to the Effective Time will be cancelled and no payment will be made in respect thereof and (iii) each issued and outstanding share of common stock, par value $0.01 per share, of Merger Sub Inc. issued and outstanding immediately prior to the Effective Time will be converted into and become one (1) fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation. The Merger Agreement contains certain customary representations and warranties made by each party, which, in the case of the Company and the Sculptor Operating Partnerships, are qualified by the confidential disclosures provided to Rithm in connection with the Merger Agreement, as well as matters included in the Company’s reports filed with the SEC prior to the date of the Merger Agreement. Rithm, the Company and the Sculptor Operating Partnerships have agreed to various customary covenants, including covenants regarding the conduct of the Company’s business prior to the closing of the Mergers, covenants requiring the Company to recommend that its stockholders approve the Merger Agreement and covenants prohibiting the Company from soliciting alternative acquisition proposals or providing information to or engaging in discussions with third parties, in each case, except in limited circumstances as provided in the Merger Agreement. The Merger Agreement also includes customary termination rights for both the Company and Rithm, subject, in certain circumstances, to the payment by the Company of a termination fee of approximately $22.4 million. Warrant Exercise On October 12, 2023, Rithm acquired warrants to purchase an aggregate of 4,338,015 shares of the Company’s Class A Common Stock from Delaware Life Insurance Company. On October 13, 2023, the Company issued 4,338,015 shares of Class A Common Stock to Rithm following their exercise in full of such warrants for an aggregate purchase price of approximately $34.5 million. As a condition to Rithm’s willingness to increase the merger consideration, Rithm requested that the Company waive certain elements of the “standstill” provision in Rithm’s non-disclosure agreement in order to permit the negotiations and purchase by Rithm of the warrants. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) Attributable to Parent | $ (31,113) | $ (22,692) | $ (25,793) | $ (17,627) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation These unaudited, interim, consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”), and exclude some of the disclosures required in audited financial statements and therefore should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report. Management believes all adjustments considered necessary for a fair presentation of the Company’s unaudited, interim, consolidated financial statements have been included and are of a normal and recurring nature and that estimates made in preparing unaudited, interim, consolidated financial statements are reasonable and prudent. The consolidated financial statements include the accounts of the Company, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which the Company is considered the primary beneficiary, and certain other entities which are not considered variable interest entities but the Company is determined to have control. All significant intercompany transactions and balances have been eliminated in consolidation. The results of operations presented for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. For example, incentive income for the majority of the Company’s multi-strategy AUM is recognized in the fourth quarter each year, based on full year investment performance. |
Recently Adopted and Future Adoption of Accounting Pronouncements | Recently Adopted Accounting Pronouncements No changes to GAAP that went into effect in the nine months ended September 30, 2023 had a material effect on the Company’s consolidated financial statements. Future Adoption of Accounting Pronouncements No changes to GAAP that are not yet effective are expected to have a material effect on the Company’s consolidated financial statements. |
Investments | The Company invests in U.S. government obligations to manage excess liquidity. CLOs, at fair value, consist of investments in notes of unconsolidated CLOs. These investments are carried at fair value under the irrevocable fair value option election at initial recognition. Changes in fair value are recorded within net gains (losses) on investments in the consolidated statements of operations. Interest income on these investments is accrued using the effective interest method and separately presented from the overall change in fair value and is recognized in other revenues in the consolidated statement of operations. The Company’s equity method investments include investments in funds, which are not consolidated, but in which the Company exerts significant influence, but not control. The Company has not elected the fair value option and accounts for such investments under the equity method. Under the equity method of accounting, the Company recognizes its share of the underlying earnings (losses) from equity method investments within net gains (losses) on investments in the consolidated statements of operations. The carrying amounts of equity method investments are recorded in investments in the consolidated balance sheets. Refer to Note 15 for details of the related party nature of such investments. In the second quarter of 2023, our consolidated SPAC was liquidated in accordance with its charter and the investments held in a SPAC’s trust account were liquidated. Investments of consolidated entities included both investments of the Company’s consolidated SPAC, prior to its liquidation, as well as investments held by the Company’s consolidated structured alternative investment solution. The investments of the consolidated structured alternative investment solution that the Company manages are generally measured at fair value using the NAV per share practical expedient. The Company may determine based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses in accordance with GAAP. The Company does not categorize investments where fair value is measured using the NAV practical expedient within the fair value hierarchy. |
Fair Value Measurement | Fair Value Disclosures Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date (i.e., an exit price). The Company and the funds it manages hold a variety of investments, certain of which are not publicly traded or that are otherwise illiquid. Significant judgement and estimation go into the assumptions that drive the fair value of these investments. The fair value of these investments may be estimated using a combination of observed transaction prices, prices from third parties (including independent pricing services and relevant broker quotes), models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable. Due to the inherent uncertainty of valuations of investments that are determined to be illiquid or do not have readily ascertainable fair values, the estimates of fair value may differ from the values ultimately realized, and those differences can be material. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type and the specific characteristics of the financial instrument, including existence and transparency of transactions between market participants. Financial instruments with readily available actively quoted prices or for which fair value can be measured from actively-quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value. Financial instruments measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values: • Level I – Quoted prices that are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments that would generally be included in this category are listed equities, U.S. government obligations and listed derivatives. The Company does not adjust the quoted price for these investments. • Level II – Quotations received from dealers making a market for financial instruments (“broker quotes”), valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly observable as of the reporting date. The types of financial instruments that would generally be included in this category are certain corporate bonds and loans, certain credit default swap contracts, certain bank debt securities, certain commercial real estate debt, less liquid equity securities, forward contracts and certain over the-counter (“OTC”) derivatives where the fair value is based on observable inputs. These financial instruments exhibit higher levels of liquid market observability as compared to Level III financial instruments. • Level III – Pricing inputs that are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value of financial instruments in this category may require significant management judgment or estimation. The fair value of these financial instruments may be estimated using a combination of observed transaction prices, independent pricing services, relevant broker quotes, models or other valuation methodologies based on pricing inputs that are neither directly or indirectly market observable (e.g., cash flows, implied yields, EBITDA multiples). The types of financial instruments that would generally be included in this category include CLOs, certain warrant liabilities, certain credit default swap contracts, certain bank debt securities, certain OTC derivatives, asset-backed securities, collateralized debt obligations and investments in affiliated credit funds. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument when the fair value is based on unobservable inputs. |
ORGANIZATION (Tables)
ORGANIZATION (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Shares and Operating Group Units | The following table presents the number of shares and units of the Company and the Sculptor Operating Partnerships, respectively, that were outstanding as of September 30, 2023: As of September 30, 2023 Sculptor Capital Management, Inc. Class A Shares 25,011,092 Class B Shares 33,017,247 Restricted Class A Shares (“RSAs”) 4,650,661 Restricted Share Units (“RSUs”) 2,593,305 Performance-based RSUs (“PSUs”) 912,500 Warrants to purchase Class A Shares (Note 7) 4,338,015 Sculptor Operating Partnerships Group A Units 15,025,994 Group A-1 Units 9,244,477 Group B Units 25,011,092 Group E Units 13,020,157 Group P Units 4,734,286 |
NONCONTROLLING INTERESTS (Table
NONCONTROLLING INTERESTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Noncontrolling Interest [Abstract] | |
