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BRDG Bridge Investment

Filed: 15 Nov 21, 2:11pm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-40622

 

BRIDGE INVESTMENT GROUP HOLDINGS INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

Delaware

82-2769085

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

111 East Sego Lily Drive, Suite 400

Salt Lake City, Utah

84070

(Address of principal executive offices)

(Zip Code)

(Registrant’s telephone number, including area code): (801) 716-4500

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

 

Class A common stock, $0.01 par value

 per share

BRDG

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

As of November 3, 2021, the registrant had 25,162,561 shares of Class A common stock ($0.01 par value per share) outstanding and 86,672,703 shares of Class B common stock ($0.01 par value per share) outstanding.

 

 


 

TABLE OF CONTENTS

 

 

 

 

 

 

Page

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

1

 

 

PART I. FINANCIAL INFORMATION

5

 

 

 

Item 1.

Financial Statements (unaudited)

5

 

BRIDGE INVESTMENT GROUP HOLDINGS INC.

5

 

Condensed Combined and Consolidated Balance Sheets

5

 

Condensed Combined and Consolidated Statements of Operations

6

 

Condensed Combined and Consolidated Statements of Comprehensive Income

7

 

Condensed Combined and Consolidated Statements of Changes in Shareholders’/Members’ Equity

8

 

Condensed Combined and Consolidated Statements of Cash Flows

10

 

Notes to Condensed Combined and Consolidated Financial Statements

11

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

38

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

62

 

 

 

Item 4.

Controls and Procedures

63

 

 

PART II. OTHER INFORMATION

64

 

 

 

Item 1.

Legal Proceedings

64

 

 

 

Item 1A.

Risk Factors

64

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

64

 

 

 

Item 3.

Defaults Upon Senior Securities

64

 

 

 

Item 4.

Mine Safety Disclosures

64

 

 

 

Item 5.

Other Information

65

 

 

 

Item 6.

Exhibits

65

 

 

SIGNATURES

66

 

i


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts contained in this Quarterly Report may be forward-looking statements. Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding expected growth, future capital expenditures, fund performance and debt service obligations, are forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “seek,” “anticipates,” “plan,” “forecasts,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate.

These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including those described in Part II, Item 1A, “Risk Factors” of this report and Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on August 17, 2021.

You should read this Quarterly Report and the documents that we reference in this Quarterly Report completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Certain Definitions

As used in this Quarterly Report, unless the context otherwise requires, references to:

“We,” “us,” “our,” the “Company,” “Bridge,” “Bridge Investment Group” and similar references refer to Bridge Investment Group Holdings Inc., and, unless otherwise stated, all of its subsidiaries, including the Operating Company and, unless otherwise stated, all of the Operating Company’s subsidiaries.
“Assets under management” or “AUM” refers to the assets we manage (see following discussion in “Operating Metrics”).
“BIGRM” refers to Bridge Investment Group Risk Management, Inc. BIGRM is incorporated in the State of Utah and is licensed under the Utah State Captive Insurance Companies Act.
“Blocker Company” refers to an entity that owns LLC Interests in Bridge Investment Group LLC prior to the Transactions and is taxable as a corporation for U.S. federal income tax purposes.
“Blocker Shareholder” refers to the owner of the Blocker Company prior to the Transactions, who will exchange its interests in the Blocker Company for shares of our Class A common stock in connection with the consummation of the Transactions.
“Bridge GPs” refers to the following entities:
Bridge Office Fund GP LLC (“BOF I GP”)
Bridge Office Fund II GP LLC (“BOF II GP”)
Bridge Seniors Housing & Medical Properties Fund GP LLC (“BSH I GP”)
Bridge Seniors Housing & Medical Properties Fund II GP LLC (“BSH II GP”)
Bridge Seniors Housing Fund III GP LLC (“BSH III GP”)
Bridge Opportunity Zone Fund GP LLC (“BOZ I GP”)

1


 

Bridge Opportunity Zone Fund II GP LLC (“BOZ II GP”)
Bridge Opportunity Zone Fund III GP LLC (“BOZ III GP”)
Bridge Opportunity Zone Fund IV GP LLC (“BOZ IV GP”)
Bridge MF&CO Fund III GP LLC (“BMF III GP”)
Bridge Multifamily Fund IV GP LLC (“BMF IV GP”)
Bridge Multifamily Fund V GP LLC (“BMF V GP”)
Bridge Workforce and Affordable Housing Fund GP LLC (“BWH I GP”)
Bridge Workforce and Affordable Housing Fund II GP LLC (“BWH II GP”)
Bridge Debt Strategies Fund GP LLC ("BDS I GP")
Bridge Debt Strategies Fund II GP LLC (“BDS II GP”)
Bridge Debt Strategies Fund III GP LLC (“BDS III GP”)
Bridge Debt Strategies Fund IV GP LLC (“BDS IV GP”)
Bridge Agency MBS Fund GP LLC (“BAMBS GP”)
Bridge Logistics Net Lease Fund GP LLC (“BLNL GP”)
“Class A Units” refers to the Class A common units of the Operating Company.
“Class B Units” refers to the Class B common units of the Operating Company.
“Continuing Equity Owners” refers collectively to direct or indirect holders of Class A Units and our Class B common stock who may exchange at each of their respective options (subject in certain circumstances to time-based vesting requirements and certain other restrictions), in whole or in part from time to time, their Class A Units (along with an equal number of shares of Class B common stock (and such shares shall be immediately cancelled) for, at our election (determined solely by our independent directors (within the meaning of the New York Stock Exchange, or NYSE, rules) who are disinterested), cash or newly issued shares of our Class A common stock.
“Contributed Bridge GPs” refers to the following entities:
BOF I GP
BOF II GP
BSH I GP
BSH II GP
BSH III GP
BOZ I GP
BOZ II GP
BOZ III GP
BOZ IV GP
BMF III GP
BMF IV GP
BWH I GP
BWH II GP
BDS II GP
BDS III GP
BDS IV GP

2


 

“Fee-earning AUM” refers to the assets we manage from which we earn management fee revenue.
“LLC Interests” refers to the Class A Units and the Class B Units.
“Operating Company,” “Bridge Investment Group LLC” and “Bridge Investment Group Holdings LLC” refer to Bridge Investment Group Holdings LLC, a Delaware limited liability company, which was converted to a limited liability company organized under the laws of the State of Delaware from a Utah limited liability company formerly named “Bridge Investment Group LLC.”
“Operating Company LLC Agreement” refers to Bridge Investment Group Holdings LLC’s amended and restated limited liability company agreement.
“Operating Subsidiaries” refers to the Bridge GPs and the consolidated entities included in the Operating Company.
“Original Equity Owners” refers to the owners of LLC Interests in the Operating Company, collectively, prior to our IPO.
“Transactions” refers to the organizational transactions in connection with the IPO on July 16, 2021, and the application of the net proceeds therefrom. The Transactions included:
The acquisition of the Blocker Company (the “Blocker Merger”), and issuance to the Blocker Shareholder of 266,809 shares of our Class A common stock as consideration in the Blocker Merger;
The contribution by minority investors that own a portion of the fund manager entities for our Seniors Housing and Office funds of their entire interest in these fund managers to (i) the Operating Company in exchange for 5,849,415 Class A Units, and (ii) the Company in exchange for 129,801 shares of Class A common stock, which the Company further contributed to the Operating Company in exchange for 129,801 Class A Units;
The contribution by certain of the current owners of the active general partners in our Seniors Housing, Office, Multifamily, Workforce and Affordable Housing, Opportunity Zone and Debt Strategies funds, which include the Continuing Equity Owners, of controlling interests in the Contributed Bridge GPs to (i) the Operating Company, in exchange for 13,198,943 Class A Units, and (ii) the Company in exchange for 363,294 shares of Class A common stock (which includes 1,794 shares of Class A common stock issued to the Blocker Shareholder as consideration in the Blocker Merger), which the Company further contributed to the Operating Company in exchange for 363,294 Class A Units;
The amendment and restatement of the existing limited liability company agreement of the Operating Company to, among other things, (1) convert the Operating Company to a limited liability company organized under the laws of the State of Delaware, (2) change the name of the Operating Company from “Bridge Investment Group LLC” to “Bridge Investment Group Holdings LLC,” (3) convert all existing ownership interests in the Operating Company into 97,463,981 Class A Units and a like amount of Class B Units and (4) appoint the Company as the sole managing member of the Operating Company upon its acquisition of LLC Interests;
The amendment and restatement of the Company’s certificate of incorporation to, among other things, provide for (1) the recapitalization of the Company’s outstanding shares of existing common stock into one share of Class A common stock, (2) the authorization of additional shares of Class A common stock, with each share of Class A common stock entitling its holder to one vote per share on all matters presented to the Company’s stockholders generally and (3) the authorization of shares of Class B common stock, with each share of Class B common stock entitling its holder to ten votes per share on all matters presented to the Company’s stockholders generally, and that shares of Class B common stock may only be held by the Continuing Equity Owners and their respective permitted transferees;
The contribution by the Original Equity Owners of the Class B Units to the Company in exchange for 97,463,981 shares of Class B common stock (which is equal to the number of Class A Units held directly or indirectly by such Continuing Equity Owners immediately following the Transactions);
The contribution by the Former Equity Owners of their indirect ownership of Class A Units to the Company in exchange for 2,084,796 shares of Class A common stock (which includes 265,015 shares of Class A common stock issued to the Blocker Shareholder as consideration in the Blocker Merger) on a one-to-one basis;
The exchange by the Former Profits Interest Program Participants of their awards for 4,781,623 Class A Units and 282,758 shares of Class A common stock with similar vesting requirements;
The issuance of 18,750,000 shares of Class A common stock to the purchasers in the IPO in exchange for net proceeds of approximately $277.2 million, after taking into account the underwriting discounts and commissions and estimated offering expenses payable by the Company;