Calculation of Noncontrolling Interests Attributable to Group A Units | The table below sets forth the calculation of noncontrolling interests related to the Group A Units for each Sculptor Operating Partnership (rounding differences may occur). The blended participation percentages presented below take into account ownership changes throughout the periods presented. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Sculptor Capital LP Net (loss) income $ (20,207) $ (9,389) $ 22,832 $ 6,826 Blended participation percentage 0 % 0 % 0 % 0 % Net Income Attributable to Group A Units $ — $ — $ — $ — Sculptor Capital Advisors LP Net loss $ (11,556) $ (14,398) $ (32,107) $ (15,595) Blended participation percentage 37 % 39 % 38 % 38 % Net Loss Attributable to Group A Units $ (4,330) $ (5,548) $ (12,050) $ (5,999) Sculptor Capital Advisors II LP Net loss $ (11,584) $ (9,800) $ (39,238) $ (29,273) Blended participation percentage 37 % 40 % 38 % 38 % Net Loss Attributable to Group A Units $ (4,337) $ (3,930) $ (14,726) $ (11,261) Total Sculptor Operating Group Net loss $ (43,347) $ (33,587) $ (48,513) $ (38,042) Blended participation percentage 20 % 28 % 55 % 45 % Net Loss Attributable to Group A Units $ (8,667) $ (9,478) $ (26,776) $ (17,260) |
Components of Net Loss Attributable to Noncontrolling Interests | The following table presents the components of the net income loss attributable to noncontrolling interests: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Group A Units $ (8,667) $ (9,478) $ (26,776) $ (17,260) Other 1,318 68 3,400 1,423 $ (7,349) $ (9,410) $ (23,376) $ (15,837) |
Components of Shareholders' Equity Attributable to Noncontrolling Interests | The following table presents the components of the shareholders’ equity attributable to noncontrolling interests: September 30, 2023 December 31, 2022 (dollars in thousands) Group A Units $ 390,424 $ 412,941 Other 36,106 26,538 $ 426,530 $ 439,479 |
Redeemable Noncontrolling Interest | The following table presents the activity in redeemable noncontrolling interests, excluding the reversal of deferred underwriting fees as a result of the SPAC liquidation, for the nine months ended September 30, 2023: Nine Months Ended September 30, 2023 SPAC (dollars in thousands) Beginning balance $ 237,864 Change in redemption value of Class A Shares of consolidated SPAC 958 Capital distributions (242,172) Comprehensive income 3,350 Ending Balance $ — |
INVESTMENTS AND FAIR VALUE DI_2
INVESTMENTS AND FAIR VALUE DISCLOSURES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Investments Summary | The following table presents the components of the Company’s investments as reported in the consolidated balance sheets: September 30, 2023 December 31, 2022 (dollars in thousands) U.S. government obligations, at fair value $ 79,408 $ 24,782 CLOs, at fair value 217,543 207,147 Equity method investments 87,033 67,130 Total Investments $ 383,984 $ 299,059 Investments of Consolidated Entities $ 322,516 $ 544,554 |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share | The following table summarizes the fair value of the investments of the structured alternative investment solution that are measured using the NAV practical expedient by strategy type and ability to redeem such investments as of September 30, 2023: Fund Type (1) Fair Value (as of September 30, 2023) Redemption Frequency (2) Redemption Notice Period (2) (dollars in thousands) Multi-strategy 58,583 Quarterly - Annually 30 days - 90 days Credit 250,321 Monthly - Annually (3) 30 days - 90 days Real estate 13,612 None (4) N/A Total $ 322,516 _______________ (1) The structured alternative investment solution invests in both open-ended and close-ended funds. The investments in each fund may represent investments in a particular tranche of such fund subject to different withdrawal rights. (2) $163.3 million of investments are subject to an initial lock-up period of three years during which time no withdrawals or redemptions are allowed. Once the lock-up period ends, the investments are able to be redeemed with the frequency noted above. (3) 30% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately six years from inception. (4) 100% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately seven |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy for the periods presented: As of September 30, 2023 Level I Level II Level III NAV Total (dollars in thousands) Assets, at Fair Value Included within cash and cash equivalents: U.S. government obligations $ 9,913 $ — $ — $ — $ 9,913 Included within investments: U.S. government obligations $ 79,408 $ — $ — $ — $ 79,408 CLOs (1) $ — $ — $ 217,543 $ — $ 217,543 Included within investments of consolidated entities: Investments in funds $ — $ — $ — $ 322,516 $ 322,516 Liabilities, at Fair Value Warrants $ — $ — $ 34,140 $ — $ 34,140 Liabilities of consolidated entities: Notes payable $ — $ — $ 220,702 $ — $ 220,702 _______________ (1) As of September 30, 2023, investments in CLOs had contractual principal amounts of $213.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments. As of December 31, 2022 Level I Level II Level III NAV Total (dollars in thousands) Assets, at Fair Value Included within cash and cash equivalents: U.S. government obligations $ 19,937 $ — $ — $ — $ 19,937 Included within investments: U.S. government obligations $ 24,782 $ — $ — $ — $ 24,782 CLOs (1) $ — $ — $ 207,147 $ — $ 207,147 Included within investments of consolidated entities: U.S. government obligations $ 237,964 $ — $ — $ — $ 237,964 Investments in funds — — — 306,590 306,590 Investments of Consolidated Entities $ 237,964 $ — $ — $ 306,590 $ 544,554 Liabilities, at Fair Value Warrants $ — $ — $ 24,163 $ — $ 24,163 Liabilities of consolidated entities: Warrants $ 596 $ — $ — $ — $ 596 Notes payable $ — $ — $ 196,106 $ — $ 196,106 _______________ (1) As of December 31, 2022, investments in CLOs had contractual principal amounts of $212.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments. |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the three months ended September 30, 2023 and 2022: June 30, 2023 Transfers In Transfers Out Purchases / Issuances Investment Sales / Settlements Gains / (Losses) Included in Earnings Gains / (Losses) Included in Other Comprehensive Income September 30, 2023 (dollars in thousands) Assets, at Fair Value Included within investments CLOs $ 208,138 $ — $ — $ 15,687 $ (3,887) $ 2,938 $ (5,333) $ 217,543 Liabilities, at Fair Value Warrants $ 24,423 $ — $ — $ — $ — $ (9,717) $ — $ 34,140 Liabilities of consolidated entities: Notes payable $ 205,290 $ — $ — $ — $ — $ (15,412) $ — $ 220,702 June 30, 2022 Transfers In Transfers Out Purchases / Issuances Investment Sales / Settlements Gains / (Losses) Included in Earnings Gains / (Losses) Included in Other Comprehensive Income September 30, 2022 (dollars in thousands) Assets, at Fair Value Included within investments: CLOs $ 203,631 $ — $ — $ 248 $ (40) $ (4,143) $ (10,482) $ 189,214 Investments of consolidated entities: Bank Debt $ 40,226 $ — $ (16,296) $ — $ (23,930) $ — $ — $ — Liabilities, at Fair Value Warrants $ 22,211 $ — $ — $ (2,386) $ — $ 24,597 Liabilities of consolidated entities: Notes payable $ 201,985 $ — $ — $ — $ — $ (5,993) $ — $ 207,978 The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the nine months ended September 30, 2023 and 2022: December 31, 2022 Transfers In Transfers Out Purchases / Issuances Investment Sales / Settlements Gains / (Losses) Included in Earnings Gains / (Losses) Included in Other Comprehensive Income September 30, 2023 (dollars in thousands) Assets, at Fair Value Included within investments: CLOs $ 207,147 $ — $ — $ 16,231 $ (12,342) $ 8,525 $ (2,018) $ 217,543 Liabilities, at Fair Value Warrants $ 24,163 $ — $ — $ — $ — $ (9,977) $ — $ 34,140 Liabilities of consolidated entities: Notes payable $ 196,106 $ — $ — $ — $ — $ (24,596) $ — $ 220,702 December 31, 2021 Transfers In Transfers Out Purchases / Issuances Investment Sales / Settlements Gains / (Losses) Included in Earnings Gains / (Losses) Included in Other Comprehensive Income September 30, 2022 (dollars in thousands) Assets, at Fair Value Included within investments: CLOs $ 219,510 $ — $ — $ 30,087 $ (12,413) $ (22,931) $ (25,039) $ 189,214 Investments of consolidated entities: Bank Debt $ — $ 3,603 (1) $ (47,258) (1) $ 98,217 $ (51,335) $ (3,227) $ — $ — Liabilities, at Fair Value Warrants $ 65,287 $ — $ — $ — $ — $ 40,690 $ — $ 24,597 Liabilities of consolidated entities: Warrants $ 7,590 $ — $ (3,450) (2) $ — $ — $ 4,140 $ — $ — Notes payable $ — $ — $ — $ 215,733 $ — $ 7,755 $ — $ 207,978 _______________ (1) Transfers into and out of Level III in bank debt include $2.3 million related to the consolidation (Transfers In) and $14.0 million related to the subsequent deconsolidation (Transfers Out) of a fund that the Company manages. (2) Transfers out of Level III into Level I related to warrants of consolidated entities that became publicly traded with available quoted prices during the first quarter of 2022. |
Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings | The table below summarizes the net change in unrealized gains and (losses) on the Company’s Level III financial instruments outstanding as of the reporting date: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Assets, at Fair Value Included within investments: CLOs $ (2,395) $ (14,625) $ 6,507 $ (47,970) Liabilities, at Fair Value Warrants $ (9,717) $ (2,386) $ (9,977) $ 40,690 Liabilities of consolidated entities: Notes payable $ (15,412) $ (5,993) $ (24,596) $ 7,755 |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Determination Methodology and Factors [Abstract] | |
Variable Interest Entities | The table below presents the assets and liabilities of VIEs consolidated by the Company. September 30, 2023 December 31, 2022 (dollars in thousands) Assets Assets of consolidated entities: Cash and cash equivalents $ 391 $ 3 Restricted cash and cash equivalents 9,800 9,805 Investments, at fair value 322,516 306,590 Other assets 11,266 2,016 Total Assets $ 343,973 $ 318,414 Liabilities Liabilities of consolidated entities: Notes payable $ 220,702 $ 196,106 Other liabilities 5,070 1,601 Total Liabilities $ 225,772 $ 197,707 The table below presents the net assets of unconsolidated VIEs in which the Company has variable interests along with the maximum exposure to loss as a result of the Company’s involvement with non-consolidated VIEs: September 30, 2023 December 31, 2022 (dollars in thousands) Net assets of unconsolidated VIEs in which the Company has a variable interest $ 12,598,243 $ 12,738,164 Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs: Unearned income and fees 40,359 53,869 Income and fees receivable 13,452 41,890 Investments 266,122 245,583 Investments of consolidated entities 263,932 237,699 Unfunded commitments (1) 202,916 182,797 Maximum Exposure to Loss $ 786,781 $ 761,838 _______________ (1) Includes commitments from certain employees and executive managing directors in the amounts of $89.7 million and $65.4 million as of September 30, 2023 and December 31, 2022, respectively. |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Lease Cost | The tables below represent components of lease expense and associated cash flows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Lease Cost Operating lease cost $ 4,825 $ 4,628 $ 14,030 $ 13,992 Short-term lease cost 22 21 66 75 Finance lease cost - amortization of leased assets 51 113 222 296 Finance lease cost - imputed interest on lease liabilities 15 19 45 23 Less: Sublease income (902) (779) (2,539) (2,413) Net Lease Cost $ 4,011 $ 4,002 $ 11,824 $ 11,973 Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Supplemental Lease Cash Flow Information Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases $ 5,311 $ 5,140 $ 15,764 $ 15,631 Operating cash flows for finance leases $ — $ 6 $ 5 $ 6 Finance cash flows for finance leases $ — $ 155 $ 223 $ 318 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 1,818 $ — $ 1,818 $ 1,079 Finance leases $ — $ 1,016 $ — $ 1,016 September 30, 2023 December 31, 2022 Lease Term and Discount Rate Weighted average remaining lease term Operating leases 6.1 years 6.7 years Finance leases 3.8 years 4.5 years Weighted average discount rate Operating leases 8.0 % 7.8 % Finance leases 7.9 % 7.9 % |
Maturity of Lease Liabilities | Operating Finance (dollars in thousands) Maturity of Lease Liabilities - Contractual Payments to be Paid October 1, 2023 to December 31, 2023 $ 4,786 $ — 2024 17,520 228 2025 14,989 228 2026 15,353 228 2027 17,675 228 Thereafter 35,015 — Total Lease Payments 105,338 912 Imputed interest (22,170) (116) Total Lease Liabilities - Contractual Payments to be Paid $ 83,168 $ 796 |
Maturity of Lease Liabilities | Operating Finance (dollars in thousands) Maturity of Lease Liabilities - Contractual Payments to be Paid October 1, 2023 to December 31, 2023 $ 4,786 $ — 2024 17,520 228 2025 14,989 228 2026 15,353 228 2027 17,675 228 Thereafter 35,015 — Total Lease Payments 105,338 912 Imputed interest (22,170) (116) Total Lease Liabilities - Contractual Payments to be Paid $ 83,168 $ 796 |
Sublease Rent Payments Receivable | Operating Leases (dollars in thousands) Sublease Rent - Contractual Payments to be Received October 1, 2023 to December 31, 2023 $ 904 2024 1,920 2025 1,920 2026 1,920 2027 1,960 Thereafter 4,160 Total Sublease Rent - Contractual Payments to be Received $ 12,784 |
DEBT OBLIGATIONS AND WARRANTS (
DEBT OBLIGATIONS AND WARRANTS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Maturities of Long-term Debt | 2020 Term Loan CLO Investments Loans Total (dollars in thousands) Maturity of Debt Obligations October 1, 2023 to December 31, 2023 $ — $ — $ — 2024 — — — 2025 — 1,120 1,120 2026 95,000 — 95,000 2027 — — — 2028 — — — Thereafter — 29,800 29,800 Total Payments 95,000 30,920 125,920 Unamortized discounts & deferred financing costs (10,256) (178) (10,434) Total Debt Obligations $ 84,744 $ 30,742 $ 115,486 |
Notes Payable, Consolidating Funds | The table below summarizes material terms of the notes payable: Class A Notes Class B Notes Class C Notes Subordinated Notes (1) (dollars in thousands) Type Senior Secured Senior Secured Mezzanine Secured Unsecured Initial principal amount $140,000 $70,000 $35,000 $105,000 Initial interest rate 4.25% 6.00% 6.75% N/A Interest rate after step up and effective date (2) 6.25%; May 2028 8.00%; May 2029 9.50%; May 2025 N/A _______________ (1) Subordinated notes do not have stated interest rates or principal entitlement but instead receive net proceeds from excess cash flows remaining after periodic payments have been made to more senior notes and after fees and expenses in accordance with the priority of payments. (2) Interest rate after a one time step up in basis at the indicated effective date. |
CLO Investments Loans Table | Carrying amounts presented in the table below are net of discounts, if any, and unamortized deferred financing costs. The interest rates on the CLO Investments Loans are variable based on SOFR or EURIBOR (subject to a floor of zero percent). The final maturity date for each CLO Investments Loan is the earlier of the contractual maturity date presented in the table below or the date at which the Company no longer holds a risk retention investment in the respective CLO. The timing of principal payments on CLO Investments Loans is contingent on principal payments made to the Company on the investments in CLOs and the CLO Investments Loans may amortize well in advance of their contractual maturity dates. Initial Borrowing Date Contractual Rate Contractual Maturity Date Carrying Value September 30, 2023 December 31, 2022 (dollars in thousands) June 7, 2017 SOFR plus 1.48% November 16, 2029 $ 12,478 $ 16,835 August 2, 2017 SOFR plus 1.41% January 21, 2030 17,144 21,594 January 19, 2022 EURIBOR plus 1.50% December 15, 2023 — 2,285 June 1, 2023 EURIBOR plus 1.85% April 12, 2025 1,120 — $ 30,742 $ 40,714 |
SECURITIES SOLD UNDER AGREEME_2
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Transfers and Servicing of Financial Assets [Abstract] | |
Schedule of Repurchase Agreements Offsetting Disclosures | The table below presents securities sold under agreements to repurchase that are offset, if any, as well as securities transferred to the counterparty related to such transactions (capped so that the net amount presented will not be reduced below zero). No other material financial instruments were subject to master netting agreements or other similar agreements: Securities Sold under Agreements to Repurchase Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Consolidated Balance Sheet Net Amounts of Liabilities in the Consolidated Balance Sheet Securities Transferred Net Amount (dollars in thousands) As of September 30, 2023 $ 177,503 $ — $ 177,503 $ 173,156 $ 4,347 As of December 31, 2022 $ 166,632 $ — $ 166,632 $ 157,107 $ 9,525 |
Schedule of Remaining Contractual Maturity of Repurchase Agreements | The securities sold under agreements to repurchase have a set scheduled maturity date that corresponds to the maturities of the securities sold under such transaction. The table below presents the remaining final contractual maturity of the securities sold to the counterparty under agreement to repurchase by class of collateral pledged: Investments in CLOs Securities Sold under Agreements to Repurchase Overnight and Continuous Up to 30 Days 30-90 Days Greater Than 90 Days Total (dollars in thousands) As of September 30, 2023 $ — $ — $ — $ 177,503 $ 177,503 As of December 31, 2022 $ — $ — $ — $ 166,632 $ 166,632 |
OTHER ASSETS, NET (Tables)
OTHER ASSETS, NET (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Components of Other Assets | The following table presents the components of other assets, net as reported in the consolidated balance sheets: September 30, 2023 December 31, 2022 (dollars in thousands) Fixed Assets: Leasehold improvements $ 47,826 $ 47,736 Computer hardware and software 44,402 44,603 Furniture, fixtures and equipment 8,013 8,013 Accumulated depreciation and amortization (82,475) (79,390) Fixed assets, net 17,766 20,962 Goodwill 22,691 22,691 Cloud computing costs 13,685 9,940 Prepaid expenses 11,440 16,698 Redemption receivable (1) — 28,721 Other 9,842 7,430 Total Other Assets, Net $ 75,424 $ 106,442 _______________ (1) Represents amounts receivable on a redeemed investment in a fund. |
OTHER LIABILITIES (Tables)
OTHER LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Components of Other Liabilities | The following table presents the components of other liabilities as reported in the consolidated balance sheets: September 30, 2023 December 31, 2022 (dollars in thousands) Accrued expenses $ 21,468 $ 20,925 Uncertain tax positions 8,250 8,250 Due to funds (1) 3,391 3,854 Other 10,069 10,020 Total Other Liabilities $ 43,178 $ 43,049 _______________ (1) To the extent that a fee-paying fund is an investor in another fee-paying fund, the Company rebates a corresponding portion of the management fees charged in the investee fund. Due to funds amounts also reflect certain incentive income and management fee waivers. |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Management Fees and Incentive Income Recognized | The following table presents management fees and incentive income recognized as revenues for the three months ended September 30, 2023 and 2022: Three Months Ended September 30, 2023 2022 Management Fees Incentive Income Management Fees Incentive Income (dollars in thousands) Multi-strategy funds $ 28,566 $ 781 $ 33,579 $ 209 Credit Opportunistic credit funds 11,524 6,290 12,001 698 Institutional Credit Strategies 11,354 — 11,550 — Real estate funds 8,750 10,730 9,106 6,659 Total $ 60,194 $ 17,801 $ 66,236 $ 7,566 The following table presents management fees and incentive income recognized as revenues for the nine months ended September 30, 2023 and 2022: Nine Months Ended September 30, 2023 2022 Management Fees Incentive Income Management Fees Incentive Income (dollars in thousands) Multi-strategy funds $ 88,716 $ 1,504 $ 112,171 $ 329 Credit Opportunistic credit funds 36,205 20,412 37,167 20,603 Institutional Credit Strategies 35,092 — 34,941 — Real estate funds 26,331 40,467 27,164 52,856 Total $ 186,344 $ 62,383 $ 211,443 $ 73,788 |
Income and Fees Receivable | The following table presents the composition of the Company’s income and fees receivable as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 (dollars in thousands) Management fees $ 23,652 $ 25,402 Incentive income 2,917 30,958 Income and Fees Receivable $ 26,569 $ 56,360 |
Unearned Income and Fees | The following table presents the Company’s unearned income and fees as of September 30, 2023 and December 31, 2022: September 30, 2023 December 31, 2022 (dollars in thousands) Management fees $ 151 $ 2 Incentive income 40,359 53,867 Unearned Income and Fees $ 40,510 $ 53,869 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate Reconciliation | The following is a reconciliation of the statutory U.S. federal income tax rate to the Company’s effective income tax rate: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Statutory U.S. federal income tax rate 21.00 % 21.00 % 21.00 % 21.00 % Loss (income) passed through to noncontrolling interests -3.98 % -5.78 % -12.16 % -7.67 % Foreign income taxes -7.39 % -4.58 % -18.11 % -4.76 % RSU/RSA excess income tax benefit or expense -0.08 % -0.49 % -4.74 % 3.76 % State and local income taxes 1.02 % 0.53 % -2.73 % -7.34 % Nondeductible amortization of Partner Equity Units -1.80 % -2.28 % -5.88 % -9.59 % Foreign tax credits and deductions 1.55 % 0.96 % 3.80 % 1.00 % Change in fair value of warrants -4.45 % -3.83 % -5.12 % 25.74 % Disallowed executive compensation -5.02 % -6.08 % -13.72 % -19.29 % Other, net -0.11 % -0.20 % -2.00 % -0.36 % SPAC Loss -0.01 % — % 7.02 % — % Effective Income Tax Rate 0.73 % -0.75 % -32.64 % 2.49 % |