3


 

The use of the net proceeds from the IPO to purchase 18,750,000 newly issued Class A Units directly from the Operating Company at a price per Class A Unit equal to the initial public offering price per share of Class A common stock in the IPO, less the underwriting discounts and commissions and estimated offering expenses payable by the Company;
The Operating Company used the net proceeds from the sale of Class A Units to the Company (1) to pay $137.1 million in cash to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners and (2) for general corporate purposes to support the growth of the business;
The Company entered into (1) a stockholders agreement with certain of the Continuing Equity Owners (including each of our executive officers), (2) a registration rights agreement with certain of the Continuing Equity Owners (including each of our executive officers) and (3) a tax receivable agreement with the Operating Company and the Continuing Equity Owners (the “Tax Receivable Agreement”);
On July 16, 2021, the Company reacquired 9,375,000 shares of the outstanding shares of Class B common stock in connection with its IPO. The Company subsequently cancelled and retired 9,375,000 shares of Class B common stock; and
Subsequently, on August 12, 2021, the underwriters exercised their over-allotment option to purchase an additional 1,416,278 shares of our Class A common stock. The Company used 100% of the net proceeds of approximately $18.2 million, after taking into account the underwriting discounts and commissions and estimated offering expenses, to purchase 1,416,278 newly issued Class A Units directly from the Operating Company, at a price per Class A Unit equal to the initial public offering price per share of Class A common stock in the IPO, less the underwriting discounts and commissions and estimated offering expenses payable by the Company. The Operating Company used all of the net proceeds from the sale of Class A Units to the Company related to this over-allotment option to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners.

 

4


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

BRIDGE INVESTMENT GROUP HOLDINGS INC.

Condensed Combined and Consolidated Balance Sheets (Unaudited)

 

 

 

September 30,

 

 

December 31,

 

(in thousands, except shares and per share amounts)

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

188,338

 

 

$

101,830

 

Restricted cash

 

 

5,450

 

 

 

5,524

 

Marketable securities

 

 

9,108

 

 

 

5,053

 

Receivables from affiliates

 

 

33,668

 

 

 

25,481

 

Notes receivable from affiliates

 

 

19,475

 

 

 

40,795

 

Notes receivable from employees

 

 

 

 

 

7,431

 

Prepaid and other current assets

 

 

5,805

 

 

 

5,184

 

Total current assets

 

 

261,844

 

 

 

191,298

 

Accrued performance allocations

 

 

301,910

 

 

 

199,410

 

Other investments

 

 

38,485

 

 

 

16,017

 

Long-term notes receivable from employees

 

 

4,364

 

 

 

 

Tenant improvements, furniture and equipment, net

 

 

4,200

 

 

 

4,158

 

Intangible assets, net

 

 

3,791

 

 

 

4,910

 

Goodwill

 

 

9,830

 

 

 

9,830

 

Deferred tax assets

 

 

62,537

 

 

 

161

 

Other assets

 

 

21

 

 

 

228

 

Total assets

 

$

686,982

 

 

$

426,012

 

 

 

 

 

 

 

 

Liabilities and shareholdersʼ/membersʼ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accrued performance allocations compensation

 

$

19,997

 

 

$

22,167

 

Accounts payable and accrued expenses

 

 

9,774

 

 

 

11,137

 

Accrued payroll and benefits

 

 

13,987

 

 

 

11,614

 

General Partner Notes Payable at fair value

 

 

12,007

 

 

 

16,458

 

Insurance loss reserves

 

 

5,418

 

 

 

4,436

 

Self-insurance reserves and unearned premiums

 

 

4,349

 

 

 

3,700

 

Other current liabilities

 

 

8,644

 

 

 

4,830

 

Total current liabilities

 

 

74,176

 

 

 

74,342

 

 

 

 

 

 

 

 

Notes payable, net

 

 

148,035

 

 

 

147,713

 

Other long-term liabilities

 

 

2,285

 

 

 

2,486

 

Due to affiliates

 

 

44,411

 

 

 

 

Total liabilities

 

 

268,907

 

 

 

224,541

 

 

 

 

 

 

 

 

Shareholdersʼ/membersʼ equity:

 

 

 

 

 

 

Net investment in common control group

 

 

 

 

 

186,091

 

Preferred stock, $0.01 par value, 20,000,000 authorized, 0 issued and
   outstanding as of September 30, 2021

 

 

 

 

 

 

Class A common stock, $0.01 par value, 500,000,000 authorized; 25,162,561
   issued and outstanding as of September 30, 2021

 

 

230

 

 

 

 

Class B common stock, $0.01 par value, 239,208,722 authorized; 86,672,703
    issued and outstanding as of September 30, 2021

 

 

867

 

 

 

 

Additional paid-in capital

 

 

52,779

 

 

 

 

Retained earnings

 

 

10,303

 

 

 

 

Accumulated other comprehensive income (loss)

 

 

(2

)

 

 

4

 

Bridge Investment Group Holdings Inc. equity

 

 

64,177

 

 

 

186,095

 

Non-controlling interests in Bridge Investment Group
  Holdings LLC or Common Control Group

 

 

194,771

 

 

 

15,376

 

Non-controlling interests in Bridge Investment Group Holdings Inc.

 

 

159,127

 

 

 

 

Total shareholdersʼ/membersʼ equity

 

 

418,075

 

 

 

201,471

 

Total liabilities and shareholdersʼ/membersʼ equity

 

$

686,982

 

 

$

426,012

 

 

See notes to condensed combined and consolidated financial statements.

5


 

BRIDGE INVESTMENT GROUP HOLDINGS INC.

Condensed Combined and Consolidated Statements of Operations (Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands, except shares and per share amounts)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues:

 

 

 

 

 

 

 

 

 

Fund management fees

 

$

40,576

 

 

$

26,624

 

 

$

105,963

 

 

$

78,066

 

Property management and leasing fees

 

 

22,510

 

 

 

13,747

 

 

 

53,592

 

 

 

45,114

 

Construction management fees

 

 

2,097

 

 

 

1,792

 

 

 

5,988

 

 

 

5,569

 

Development fees

 

 

1,018

 

 

 

738

 

 

 

2,567

 

 

 

1,315

 

Transaction fees

 

 

21,907

 

 

 

5,085

 

 

 

43,475

 

 

 

20,724

 

Insurance premiums

 

 

2,530

 

 

 

2,220

 

 

 

6,446

 

 

 

4,725

 

Other asset management and property income

 

 

1,533

 

 

 

1,146

 

 

 

4,664

 

 

 

4,690

 

Total revenues

 

 

92,171

 

 

 

51,352

 

 

 

222,695

 

 

 

160,203

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income:

 

 

 

 

 

 

 

 

 

 

 

 

Incentive fees

 

 

0

 

 

 

0

 

 

 

910

 

 

 

0

 

Performance allocations:

 

 

 

 

 

 

 

 

 

 

 

 

Realized gains

 

 

30,999

 

 

 

4,437

 

 

 

72,184

 

 

 

13,872

 

Unrealized gains

 

 

53,042

 

 

 

14,663

 

 

 

111,009

 

 

 

12,045

 

Earnings (losses) from investments in real estate

 

 

823

 

 

 

183

 

 

 

1,799

 

 

 

(407

)

Total investment income

 

 

84,864

 

 

 

19,283

 

 

 

185,902

 

 

 

25,510

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Employee compensation and benefits

 

 

31,763

 

 

 

22,826

 

 

 

101,220

 

 

 

67,358

 

Incentive fee compensation

 

 

0

 

 

 

0

 

 

 

82

 

 

 

0

 

Performance allocations compensation:

 

 

 

 

 

 

 

 

 

 

 

 

Realized gain

 

 

1,855

 

 

 

438

 

 

 

6,096

 

 

 

1,343

 

Unrealized gain

 

 

2,682

 

 

 

1,542

 

 

 

10,159

 

 

 

1,398

 

Loss and loss adjustment expenses

 

 

1,429

 

 

 

1,535

 

 

 

4,346

 

 

 

3,213

 

Third-party operating expenses

 