GENERAL, ADMINISTRATIVE AND O_2
GENERAL, ADMINISTRATIVE AND OTHER (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
Components of General, Administrative and Other Expenses | The following table presents the components of general, administrative and other expenses as reported in the consolidated statements of operations: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Professional services $ 20,112 $ 7,326 $ 40,480 $ 18,967 Occupancy and equipment 7,315 6,951 20,816 20,941 Information processing and communications 6,673 5,299 18,205 15,500 Recurring placement and related service fees 3,656 4,661 10,938 15,092 Insurance 2,312 2,226 6,947 6,661 Business development 587 799 2,607 2,094 Other expenses 1,433 1,028 5,818 2,776 Total General, Administrative and Other $ 42,088 $ 28,290 $ 105,811 $ 82,031 |
LOSS PER CLASS A SHARE (Tables)
LOSS PER CLASS A SHARE (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings (Loss) Per Class A Share | The following tables present the computation of basic and diluted loss per Class A Share: Three Months Ended September 30, 2023 Net Loss Attributable to Class A Shareholders Weighted- Average Class A Shares Outstanding Loss Per Class A Share Number of Antidilutive Units and Warrants Excluded from Diluted Calculation (dollars in thousands, except per share amounts) Basic $ (31,113) 25,204,848 $ (1.23) Effect of dilutive securities: Group A Units — — 15,025,994 Group E Units — — 13,020,157 RSUs — — 2,412,996 RSAs — — 1,099,947 Warrants — — 4,338,015 Diluted $ (31,113) 25,204,848 $ (1.23) Three Months Ended September 30, 2022 Net Loss Attributable to Class A Shareholders Weighted- Average Class A Shares Outstanding Loss Per Class A Share Number of Antidilutive Units and Warrants Excluded from Diluted Calculation (dollars in thousands, except per share amounts) Basic $ (22,518) 24,772,098 $ (0.91) Effect of dilutive securities: Group A Units — — 15,025,994 Group E Units — — 13,009,158 RSUs — — 2,565,485 RSAs — — 1,591,507 Warrants — — 4,338,015 Diluted $ (22,518) 24,772,098 $ (0.91) Nine Months Ended September 30, 2023 Net Loss Attributable to Class A Shareholders Weighted- Average Class A Shares Outstanding Loss Per Class A Share Number of Antidilutive Units and Warrants Excluded from Diluted Calculation (dollars in thousands, except per share amounts) Basic $ (18,967) 25,186,162 $ (0.75) Effect of dilutive securities: Group A Units (21,280) 15,025,994 — Group E Units — — 13,019,919 RSUs — — 2,341,331 RSAs — — 1,089,830 Warrants — — 4,338,015 Diluted $ (40,247) 40,212,156 $ (1.00) Nine Months Ended September 30, 2022 Net Loss Attributable to Class A Shareholders Weighted- Average Class A Shares Outstanding Loss Per Class A Share Number of Antidilutive Units and Warrants Excluded from Diluted Calculation (dollars in thousands, except per share amounts) Basic $ (13,688) 25,620,996 $ (0.53) Effect of dilutive securities: Group A Units — — 15,025,994 Group E Units — — 13,009,157 RSUs — — 2,560,287 RSAs — — 1,406,538 Warrants (34,190) 1,197,180 — Diluted $ (47,878) 26,818,176 $ (1.79) |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Management Fees and Incentive Income Earned from Related Parties | The following table presents management fees and incentive income charged on investments held by the Company’s executive managing directors, employees and certain other related parties: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 (dollars in thousands) Fees charged on investments held by related parties: Management fees $ 971 $ 1,243 $ 2,832 $ 3,392 Incentive income $ 570 $ 192 $ 1,543 $ 1,005 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Estimated Future Maximum Payments Under Tax Receivable Agreement | The table below presents management’s estimate as of September 30, 2023, of the maximum amounts that would be payable under the tax receivable agreement assuming that the Company will have sufficient taxable income each year to fully realize the expected tax savings. In light of the numerous factors affecting the Company’s obligation to make such payments, the timing and amounts of any such actual payments may differ materially from those presented in the table. The impact of any net operating losses is included in the “Thereafter” amount in the table below. Potential Payments Under Tax Receivable Agreement (dollars in thousands) October 1, 2023 to December 31, 2023 $ — 2024 18,041 2025 6,652 2026 26,903 2027 30,443 Thereafter 91,085 Total Payments $ 173,124 |
ORGANIZATION - Additional Infor
ORGANIZATION - Additional Information (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Feb. 07, 2019 shares | Sep. 30, 2023 USD ($) shares | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) vote segment installment $ / shares shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 shares | Feb. 28, 2022 USD ($) | |
Class of Stock | |||||||
Ratio of group A units, recapitalized as group A-1 units | 0.35 | ||||||
Ratio of group A units, recapitalized as group A units | 0.65 | ||||||
Number of group A units forfeited in connection with recapitalization (in shares) | 749,813 | ||||||
Number of reportable segments | segment | 1 | ||||||
Number of operating segments | segment | 1 | ||||||
Distribution holiday period | 2 years | ||||||
Amount of installments | installment | 3 | ||||||
Treasury stock (in shares) | 3,022,380 | 3,022,380 | 3,022,380 | ||||
Stock repurchase program, authorized amount | $ | $ 100,000 | ||||||
Stock repurchased during period | $ | $ 8,749 | $ 28,258 | |||||
Stock repurchase program, remaining authorized repurchase amount | $ | $ 67,500 | $ 67,500 | |||||
Class A Shares | |||||||
Class of Stock | |||||||
Number of votes per share (in shares) | vote | 1 | ||||||
Treasury stock, shares acquired (in shares) | 0 | 3,022,380 | |||||
Stock repurchased during period | $ | $ 32,500 | ||||||
Average price per treasury share purchased (in dollars per share) | $ / shares | $ 10.75 | ||||||
Treasury Stock | |||||||
Class of Stock | |||||||
Treasury stock (in shares) | 3,022,380 | 3,022,380 | |||||
Class B Shares | |||||||
Class of Stock | |||||||
Number of votes per share (in shares) | vote | 1 | ||||||
Class E | |||||||
Class of Stock | |||||||
Number of exchangeable shares (in shares) | 1 | ||||||
Class P | |||||||
Class of Stock | |||||||
Number of exchangeable shares (in shares) | 1 |
ORGANIZATION - Schedule of Shar
ORGANIZATION - Schedule of Shares and Operating Group Units (Details) - shares | Sep. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2021 |
Class of Stock | ||||||
Warrants outstanding (in shares) | 4,338,015 | |||||
Class A Shares | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 25,011,092 | 24,971,561 | 23,707,228 | 24,034,767 | 24,885,028 | 25,668,987 |
Class B Shares | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 33,017,247 | 33,017,247 | 33,569,188 | 33,569,188 | 33,633,474 | 33,613,023 |
Restricted Class A Shares (“RSAs”) | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 4,650,661 | |||||
Restricted Share Units (“RSUs”) | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 2,593,305 | |||||
Performance-based RSUs (“PSUs”) | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 912,500 | |||||
Group A Units | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 15,025,994 | |||||
Group A-1 Units | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 9,244,477 | |||||
Group B Units | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 25,011,092 | |||||
Group E Units | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 13,020,157 | |||||
Group P Units | ||||||
Class of Stock | ||||||
Stock and operating group units outstanding (in shares) | 4,734,286 |
NONCONTROLLING INTERESTS - Addi
NONCONTROLLING INTERESTS - Additional Information (Details) | Sep. 30, 2023 | Sep. 30, 2022 |
Total Sculptor Operating Group | Sculptor Capital Management, Inc | ||
Noncontrolling Interest [Line Items] | ||
Ownership interest, percent | 47.10% | 46.20% |
NONCONTROLLING INTERESTS - Calc
NONCONTROLLING INTERESTS - Calculation of Noncontrolling Interests Attributable to Group A Units (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Noncontrolling Interest [Line Items] | ||||
Net (loss) income | $ (31,113) | $ (22,692) | $ (25,793) | $ (17,627) |
Less: Net loss attributable to noncontrolling interests | (7,349) | (9,410) | (23,376) | (15,837) |
Sculptor Capital LP | ||||
Noncontrolling Interest [Line Items] | ||||
Net (loss) income | (20,207) | (9,389) | 22,832 | 6,826 |
Sculptor Capital Advisors LP | ||||
Noncontrolling Interest [Line Items] | ||||
Net (loss) income | (11,556) | (14,398) | (32,107) | (15,595) |
Sculptor Capital Advisors II LP | ||||
Noncontrolling Interest [Line Items] | ||||
Net (loss) income | (11,584) | (9,800) | (39,238) | (29,273) |
Total Sculptor Operating Group | ||||
Noncontrolling Interest [Line Items] | ||||
Net (loss) income | (43,347) | (33,587) | (48,513) | (38,042) |
Group A Units | ||||
Noncontrolling Interest [Line Items] | ||||
Less: Net loss attributable to noncontrolling interests | $ (8,667) | $ (9,478) | $ (26,776) | $ (17,260) |
Group A Units | Sculptor Capital LP | ||||
Noncontrolling Interest [Line Items] | ||||
Blended participation percentage | 0% | 0% | 0% | 0% |
Less: Net loss attributable to noncontrolling interests | $ 0 | $ 0 | $ 0 | $ 0 |
Group A Units | Sculptor Capital Advisors LP | ||||
Noncontrolling Interest [Line Items] | ||||
Blended participation percentage | 37% | 39% | 38% | 38% |
Less: Net loss attributable to noncontrolling interests | $ (4,330) | $ (5,548) | $ (12,050) | $ (5,999) |
Group A Units | Sculptor Capital Advisors II LP | ||||
Noncontrolling Interest [Line Items] | ||||
Blended participation percentage | 37% | 40% | 38% | 38% |
Less: Net loss attributable to noncontrolling interests | $ (4,337) | $ (3,930) | $ (14,726) | $ (11,261) |
Group A Units | Total Sculptor Operating Group | ||||
Noncontrolling Interest [Line Items] | ||||
Blended participation percentage | 20% | 28% | 55% | 45% |
Less: Net loss attributable to noncontrolling interests | $ (8,667) | $ (9,478) | $ (26,776) | $ (17,260) |
NONCONTROLLING INTERESTS - Comp
NONCONTROLLING INTERESTS - Components of Net Loss Attributable to Noncontrolling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Noncontrolling Interest [Line Items] | ||||
Less: Net loss attributable to noncontrolling interests | $ (7,349) | $ (9,410) | $ (23,376) | $ (15,837) |
Group A Units | ||||
Noncontrolling Interest [Line Items] | ||||
Less: Net loss attributable to noncontrolling interests | (8,667) | (9,478) | (26,776) | (17,260) |
Other | ||||
Noncontrolling Interest [Line Items] | ||||
Less: Net loss attributable to noncontrolling interests | $ 1,318 | $ 68 | $ 3,400 | $ 1,423 |
NONCONTROLLING INTERESTS - Co_2
NONCONTROLLING INTERESTS - Components of Shareholders' Equity Attributable to Noncontrolling Interests (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Noncontrolling Interest [Line Items] | ||
Shareholders’ equity attributable to noncontrolling interests | $ 426,530 | $ 439,479 |
Group A Units | ||
Noncontrolling Interest [Line Items] | ||
Shareholders’ equity attributable to noncontrolling interests | 390,424 | 412,941 |
Other | ||
Noncontrolling Interest [Line Items] | ||
Shareholders’ equity attributable to noncontrolling interests | $ 36,106 | $ 26,538 |
NONCONTROLLING INTERESTS - Rede
NONCONTROLLING INTERESTS - Redeemable Noncontrolling Interest (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Increase (Decrease) in Redeemable Noncontrolling Interest [Roll Forward] | ||||
Redeemable noncontrolling interest, beginning balance | $ 237,864 | |||
Capital distributions | $ (796) | $ (1,751) | (3,009) | $ (6,570) |
Comprehensive income | 0 | $ 1,492 | 3,350 | $ 5,257 |
Redeemable noncontrolling interest, ending balance | 0 | 0 | ||
SPAC | ||||
Increase (Decrease) in Redeemable Noncontrolling Interest [Roll Forward] | ||||
Redeemable noncontrolling interest, beginning balance | 237,864 | |||
Change in redemption value of Class A Shares of consolidated SPAC | 958 | |||
Capital distributions | (242,172) | |||
Comprehensive income | 3,350 | |||
Redeemable noncontrolling interest, ending balance | $ 0 | $ 0 |
INVESTMENTS AND FAIR VALUE DI_3
INVESTMENTS AND FAIR VALUE DISCLOSURES - Schedule of Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fair Value Disclosures [Abstract] | ||
U.S. government obligations | $ 79,408 | $ 24,782 |
CLOs, at fair value | 217,543 | 207,147 |
Equity method investments | 87,033 | 67,130 |
Investments, at fair value | 383,984 | 299,059 |
Investments of Consolidated Entities | $ 322,516 | $ 544,554 |
INVESTMENTS AND FAIR VALUE DI_4
INVESTMENTS AND FAIR VALUE DISCLOSURES - Fair Value Option (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Structured Alternative Investment Solution | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair Value | $ 322,516 |
Investments subject to lock up period | $ 163,300 |
Lock up period of investments | 3 years |
Multi-strategy | Structured Alternative Investment Solution | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair Value | $ 58,583 |
Opportunistic credit funds | Structured Alternative Investment Solution | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair Value | $ 250,321 |
Redemption restriction percent | 30% |
Redemption restriction period | 6 years |
Real estate | Structured Alternative Investment Solution | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Fair Value | $ 13,612 |
Redemption restriction percent | 100% |
Minimum | Multi-strategy | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Redemption Frequency | Quarterly |
Redemption Notice Period | 30 days |
Minimum | Opportunistic credit funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Redemption Frequency | Monthly |
Redemption Notice Period | 30 days |
Minimum | Real estate | Structured Alternative Investment Solution | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Redemption restriction period | 7 years |
Maximum | Multi-strategy | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Redemption Frequency | Annually |
Redemption Notice Period | 90 days |
Maximum | Opportunistic credit funds | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Redemption Frequency | Annually |
Redemption Notice Period | 90 days |
Maximum | Real estate | Structured Alternative Investment Solution | |
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items] | |
Redemption restriction period | 9 years |
INVESTMENTS AND FAIR VALUE DI_5
INVESTMENTS AND FAIR VALUE DISCLOSURES - Additional Information (Details) | 9 Months Ended | ||
Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | |
Loans Sold to CLOs Managed by the Company | |||
Loans sold to CLOs | $ 0 | $ 0 | |
Risk retention percentage | 5% | ||
Fair value of investments in retained interests | $ 71,300,000 | $ 78,600,000 | |
Cash flows from retained interests | $ 13,200,000 | $ 2,000,000 | |
Minimum | |||
Loans Sold to CLOs Managed by the Company | |||
Adverse price change, percentage | 10% | ||
Maximum | |||
Loans Sold to CLOs Managed by the Company | |||
Adverse price change, percentage | 20% | ||
Structured Alternative Investment Solution | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis | |||
Unfunded commitment amount | $ 72,000,000 | ||
Measurement Input, Price Volatility, Merger Scenario | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis | |||
Warrants unobservable measurement input | 0.5865 | ||
Measurement Input, Price Volatility, No Merger Scenario | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis | |||
Warrants unobservable measurement input | 0.5596 |
INVESTMENTS AND FAIR VALUE DI_6
INVESTMENTS AND FAIR VALUE DISCLOSURES - Schedule of Investments Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Included within investments: | ||
U.S. government obligations | $ 79,408 | $ 24,782 |
CLOs | 217,543 | 207,147 |
Included within investments of consolidated entities: | ||
U.S. government obligations | 79,408 | 24,782 |
Investments, at fair value | 383,984 | 299,059 |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 34,140 | 24,163 |
CLOs | ||
Liabilities of consolidated entities: | ||
Contractual principal on investments in CLOs | 213,000 | 212,000 |
Fair Value, Measurements, Recurring | ||
Included within cash and cash equivalents: | ||
U.S. government obligations | 9,913 | 19,937 |
Included within investments: | ||
U.S. government obligations | 79,408 | 24,782 |
CLOs | 217,543 | 207,147 |
Included within investments of consolidated entities: | ||
U.S. government obligations | 79,408 | 24,782 |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 34,140 | 24,163 |
Fair Value, Measurements, Recurring | Consolidated Entities | ||
Included within investments: | ||
U.S. government obligations | 237,964 | |
Included within investments of consolidated entities: | ||
U.S. government obligations | 237,964 | |
Fair Value | 322,516 | 306,590 |
Investments, at fair value | 544,554 | |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 596 | |
Liabilities of consolidated entities: | ||
Notes payable of consolidated entities | 220,702 | 196,106 |
Fair Value, Measurements, Recurring | Level I | ||
Included within cash and cash equivalents: | ||
U.S. government obligations | 9,913 | 19,937 |
Included within investments: | ||
U.S. government obligations | 79,408 | 24,782 |
CLOs | 0 | 0 |
Included within investments of consolidated entities: | ||
U.S. government obligations | 79,408 | 24,782 |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Level I | Consolidated Entities | ||
Included within investments: | ||
U.S. government obligations | 237,964 | |
Included within investments of consolidated entities: | ||
U.S. government obligations | 237,964 | |
Fair Value | 0 | 0 |
Investments, at fair value | 237,964 | |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 596 | |
Liabilities of consolidated entities: | ||
Notes payable of consolidated entities | 0 | 0 |
Fair Value, Measurements, Recurring | Level II | ||
Included within cash and cash equivalents: | ||
U.S. government obligations | 0 | 0 |
Included within investments: | ||
U.S. government obligations | 0 | 0 |
CLOs | 0 | 0 |
Included within investments of consolidated entities: | ||
U.S. government obligations | 0 | 0 |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Level II | Consolidated Entities | ||
Included within investments: | ||
U.S. government obligations | 0 | |
Included within investments of consolidated entities: | ||
U.S. government obligations | 0 | |
Fair Value | 0 | 0 |
Investments, at fair value | 0 | |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 0 | |
Liabilities of consolidated entities: | ||
Notes payable of consolidated entities | 0 | 0 |
Fair Value, Measurements, Recurring | Level III | ||
Included within cash and cash equivalents: | ||
U.S. government obligations | 0 | 0 |
Included within investments: | ||
U.S. government obligations | 0 | 0 |
CLOs | 217,543 | 207,147 |
Included within investments of consolidated entities: | ||
U.S. government obligations | 0 | 0 |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 34,140 | 24,163 |
Fair Value, Measurements, Recurring | Level III | Consolidated Entities | ||
Included within investments: | ||
U.S. government obligations | 0 | |
Included within investments of consolidated entities: | ||
U.S. government obligations | 0 | |
Fair Value | 0 | 0 |
Investments, at fair value | 0 | |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 0 | |
Liabilities of consolidated entities: | ||
Notes payable of consolidated entities | 220,702 | 196,106 |
Fair Value, Measurements, Recurring | NAV | ||
Included within cash and cash equivalents: | ||
U.S. government obligations | 0 | 0 |
Included within investments: | ||
U.S. government obligations | 0 | 0 |
CLOs | 0 | 0 |
Included within investments of consolidated entities: | ||
U.S. government obligations | 0 | 0 |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 0 | 0 |
Fair Value, Measurements, Recurring | NAV | Consolidated Entities | ||
Included within investments: | ||
U.S. government obligations | 0 | |
Included within investments of consolidated entities: | ||
U.S. government obligations | 0 | |
Fair Value | 322,516 | 306,590 |
Investments, at fair value | 306,590 | |
Liabilities, at Fair Value | ||
Warrant liabilities, at fair value | 0 | |
Liabilities of consolidated entities: | ||
Notes payable of consolidated entities | $ 0 | $ 0 |
INVESTMENTS AND FAIR VALUE DI_7
INVESTMENTS AND FAIR VALUE DISCLOSURES - Schedule of Changes in Company's Level III Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Warrants | ||||
Liabilities, at Fair Value | ||||
Beginning balance, Liability | $ 24,423 | $ 22,211 | ||
Transfers In | 0 | $ 0 | ||
Transfers Out | 0 | 0 | ||
Purchases / Issuances | 0 | 0 | ||
Investment Sales / Settlements | 0 | 0 | ||
Gains / (Losses) Included in Earnings | (9,717) | (2,386) | ||