 

11,581

 

 

 

6,033

 

 

 

26,325

 

 

 

21,676

 

General and administrative expenses

 

 

6,703

 

 

 

4,448

 

 

 

16,196

 

 

 

13,209

 

Depreciation and amortization

 

 

699

 

 

 

672

 

 

 

2,179

 

 

 

2,016

 

Total expenses

 

 

56,712

 

 

 

37,494

 

 

 

166,603

 

 

 

110,213

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Investment income (loss)

 

 

2,565

 

 

 

(143

)

 

 

8,663

 

 

 

663

 

Interest income

 

 

1,008

 

 

 

358

 

 

 

2,172

 

 

 

961

 

Interest expense

 

 

(2,407

)

 

 

(1,701

)

 

 

(6,547

)

 

 

(2,626

)

Total other income (expense)

 

 

1,166

 

 

 

(1,486

)

 

 

4,288

 

 

 

(1,002

)

Income before provision for income taxes

 

 

121,489

 

 

 

31,655

 

 

 

246,282

 

 

 

74,498

 

Income tax provision

 

 

(2,607

)

 

 

(397

)

 

 

(3,441

)

 

 

(579

)

Net income

 

 

118,882

 

 

 

31,258

 

 

 

242,841

 

 

 

73,919

 

Net income attributable to non-controlling interests in Bridge
  Investment Group Holdings LLC

 

 

60,900

 

 

 

4,089

 

 

 

70,663

 

 

 

10,574

 

Net income attributable to Bridge Investment Group Holdings LLC

 

 

57,982

 

 

 

27,169

 

 

 

172,178

 

 

 

63,345

 

Net income attributable to Common Control Group prior to Transactions and IPO

 

 

3,775

 

 

 

27,169

 

 

 

117,971

 

 

 

63,345

 

Net income attributable to non-controlling interests in Bridge Investment
  Group Holdings Inc. subsequent to Transactions and IPO

 

 

43,904

 

 

 

0

 

 

 

43,904

 

 

 

0

 

Net income attributable to Bridge Investment Group Holdings Inc.
  subsequent to Transactions and IPO

 

$

10,303

 

 

$

0

 

 

$

10,303

 

 

$

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share of Class A common stock - Basic and Diluted(1)

 

$

0.41

 

 

 

 

 

$

0.41

 

 

 

 

Weighted-average shares of Class A common stock outstanding - Basic and Diluted(1)

 

 

22,284,351

 

 

 

 

 

 

22,284,351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Represents the period following the Transactions and the IPO, from July 16, 2021 through September 30, 2021, as described in note 23.

 

 

See notes to condensed combined and consolidated financial statements.

6


 

BRIDGE INVESTMENT GROUP HOLDINGS INC.

Condensed Combined and Consolidated Statements of Comprehensive Income (Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net income

 

$

118,882

 

 

$

31,258

 

 

$

242,841

 

 

$

73,919

 

Other comprehensive income (loss) - foreign currency
  translation adjustments, net of tax

 

 

(13

)

 

 

1

 

 

 

(6

)

 

 

1

 

Total comprehensive income

 

 

118,869

 

 

 

31,259

 

 

 

242,835

 

 

 

73,920

 

Less: comprehensive income attributable to non-controlling
  interests in Bridge Investment Group Holdings LLC

 

 

60,900

 

 

 

4,089

 

 

 

70,663

 

 

 

10,574

 

Comprehensive income attributable to Bridge Investment
  Group Holdings LLC

 

 

57,969

 

 

 

27,170

 

 

 

172,172

 

 

 

63,346

 

Less: comprehensive income attributable to Common Control
  Group prior to Transactions and IPO

 

 

3,775

 

 

 

27,170

 

 

 

117,971

 

 

 

63,346

 

Less: comprehensive income attributable to non-controlling
  interests in Bridge Investment Group Holdings Inc. subsequent
  to Transactions and IPO

 

 

43,904

 

 

 

 

 

 

43,904

 

 

 

 

Comprehensive income attributable to Bridge Investment
  Group Holdings Inc. subsequent to Transactions and IPO

 

$

10,290

 

 

$

 

 

$

10,297

 

 

$

 

 

See notes to condensed combined and consolidated financial statements.

7


 

BRIDGE INVESTMENT GROUP HOLDINGS INC.