Gains / (Losses) Included in Other Comprehensive Income | 0 | 0 | ||
Ending balance, Liability | 34,140 | 24,597 | $ 34,140 | 24,597 |
Warrants | Management Company | ||||
Liabilities, at Fair Value | ||||
Beginning balance, Liability | 24,163 | 65,287 | ||
Transfers In | 0 | |||
Transfers Out | 0 | |||
Purchases / Issuances | 0 | 0 | ||
Investment Sales / Settlements | 0 | 0 | ||
Gains / (Losses) Included in Earnings | (9,977) | 40,690 | ||
Gains / (Losses) Included in Other Comprehensive Income | 0 | 0 | ||
Ending balance, Liability | 34,140 | 24,597 | 34,140 | 24,597 |
Warrants | Consolidated Entities | ||||
Liabilities, at Fair Value | ||||
Beginning balance, Liability | 7,590 | |||
Transfers In | 0 | |||
Transfers Out | (3,450) | |||
Purchases / Issuances | 0 | |||
Investment Sales / Settlements | 0 | |||
Gains / (Losses) Included in Earnings | 4,140 | |||
Gains / (Losses) Included in Other Comprehensive Income | 0 | |||
Ending balance, Liability | 0 | 0 | ||
Notes Payable | Consolidated Entities | ||||
Liabilities, at Fair Value | ||||
Beginning balance, Liability | 205,290 | 201,985 | 196,106 | 0 |
Transfers In | 0 | 0 | 0 | 0 |
Transfers Out | 0 | 0 | 0 | 0 |
Purchases / Issuances | 0 | 0 | 0 | 215,733 |
Investment Sales / Settlements | 0 | 0 | 0 | 0 |
Gains / (Losses) Included in Earnings | (15,412) | (5,993) | (24,596) | 7,755 |
Gains / (Losses) Included in Other Comprehensive Income | 0 | 0 | 0 | 0 |
Ending balance, Liability | 220,702 | 207,978 | 220,702 | 207,978 |
CLOs | ||||
Assets, at Fair Value | ||||
Beginning balance, Asset | 208,138 | 203,631 | ||
Transfers In | 0 | 0 | ||
Transfers Out | 0 | 0 | ||
Purchases / Issuances | 15,687 | 248 | ||
Investment Sales / Settlements | (3,887) | (40) | ||
Gains / (Losses) Included in Earnings | 2,938 | (4,143) | ||
Gains / (Losses) Included in Other Comprehensive Income | (5,333) | (10,482) | ||
Ending balance, Asset | 217,543 | 189,214 | 217,543 | 189,214 |
CLOs | Management Company | ||||
Assets, at Fair Value | ||||
Beginning balance, Asset | 207,147 | 219,510 | ||
Transfers In | 0 | 0 | ||
Transfers Out | 0 | 0 | ||
Purchases / Issuances | 16,231 | 30,087 | ||
Investment Sales / Settlements | (12,342) | (12,413) | ||
Gains / (Losses) Included in Earnings | 8,525 | (22,931) | ||
Gains / (Losses) Included in Other Comprehensive Income | (2,018) | (25,039) | ||
Ending balance, Asset | $ 217,543 | 189,214 | $ 217,543 | 189,214 |
Bank Debt | Consolidated Entities | ||||
Assets, at Fair Value | ||||
Beginning balance, Asset | 40,226 | |||
Transfers In | 0 | |||
Transfers Out | (16,296) | |||
Purchases / Issuances | 0 | |||
Investment Sales / Settlements | (23,930) | |||
Gains / (Losses) Included in Earnings | 0 | |||
Gains / (Losses) Included in Other Comprehensive Income | 0 | |||
Ending balance, Asset | 0 | 0 | ||
Liabilities, at Fair Value | ||||
Beginning balance, Liability | 0 | |||
Transfers In | 3,603 | |||
Transfers Out | (47,258) | |||
Purchases / Issuances | 98,217 | |||
Investment Sales / Settlements | (51,335) | |||
Gains / (Losses) Included in Earnings | (3,227) | |||
Gains / (Losses) Included in Other Comprehensive Income | 0 | |||
Ending balance, Liability | $ 0 | 0 | ||
Bank Debt | Consolidated Entities | ||||
Liabilities, at Fair Value | ||||
Transfers into level 3 as a result of consolidation | 2,300 | |||
Transfers out of level 3 as a result of deconsolidation | $ 14,000 |
INVESTMENTS AND FAIR VALUE DI_8
INVESTMENTS AND FAIR VALUE DISCLOSURES - Schedule of Net Unrealized Gains (Losses) on Company's Level III Assets and Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Warrants | ||||
Liabilities, at Fair Value | ||||
Fair Value, Asset (Liability), Recurring Basis, Still Held, Unrealized Gain (Loss) | $ (9,717) | $ (2,386) | $ (9,977) | $ 40,690 |
Notes payable | Consolidated Entities | ||||
Liabilities, at Fair Value | ||||
Fair Value, Asset (Liability), Recurring Basis, Still Held, Unrealized Gain (Loss) | (15,412) | (5,993) | (24,596) | 7,755 |
CLOs | ||||
Assets, at Fair Value | ||||
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss) | $ (2,395) | $ (14,625) | $ 6,507 | $ (47,970) |
VARIABLE INTEREST ENTITIES - As
VARIABLE INTEREST ENTITIES - Assets and Liabilities of Funds that are VIEs and Consolidated by Company (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 |
Assets of consolidated entities: | |||
Cash and cash equivalents | $ 159,446 | $ 258,863 | $ 170,304 |
Investments, at fair value | 383,984 | 299,059 | |
Total Other Assets, Net | 75,424 | 106,442 | |
Total Assets | 1,346,058 | 1,652,206 | |
Liabilities of consolidated entities: | |||
Debt obligations | 115,486 | 124,176 | |
Other liabilities | 43,178 | 43,049 | |
Total Liabilities | 966,893 | 1,027,759 | |
Variable Interest Entity, Primary Beneficiary | |||
Assets of consolidated entities: | |||
Cash and cash equivalents | 391 | 3 | |
Restricted cash and cash equivalents | 9,800 | 9,805 | |
Investments, at fair value | 322,516 | 306,590 | |
Total Other Assets, Net | 11,266 | 2,016 | |
Total Assets | 343,973 | 318,414 | |
Liabilities of consolidated entities: | |||
Debt obligations | 220,702 | 196,106 | |
Other liabilities | 5,070 | 1,601 | |
Total Liabilities | $ 225,772 | $ 197,707 |
VARIABLE INTEREST ENTITIES - _2
VARIABLE INTEREST ENTITIES - Assets and Liabilities Related to VIEs that are Not Consolidated (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs: | ||
Income and fees receivable | $ 26,569 | $ 56,360 |
Investments of Consolidated Entities | 322,516 | 544,554 |
Unfunded commitments | 203,000 | |
Unfunded commitments from employees to VIEs | 89,700 | 65,400 |
Variable Interest Entity, Not Primary Beneficiary | ||
Variable Interest Entity [Line Items] | ||
Net assets of unconsolidated VIEs in which the Company has a variable interest | 12,598,243 | 12,738,164 |
Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs: | ||
Unearned income and fees | 40,359 | 53,869 |
Income and fees receivable | 13,452 | 41,890 |
Investments | 266,122 | 245,583 |
Investments of Consolidated Entities | 263,932 | 237,699 |
Unfunded commitments | 202,916 | 182,797 |
Maximum Exposure to Loss | $ 786,781 | $ 761,838 |
LEASES - Lease Cost (Details)
LEASES - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Lease collateral | $ 6,200 | $ 6,200 | ||
Operating lease cost | 4,825 | $ 4,628 | 14,030 | $ 13,992 |
Short-term lease cost | 22 | 21 | 66 | 75 |
Finance lease cost - amortization of leased assets | 51 | 113 | 222 | 296 |
Finance lease cost - imputed interest on lease liabilities | 15 | 19 | 45 | 23 |
Less: Sublease income | (902) | (779) | (2,539) | (2,413) |
Net Lease Cost | $ 4,011 | $ 4,002 | $ 11,824 | $ 11,973 |
LEASES- Supplemental Lease Cash
LEASES- Supplemental Lease Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Operating cash flows for operating leases | $ 5,311 | $ 5,140 | $ 15,764 | $ 15,631 |
Operating cash flows for finance leases | 0 | 6 | 5 | 6 |
Finance cash flows for finance leases | 0 | 155 | 223 | 318 |
Operating leases | 1,818 | 0 | 1,818 | 1,079 |
Finance leases | $ 0 | $ 1,016 | $ 0 | $ 1,016 |
LEASES- Lease Term and Discount
LEASES- Lease Term and Discount Rate (Details) | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Weighted average remaining lease term, Operating leases | 6 years 1 month 6 days | 6 years 8 months 12 days |
Weighted average remaining lease term, Financing leases | 3 years 9 months 18 days | 4 years 6 months |
Weighted average discount rate, Operating leases | 8% | 7.80% |
Weighted average discount rate, Financing leases | 7.90% | 7.90% |
LEASES- Maturity of Lease Liabi
LEASES- Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Operating Leases | ||
October 1, 2023 to December 31, 2023 | $ 4,786 | |
2024 | 17,520 | |
2025 | 14,989 | |
2026 | 15,353 | |
2027 | 17,675 | |
Thereafter | 35,015 | |
Total Lease Payments | 105,338 | |
Imputed interest | (22,170) | |
Operating lease liabilities | 83,168 | $ 92,045 |
Finance Leases | ||
2024 | 228 | |
October 1, 2023 to December 31, 2023 | 0 | |
2025 | 228 | |
2026 | 228 | |
2027 | 228 | |
Thereafter | 0 | |
Total Lease Payments | 912 | |
Imputed interest | (116) | |
Finance lease liabilities | $ 796 |
LEASES - Sublease Rent (Details
LEASES - Sublease Rent (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Leases [Abstract] | |
October 1, 2023 to December 31, 2023 | $ 904 |
2024 | 1,920 |
2025 | 1,920 |
2026 | 1,920 |
2027 | 1,960 |
Thereafter | 4,160 |
Total Sublease Rent - Contractual Payments to be Received | $ 12,784 |
DEBT OBLIGATIONS AND WARRANTS -
DEBT OBLIGATIONS AND WARRANTS - Schedule of Debt Principal Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Sep. 25, 2020 |
Maturity of Debt Obligations | |||
October 1, 2023 to December 31, 2023 | $ 0 | ||
2024 | 0 | ||
2025 | 1,120 | ||
2026 | 95,000 | ||
2027 | 0 | ||
2028 | 0 | ||
Thereafter | 29,800 | ||
Total Payments | 125,920 | ||
Unamortized discounts & deferred financing costs | (10,434) | ||
Debt obligations | 115,486 | $ 124,176 | |
2020 Term Loan | |||
Maturity of Debt Obligations | |||
October 1, 2023 to December 31, 2023 | 0 | ||
2024 | 0 | ||
2025 | 0 | ||
2026 | 95,000 | ||
2027 | 0 | ||
2028 | 0 | ||
Thereafter | 0 | ||
Total Payments | 95,000 | ||
Unamortized discounts & deferred financing costs | (10,256) | ||
Debt obligations | 84,744 | $ 275,800 | |
CLO Investments Loans | |||
Maturity of Debt Obligations | |||
October 1, 2023 to December 31, 2023 | 0 | ||
2024 | 0 | ||
2025 | 1,120 | ||
2026 | 0 | ||
2027 | 0 | ||
2028 | 0 | ||
Thereafter | 29,800 | ||
Total Payments | 30,920 | ||
Unamortized discounts & deferred financing costs | (178) | ||
Debt obligations | $ 30,742 | $ 40,714 |
DEBT OBLIGATIONS AND WARRANTS_2
DEBT OBLIGATIONS AND WARRANTS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Nov. 13, 2020 | Sep. 25, 2020 | Mar. 31, 2022 | Mar. 31, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | Jun. 30, 2022 | Jun. 21, 2021 | |
Debt Instruments and Warrants [Line Items] | ||||||||||
Debt obligations | $ 115,486 | $ 124,176 | ||||||||
Obligation balance | 125,920 | |||||||||
Other | $ 1,406 | $ 0 | ||||||||
Warrants, term | 10 years | |||||||||
Warrants, Exercise price (in USD per share) | $ 11.93 | $ 7.95 | ||||||||
Warrants outstanding (in shares) | 4,338,015 | |||||||||
Warrant liabilities, at fair value | $ 0 | 596 | ||||||||
Notes payable, at fair value | 220,702 | 196,106 | ||||||||
Investments, at fair value | 383,984 | 299,059 | ||||||||
Structured Alternative Investment Solution | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Notes payable, at fair value | 220,700 | |||||||||
Investments, at fair value | $ 127,800 | $ 127,800 | ||||||||
Structured Alternative Investment Solution | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Undrawn commitment fee | 1.15% | |||||||||
Notes payable, at fair value | $ 350,000 | |||||||||
Commitment fee amount | 52,500 | |||||||||
Maximum amount oustanding | $ 20,000 | |||||||||
Interest rate percentage | 3% | |||||||||
Class A Shares | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Warrants, number of shares issuable | 4,338,015 | |||||||||
Sculptor Acquisition Corp I | SPAC | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Warrants, term | 5 years | |||||||||
Warrants, Exercise price (in USD per share) | $ 11.50 | |||||||||
Warrants outstanding (in shares) | 11,500,000 | |||||||||
Sculptor Acquisition Corp I | Management Company | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Warrants outstanding (in shares) | 11,200,000 | |||||||||
2020 Term Loan | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Initial principal amount | $ 320,000 | |||||||||
Debt obligations | $ 275,800 | 84,744 | ||||||||
Call Premium due in addition to make-whole premium on prepayment occurring prior to second anniversary of Closing Date | 3% | |||||||||
Call Premium on prepayment occurring on or after second anniversary, but prior to third anniversary of Closing Date | 3% | |||||||||
Call Premium on prepayment occurring on or after third anniversary, but prior to fourth anniversary of Closing Date | 2% | |||||||||
Call Premium on prepayment occurring on or after fourth anniversary of Closing Date | 0% | |||||||||
Repayment Of Debt Amount For Which Prepayment Premium Is Not Charged - Beginning Of Range | $ 175,000 | |||||||||
Amount Of Debt Prepayment For Which Prepayment Premium Is Not Charged, As Amended | 225,000 | |||||||||
Amendment fee | $ 1,750 | |||||||||
Obligation balance | 95,000 | |||||||||
Other | $ 30,200 | |||||||||
Minimum amount of fee-paying assets under management covenant | $ 20,000,000 | |||||||||
2020 Revolving Credit Facility | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Repurchase agreements credit facility borrowing capacity | $ 25,000 | |||||||||
Repayments of debt | $ 175,000 | $ 224,400 | ||||||||
Undrawn commitment fee | 0.50% | |||||||||
CLO Investments Loans | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Debt obligations | 30,742 | 40,714 | ||||||||
Obligation balance | 30,920 | |||||||||
Collateral on CLO investments loans | $ 32,300 | $ 40,000 | ||||||||
Class A Notes | Structured Alternative Investment Solution | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Investments, at fair value | $ 20,000 | |||||||||
Subordinated Notes | Structured Alternative Investment Solution | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Investments, at fair value | 87,800 | |||||||||
Class C Notes | Structured Alternative Investment Solution | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Investments, at fair value | $ 20,000 | |||||||||
SOFR | 2020 Term Loan | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Floor on variable rate | 0.75% | |||||||||
Contractual Rate | 6.25% | |||||||||
Three or Six Months SOFR | 2020 Term Loan | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Contractual Rate | 0.10% | |||||||||
One Month SOFR | 2020 Term Loan | ||||||||||
Debt Instruments and Warrants [Line Items] | ||||||||||
Contractual Rate | 0.05% |
DEBT OBLIGATIONS AND WARRANTS_3
DEBT OBLIGATIONS AND WARRANTS - Notes Payable (Details) - Structured Alternative Investment Solution - USD ($) $ in Thousands | May 31, 2029 | May 31, 2028 | May 31, 2025 | Sep. 30, 2023 |
Class A Notes | Senior Secured | ||||
Debt Instruments and Warrants [Line Items] | ||||
Initial principal amount | $ 140,000 | |||
Initial interest rate | 4.25% | |||
Class A Notes | Senior Secured | Interest Rate After Step Up | ||||
Debt Instruments and Warrants [Line Items] | ||||
Initial interest rate | 6.25% | |||
Class B Notes | Senior Secured | ||||
Debt Instruments and Warrants [Line Items] | ||||
Initial principal amount | $ 70,000 | |||
Initial interest rate | 6% | |||
Class B Notes | Senior Secured | Interest Rate After Step Up | ||||
Debt Instruments and Warrants [Line Items] | ||||
Initial interest rate | 8% | |||
Class C Notes | Mezzanine Secured | ||||
Debt Instruments and Warrants [Line Items] | ||||
Initial principal amount | $ 35,000 | |||
Initial interest rate | 6.75% | |||
Class C Notes | Mezzanine Secured | Interest Rate After Step Up | ||||
Debt Instruments and Warrants [Line Items] | ||||
Initial interest rate | 9.50% | |||
Subordinated Notes | Unsecured | ||||
Debt Instruments and Warrants [Line Items] | ||||
Initial principal amount | $ 105,000 |
DEBT OBLIGATIONS AND WARRANTS_4
DEBT OBLIGATIONS AND WARRANTS - Schedule of CLO Investments Loans (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Debt Instruments and Warrants [Line Items] | ||
Debt obligations | $ 115,486 | $ 124,176 |
CLO Investments Loans | ||
Debt Instruments and Warrants [Line Items] | ||
Debt obligations | 30,742 | 40,714 |
CLO Investments Loans | June 7, 2017 | ||
Debt Instruments and Warrants [Line Items] | ||
Debt obligations | $ 12,478 | 16,835 |
CLO Investments Loans | June 7, 2017 | Secured Overnight Financing Rate (SOFR) | ||
Debt Instruments and Warrants [Line Items] | ||
Contractual Rate | 1.48% | |
CLO Investments Loans | August 2, 2017 | ||
Debt Instruments and Warrants [Line Items] | ||
Debt obligations | $ 17,144 | 21,594 |
CLO Investments Loans | August 2, 2017 | Secured Overnight Financing Rate (SOFR) | ||
Debt Instruments and Warrants [Line Items] | ||
Contractual Rate | 1.41% | |
CLO Investments Loans | 44580 | ||
Debt Instruments and Warrants [Line Items] | ||
Debt obligations | $ 0 | 2,285 |
CLO Investments Loans | 44580 | EURIBOR | ||
Debt Instruments and Warrants [Line Items] | ||
Contractual Rate | 1.50% | |
CLO Investments Loans | 45078 | ||
Debt Instruments and Warrants [Line Items] | ||
Debt obligations | $ 1,120 | $ 0 |
CLO Investments Loans | 45078 | EURIBOR | ||
Debt Instruments and Warrants [Line Items] | ||
Contractual Rate | 1.85% |
SECURITIES SOLD UNDER AGREEME_3
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Additional Details (Details) - Sep. 30, 2023 - Repurchase agreements credit facility € in Millions, $ in Millions | USD ($) | EUR (€) |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Repurchase agreements credit facility borrowing capacity | $ 100 | € 200 |
Repurchase agreements credit facility undrawn balance | $ 86.5 | € 43.6 |
SECURITIES SOLD UNDER AGREEME_4
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Balance Sheet Offsetting (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Transfers and Servicing of Financial Assets [Abstract] | ||
Gross Amounts of Recognized Liabilities | $ 177,503 | $ 166,632 |
Gross Amounts Offset in the Consolidated Balance Sheet | 0 | 0 |
Net Amounts of Liabilities in the Consolidated Balance Sheet | 177,503 | 166,632 |
Securities Transferred | 173,156 | 157,107 |
Net Amount | $ 4,347 | $ 9,525 |
SECURITIES SOLD UNDER AGREEME_5
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Remaining Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Net Amounts of Liabilities in the Consolidated Balance Sheet | $ 177,503 | $ 166,632 |
Overnight and Continuous | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Net Amounts of Liabilities in the Consolidated Balance Sheet | 0 | 0 |
Up to 30 Days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Net Amounts of Liabilities in the Consolidated Balance Sheet | 0 | 0 |
30-90 Days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Net Amounts of Liabilities in the Consolidated Balance Sheet | 0 | 0 |
Greater Than 90 Days | ||
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items] | ||
Net Amounts of Liabilities in the Consolidated Balance Sheet | $ 177,503 | $ 166,632 |
OTHER ASSETS, NET - Components
OTHER ASSETS, NET - Components of Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Fixed Assets: | ||
Leasehold improvements | $ 47,826 | $ 47,736 |
Computer hardware and software | 44,402 | 44,603 |
Furniture, fixtures and equipment | 8,013 | 8,013 |
Accumulated depreciation and amortization | (82,475) | (79,390) |
Fixed assets, net | 17,766 | 20,962 |
Goodwill | 22,691 | 22,691 |
Cloud computing costs | 13,685 | 9,940 |
Prepaid expenses | 11,440 | 16,698 |
Redemption receivable | 0 | 28,721 |
Other | 9,842 | 7,430 |
Total Other Assets, Net | $ 75,424 | $ 106,442 |
OTHER LIABILITIES - Components
OTHER LIABILITIES - Components of Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Other Liabilities Disclosure [Abstract] | ||
Accrued expenses | $ 21,468 | $ 20,925 |
Uncertain tax positions | 8,250 | 8,250 |
Due to funds | 3,391 | 3,854 |
Other | 10,069 | 10,020 |
Total Other Liabilities | $ 43,178 | $ 43,049 |
REVENUES - Management Fees and
REVENUES - Management Fees and Incentive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Management fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | $ 60,194 | $ 66,236 | $ 186,344 | $ 211,443 |
Incentive income | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | 17,801 | 7,566 | 62,383 | 73,788 |
Multi-Strategy Funds | Management fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | 28,566 | 33,579 | 88,716 | 112,171 |
Multi-Strategy Funds | Incentive income | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | 781 | 209 | 1,504 | 329 |
Opportunistic credit funds | Management fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | 11,524 | 12,001 | 36,205 | 37,167 |
Opportunistic credit funds | Incentive income | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | 6,290 | 698 | 20,412 | 20,603 |
Institutional Credit Strategies | Management fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | 11,354 | 11,550 | 35,092 | 34,941 |
Institutional Credit Strategies | Incentive income | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | 0 | 0 | 0 | 0 |
Real estate funds | Management fees | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | 8,750 | 9,106 | 26,331 | 27,164 |
Real estate funds | Incentive income | ||||
Disaggregation of Revenue [Line Items] | ||||
Investment management revenues | $ 10,730 | $ 6,659 | $ 40,467 | $ 52,856 |
REVENUES - Income and Fees Rece
REVENUES - Income and Fees Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Income and Fees Receivable [Line Items] | ||
Income and fees receivable | $ 26,569 | $ 56,360 |
Management fees | ||
Income and Fees Receivable [Line Items] | ||
Income and fees receivable | 23,652 | 25,402 |
Incentive income | ||
Income and Fees Receivable [Line Items] | ||
Income and fees receivable | $ 2,917 | $ 30,958 |
REVENUES - Unearned Income and