Condensed Combined and Consolidated Statements of Changes in Shareholders’/Members’ Equity (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NCI in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Bridge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other

 

 

NCI in

 

 

Investment

 

 

Total

 

 

 

Net

 

 

 

 

 

 

 

 

Additional

 

 

 

 

comprehensive

 

 

Operating

 

 

Group

 

 

Shareholdersʼ/

 

 

 

investment

 

 

Class A

 

 

Class B

 

 

paid-in

 

 

Retained

 

 

income

 

 

Company

 

 

Holdings

 

 

membersʼ

 

(in thousands)

 

CCG(1)

 

 

common stock

 

 

common stock

 

 

capital

 

 

earnings

 

 

(loss)

 

 

or CCG(2)

 

 

Inc.(3)

 

 

equity

 

Balance at June 30, 2021

 

$

157,253

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

11

 

 

$

12,377

 

 

$

 

 

$

169,641

 

Net income prior to Transactions and IPO

 

 

3,775

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,799

 

 

 

 

 

 

5,574

 

Foreign currency translation adjustment prior to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

(11

)

Share-based compensation prior to Transactions and IPO

 

 

196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

215

 

Distributions prior to Transactions and IPO

 

 

(18,377

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,186

)

 

 

 

 

 

(21,563

)

Settlement of accrued performance allocations compensation liability with equity

 

 

14,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,247

 

Recognition of non-controlling interests in certain subsidiaries concurrent
  with Transactions and IPO

 

 

(142,986

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

142,986

 

 

 

 

 

 

 

Derecognition of Bridge Debt Strategies Fund GP LLC

 

 

2,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,337

 

Effects of Transactions and purchase of Operating Company Class A Units

 

 

(16,445

)

 

 

28

 

 

 

975

 

 

 

15,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Class A common stock sold in IPO, net of underwriting discount
  and issuance costs

 

 

 

 

 

187

 

 

 

 

 

 

277,006

 

 

 

 

 

 

 

 

 

 

 

 

(139,875

)

 

 

137,318

 

Purchase of membership interests in the Operating Company

 

 

 

 

 

 

 

 

(108

)

 

 

(157,955

)

 

 

 

 

 

 

 

 

 

 

 

158,063

 

 

 

 

Issuance of Class A common stock from Underwritersʼ exercise of
  over-allotment option, net of underwriting discount and issuance costs

 

 

 

 

 

14

 

 

 

 

 

 

18,174

 

 

 

 

 

 

 

 

 

 

 

 

(18,188

)

 

 

 

Deferred tax effect resulting from purchase of Class A Units, net of amounts
  payable under Tax Receivable Agreement

 

 

 

 

 

 

 

 

 

 

 

18,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,730

 

Equity reallocation between controlling and non-controlling interests
  subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

(119,149

)

 

 

 

 

 

 

 

 

 

 

 

119,149

 

 

 

 

Capital contributions subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

186

 

 

 

 

 

 

186

 

Net income subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,303

 

 

 

 

 

 

59,101

 

 

 

43,904

 

 

 

113,308

 

Foreign currency translation subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

Share-based compensation subsequent to Transactions and IPO

 

 

 

 

 

1

 

 

 

 

 

 

531

 

 

 

 

 

 

 

 

 

4

 

 

 

1,702

 

 

 

2,238

 

Distributions subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,515

)

 

 

(5,628

)

 

 

(24,143

)

Balance at September 30, 2021

 

$

 

 

$

230

 

 

$

867

 

 

$

52,779

 

 

$

10,303

 

 

$

(2

)

 

$

194,771

 

 

$

159,127

 

 

$

418,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2020

 

$

164,721

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

8,697

 

 

$

 

 

$

173,418

 

Net income for the period

 

 

27,169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,089

 

 

 

 

 

 

31,258

 

Foreign currency translation adjustment

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

0

 

 

 

 

 

 

1

 

Distributions to members

 

 

(54,127

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

(5,435

)

 

 

 

 

 

(59,562

)

Repurchase of membership interests

 

 

(59

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(40

)

 

 

 

 

 

(99

)

Share-based compensation

 

 

351

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36

 

 

 

 

 

 

387

 

Balance at September 30, 2020

 

$

138,055

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

1

 

 

$

7,347

 

 

$

 

 

$

145,403

 

 

(1) Net investment in Common Control Group ("CCG")

(2.)Non-controlling interests ("NCI") in Bridge Investment Group Holdings LLC or Common Control Group

(3) Non-controlling interests ("NCI") in Bridge Investment Group Holdings Inc.

See notes to condensed combined and consolidated financial statements.

 

 

 

8


 

BRIDGE INVESTMENT GROUP HOLDINGS INC.

Condensed Combined and Consolidated Statements of Changes in Shareholders’/Members’ Equity (Unaudited) (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NCI in

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

Bridge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other

 

 

NCI in

 

 

Investment

 

 

Total

 

 

 

Net

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

comprehensive

 

 

Operating

 

 

Group

 

 

Shareholdersʼ/

 

 

 

investment

 

 

Class A

 

 

Class B

 

 

paid-in

 

 

Retained

 

 

income

 

 

Company

 

 

Holdings

 

 

membersʼ

 

(in thousands)

 

CCG(1)

 

 

common stock

 

 

common stock

 

 

capital

 

 

earnings

 

 

(loss)

 

 

or CCG(2)

 

 

Inc.(3)

 

 

equity

 

Balance at December 31, 2020

 

$

186,091

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

4

 

 

$

15,376

 

 

$

 

 

$

201,471

 

Net income prior to Transactions and IPO

 

 

117,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,562

 

 

 

 

 

 

129,533

 

Foreign currency translation adjustment prior to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4

)

 

 

 

 

 

 

 

 

(4

)

Share-based compensation prior to Transactions and IPO

 

 

14,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

975

 

 

 

 

 

 

15,679

 

Capital contributions prior to Transactions and IPO

 

 

422

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

323

 

 

 

 

 

 

745

 

Distributions prior to Transactions and IPO

 

 

(176,273

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,186

)

 

 

 

 

 

(193,459

)

Repurchase of membership interests prior to Transactions and IPO

 

 

(68

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(42

)

 

 

 

 

 

(110

)

Settlement of accrued performance allocations compensation liability with equity

 

 

14,247

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,247

 

Recognition of non-controlling interests in certain subsidiaries concurrent
  with Transactions and IPO

 

 

(142,986

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

142,986

 

 

 

 

 

 

 

Derecognition of Bridge Debt Strategies Fund GP LLC

 

 

2,337

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,337

 

Effects of Transactions and purchase of Operating Company Class A Units

 

 

(16,445

)

 

 

28

 

 

 

975

 

 

 

15,442

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Class A common stock sold in IPO, net of underwriting discount
  and issuance costs

 

 

 

 

 

187

 

 

 

 

 

 

277,006

 

 

 

 

 

 

 

 

 

 

 

 

(139,875

)

 

 

137,318

 

Purchase of membership interests in the Operating Company

 

 

 

 

 

 

 

 

(108

)

 

 

(157,955

)

 

 

 

 

 

 

 

 

 

 

 

158,063

 

 

 

 

Issuance of Class A common stock from Underwritersʼ exercise of
  over-allotment option, net of underwriting discount and issuance costs

 

 

 

 

 

14

 

 

 

 

 

 

18,174

 

 

 

 

 

 

 

 

 

 

 

 

(18,188

)

 

 

 

Deferred tax effect resulting from purchase of Class A Units, net of
  amounts payable under Tax Receivable Agreement

 

 

 

 

 

 

 

 

 

 

 

18,730

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,730

 

Equity reallocation between controlling and non-controlling interests
  subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

(119,149

)

 

 

 

 

 

 

 

 

 

 

 

119,149

 

 

 

 

Capital contributions subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

186

 

 

 

 

 

 

186

 

Net income subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,303

 

 

 

 

 

 

59,101

 

 

 

43,904

 

 

 

113,308

 

Foreign currency translation subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

Share-based compensation subsequent to Transactions and IPO

 

 

 

 

 

1

 

 

 

 

 

 

531

 

 

 

 

 

 

 

 

 

4

 

 

 

1,702

 

 

 

2,238

 

Distributions subsequent to Transactions and IPO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,514

)

 

 

(5,628

)

 

 

(24,142

)

Balance at September 30, 2021

 

$

 

 

$

230

 

 

$

867

 

 

$

52,779

 

 

$

10,303

 

 

$

(2

)

 

$

194,771

 

 

$

159,127

 

 

$

418,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

$

174,465

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

0

 

 

$

15,860

 

 

$

 

 

$

190,325

 

Net income for the period

 

 

63,345

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,574

 

 

 

 

 

 

73,919

 

Foreign currency translation adjustment

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

0

 

 

 

 

 

 

1

 

Capital contributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

273

 

 

 

 

 

 

273

 

Distributions to members

 

 

(94,248

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(19,430

)

 

 

 

 

 

(113,678

)

Repurchase of membership interests

 

 

(6,559

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(39

)

 

 

 

 

 

(6,598

)

Share-based compensation

 

 

1,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

109

 

 

 

 

 

 

1,161

 

Balance at September 30, 2020

 

$

138,055

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

1

 

 

$

7,347

 

 

$

 

 

$

145,403

 

(1) Net investment in Common Control Group ("CCG")

(2.)Non-controlling interests ("NCI") in Bridge Investment Group Holdings LLC or Common Control Group

(3) Non-controlling interests ("NCI") in Bridge Investment Group Holdings Inc.