REVENUES - Unearned Income and Fees (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Unearned Income and Fees [Line Items] | ||
Unearned income and fees | $ 40,510 | $ 53,869 |
Management fees | ||
Unearned Income and Fees [Line Items] | ||
Unearned income and fees | 151 | 2 |
Incentive income | ||
Unearned Income and Fees [Line Items] | ||
Unearned income and fees | $ 40,359 | $ 53,867 |
REVENUES - Additional Details (
REVENUES - Additional Details (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Incentive Income | ||
Disaggregation of Revenue [Line Items] | ||
Unearned incentive recognized of the beginning unearned balance | $ 35.6 | $ 47.2 |
INCOME TAXES- Reconciliation of
INCOME TAXES- Reconciliation of Statutory U.S. Federal Income Tax Rate (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Statutory U.S. federal income tax rate | 21% | 21% | 21% | 21% |
Loss (income) passed through to noncontrolling interests | (3.98%) | (5.78%) | (12.16%) | (7.67%) |
Foreign income taxes | (7.39%) | (4.58%) | (18.11%) | (4.76%) |
RSU/RSA excess income tax benefit or expense | (0.08%) | (0.49%) | (4.74%) | 3.76% |
State and local income taxes | 1.02% | 0.53% | (2.73%) | (7.34%) |
Nondeductible amortization of Partner Equity Units | (1.80%) | (2.28%) | (5.88%) | (9.59%) |
Foreign tax credits and deductions | 1.55% | 0.96% | 3.80% | 1% |
Change in fair value of warrants | (4.45%) | (3.83%) | (5.12%) | 25.74% |
Disallowed executive compensation | (5.02%) | (6.08%) | (13.72%) | (19.29%) |
Other, net | (0.11%) | (0.20%) | (2.00%) | (0.36%) |
SPAC Loss | (0.01%) | 0% | 7.02% | 0% |
Effective Income Tax Rate | 0.73% | (0.75%) | (32.64%) | 2.49% |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 8.3 | $ 8.3 |
Unrecognized tax benefits that would impact effective tax rate | $ 4.8 |
GENERAL, ADMINISTRATIVE AND O_3
GENERAL, ADMINISTRATIVE AND OTHER - Components of General, Administrative and Other Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | ||||
Professional services | $ 20,112 | $ 7,326 | $ 40,480 | $ 18,967 |
Occupancy and equipment | 7,315 | 6,951 | 20,816 | 20,941 |
Information processing and communications | 6,673 | 5,299 | 18,205 | 15,500 |
Recurring placement and related service fees | 3,656 | 4,661 | 10,938 | 15,092 |
Insurance | 2,312 | 2,226 | 6,947 | 6,661 |
Business development | 587 | 799 | 2,607 | 2,094 |
Other expenses | 1,433 | 1,028 | 5,818 | 2,776 |
Total General, Administrative and Other | $ 42,088 | $ 28,290 | $ 105,811 | $ 82,031 |
LOSS PER CLASS A SHARE - Additi
LOSS PER CLASS A SHARE - Additional Information (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
RSUs | ||||
Earnings Per Share [Line Items] | ||||
Vested RSUs included in weighted-average Class A Shares outstanding | 207,458 | 165,379 | 206,360 | 171,739 |
LOSS PER CLASS A SHARE- Computa
LOSS PER CLASS A SHARE- Computation of Basic and Diluted Earnings (Loss) Per Class A Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Earnings Per Share [Line Items] | ||||
Net Loss Attributable to Class A Shareholders, Basic | $ (31,113) | $ (22,518) | $ (18,967) | $ (13,688) |
Net Loss Attributable to Class A Shareholders, Diluted | $ (31,113) | $ (22,518) | $ (40,247) | $ (47,878) |
Weighted-average Class A Shares outstanding - Basic (in shares) | 25,204,848 | 24,772,098 | 25,186,162 | 25,620,996 |
Weighted-average Class A Shares outstanding - Diluted (in shares) | 25,204,848 | 24,772,098 | 40,212,156 | 26,818,176 |
Loss per Class A Share - Basic (in dollars per share) | $ (1.23) | $ (0.91) | $ (0.75) | $ (0.53) |
Loss per Class A Share - Diluted (in dollars per share) | $ (1.23) | $ (0.91) | $ (1) | $ (1.79) |
Group A Units | ||||
Earnings Per Share [Line Items] | ||||
Net Loss Attributable to Class A Shareholders, Effect of dilutive securities | $ 0 | $ 0 | $ (21,280) | $ 0 |
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares) | 0 | 0 | 15,025,994 | 0 |
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation | 15,025,994 | 15,025,994 | 0 | 15,025,994 |
Group E Units | ||||
Earnings Per Share [Line Items] | ||||
Net Loss Attributable to Class A Shareholders, Effect of dilutive securities | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 |
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation | 13,020,157 | 13,009,158 | 13,019,919 | 13,009,157 |
RSUs | ||||
Earnings Per Share [Line Items] | ||||
Net Loss Attributable to Class A Shareholders, Effect of dilutive securities | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 |
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation | 2,412,996 | 2,565,485 | 2,341,331 | 2,560,287 |
Restricted Class A Shares (“RSAs”) | ||||
Earnings Per Share [Line Items] | ||||
Net Loss Attributable to Class A Shareholders, Effect of dilutive securities | $ 0 | $ 0 | $ 0 | $ 0 |
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares) | 0 | 0 | 0 | 0 |
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation | 1,099,947 | 1,591,507 | 1,089,830 | 1,406,538 |
Warrants | ||||
Earnings Per Share [Line Items] | ||||
Net Loss Attributable to Class A Shareholders, Effect of dilutive securities | $ 0 | $ 0 | $ 0 | $ (34,190) |
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares) | 0 | 0 | 0 | 1,197,180 |
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation | 4,338,015 | 4,338,015 | 4,338,015 | 0 |
RELATED PARTY TRANSACTIONS - Ad
RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Mar. 31, 2022 | |
Related Party Transaction [Line Items] | |||||||
Tax receivable agreement liability | $ 173,124,000 | $ 173,124,000 | $ 190,245,000 | ||||
Notes payable, at fair value | 220,702,000 | 220,702,000 | 196,106,000 | ||||
Investments, at fair value | 383,984,000 | 383,984,000 | 299,059,000 | ||||
Structured Alternative Investment Solution | |||||||
Related Party Transaction [Line Items] | |||||||
Notes payable, at fair value | $ 350,000,000 | ||||||
Payments Under Tax Receivable Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Payments under Tax Receivable Agreement | 17,400,000 | $ 16,900,000 | |||||
Executive Managing Directors, Employees and Other Related Parties | Payments Under Tax Receivable Agreement | |||||||
Related Party Transaction [Line Items] | |||||||
Tax receivable agreement liability | 64,600,000 | 64,600,000 | |||||
Payments under Tax Receivable Agreement | 0 | $ 0 | 7,700,000 | $ 7,400,000 | |||
Executive Managing Directors, Employees and Other Related Parties | Amount of Related Party Assets Under Management | |||||||
Related Party Transaction [Line Items] | |||||||
Assets under management | $ 809,900,000 | $ 809,900,000 | $ 906,600,000 | ||||
Executive Managing Directors, Employees and Other Related Parties | Percent of Related Party Assets Under Management Not Charged Fees | |||||||
Related Party Transaction [Line Items] | |||||||
Percent of assets under management not charged management and incentive fees | 41% | 41% | 43% | ||||
SPAC | |||||||
Related Party Transaction [Line Items] | |||||||
Proceeds from issuance of warrants | $ 11,200,000 |
RELATED PARTY TRANSACTIONS - Ma
RELATED PARTY TRANSACTIONS - Management Fees and Incentive Income Earned from Related Parties and Waived Fees (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Management fees | ||||
Related Party Transaction [Line Items] | ||||
Investment management revenues | $ 60,194 | $ 66,236 | $ 186,344 | $ 211,443 |
Incentive income | ||||
Related Party Transaction [Line Items] | ||||
Investment management revenues | 17,801 | 7,566 | 62,383 | 73,788 |
Fees charged on investments held by related parties: | Management fees | Executive Managing Directors, Employees and Other Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Investment management revenues | 971 | 1,243 | 2,832 | 3,392 |
Fees charged on investments held by related parties: | Incentive income | Executive Managing Directors, Employees and Other Related Parties | ||||
Related Party Transaction [Line Items] | ||||
Investment management revenues | $ 570 | $ 192 | $ 1,543 | $ 1,005 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2023 | Dec. 31, 2022 | Apr. 01, 2019 | Dec. 31, 2018 | |
Loss Contingencies [Line Items] | ||||
Amortization of intangible assets period | 15 years | |||
Percentage of tax savings to be paid under tax receivable agreement to remaining EMDs and Ziffs | 69% | |||
Tax receivable agreement liability | $ 173,124 | $ 190,245 | ||
Unfunded capital commitments of the Company to funds managed | $ 203,000 | |||
Purchase commitment period | 5 years | |||
Director | ||||
Loss Contingencies [Line Items] | ||||
Unfunded capital commitments of the Company to funds managed | $ 89,700 | |||
Consolidated Entities | ||||
Loss Contingencies [Line Items] | ||||
Unfunded capital commitments of the Company to funds managed | 131,000 | |||
Structured Alternative Investment Solution | ||||
Loss Contingencies [Line Items] | ||||
Unfunded capital commitments of the Company to funds managed | $ 72,000 | |||
Tax Year 2019 | ||||
Loss Contingencies [Line Items] | ||||
Percentage of tax savings to be paid under tax receivable agreement | 75% | 75% | ||
Tax Year, Prior To 2018 | ||||
Loss Contingencies [Line Items] | ||||
Percentage of tax savings to be paid under tax receivable agreement | 85% | |||
Tax Year 2018 | ||||
Loss Contingencies [Line Items] | ||||
Percentage of tax savings to be paid under tax receivable agreement | 85% |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Estimated Potential Payments Under Tax Receivable Agreement (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Potential Payments Under Tax Receivable Agreement | ||
October 1, 2023 to December 31, 2023 | $ 0 | |
2024 | 18,041 | |
2025 | 6,652 | |
2026 | 26,903 | |
2027 | 30,443 | |
Thereafter | 91,085 | |
Total Payments | $ 173,124 | $ 190,245 |
SUBSEQUENT EVENTS - Additional
SUBSEQUENT EVENTS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | Oct. 13, 2023 | Oct. 12, 2023 | Sep. 30, 2023 | Jul. 23, 2023 | Dec. 31, 2022 | Sep. 25, 2020 |
Subsequent Event [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | |||||
Termination fee | $ 22.4 | |||||
Subsequent Event | Rithm | ||||||
Subsequent Event [Line Items] | ||||||
Warrants, number of shares issuable | 4,338,015 | |||||
Class A Shares | ||||||
Subsequent Event [Line Items] | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||||
Warrants, number of shares issuable | 4,338,015 | |||||
Class A Shares | Subsequent Event | Rithm | ||||||
Subsequent Event [Line Items] | ||||||
Conversion of convertible securities (in shares) | 4,338,015 | |||||
Value of conversion of convertible securities | $ 34.5 | |||||
Merger Agreement | ||||||
Subsequent Event [Line Items] | ||||||
Business acquisition share price (in dollars per share) | $ 12.70 |