See notes to condensed combined and consolidated financial statements.

9


 

BRIDGE INVESTMENT GROUP HOLDINGS INC.

Condensed Combined and Consolidated Statements of Cash Flows (Unaudited)

 

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2021

 

 

2020

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income

 

$

242,841

 

 

$

73,919

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

2,179

 

 

 

2,016

 

Amortization of financing costs and debt discount and premium

 

 

392

 

 

 

140

 

Share-based compensation

 

 

17,917

 

 

 

1,161

 

Equity in income of investments

 

 

(7,828

)

 

 

(353

)

Changes in unrealized gain on General Partner Notes Payable

 

 

(830

)

 

 

(657

)

Amortization of lease liabilities

 

 

(203

)

 

 

(209

)

Changes in unrealized performance allocations

 

 

(111,009

)

 

 

(12,045

)

Changes in unrealized accrued performance allocations compensation

 

 

10,159

 

 

 

1,398

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Receivable from affiliates

 

 

(8,136

)

 

 

15,409

 

Prepaid and other current assets

 

 

(1,929

)

 

 

(1,230

)

Accounts payable and accrued expenses

 

 

(430

)

 

 

(1,481

)

Accrued payroll and benefits

 

 

2,374

 

 

 

(1,675

)

Other liabilities

 

 

3,816

 

 

 

1,893

 

Insurance loss and self-insurance reserves

 

 

1,630

 

 

 

856

 

Accrued performance allocations compensation

 

 

1,918

 

 

 

198

 

Net cash provided by operating activities

 

 

152,861

 

 

 

79,340

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Purchase of investments

 

 

(10,667

)

 

 

(15,553

)

Proceeds from sale of investments

 

 

1,274

 

 

 

5,313

 

Issuance of notes receivable

 

 

(385,165

)

 

 

(108,240

)

Proceeds from collections on notes receivable

 

 

409,552

 

 

 

94,932

 

Purchase of tenant improvements, furniture and equipment

 

 

(893

)

 

 

(34

)

Net cash provided by (used in) investing activities

 

 

14,101

 

 

 

(23,582

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Capital contributions

 

 

931

 

 

 

273

 

Distributions to members

 

 

(176,273

)

 

 

(94,248

)

Distributions to non-controlling interests

 

 

(41,327

)

 

 

(19,430

)

Repurchase of membership interests

 

 

(110

)

 

 

(6,598

)

Proceeds from issuance of common stock - IPO, net of underwriting
  discount and issuance costs

 

 

277,193

 

 

 

 

Purchase of membership interests in Operating Company

 

 

(158,063

)

 

 

 

Proceeds from issuance of common stock - Underwritersʼ exercise of
  over-allotment option, net of underwriting discount and issuance costs

 

 

18,188

 

 

 

 

Payments of deferred financing costs

 

 

 

 

 

(2,489

)

Borrowings from notes payable

 

 

 

 

 

150,000

 

Repayment of notes payable

 

 

 

 

 

(2,762

)

Repayments of General Partner Notes Payable

 

 

(1,067

)

 

 

(500

)

Proceeds from line of credit

 

 

85,800

 

 

 

91,306

 

Payments of line of credit

 

 

(85,800

)

 

 

(102,542

)

Net cash provided by (used in) financing activities

 

 

(80,528

)

 

 

13,010

 

Net increase in cash, cash equivalents, and restricted cash

 

 

86,434

 

 

 

68,768

 

Cash, cash equivalents and restricted cash - beginning of period

 

 

107,354

 

 

 

60,110

 

Cash, cash equivalents and restricted cash - end of period

 

$

193,788

 

 

$

128,878

 

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Net cash paid for income taxes

 

$

3,492

 

 

$

752

 

Cash paid for interest

 

 

8,066

 

 

 

1,438

 

Settlement of accrued performance allocations compensation liability with equity

 

 

14,247

 

 

 

 

Derecognition of Bridge Debt Strategies Fund GP LLC

 

 

2,337

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

188,338

 

 

$

125,755

 

Restricted cash

 

 

5,450

 

 

 

3,123

 

Cash, cash equivalents, and restricted cash

 

$

193,788

 

 

$

128,878

 

 

See notes to condensed combined and consolidated financial statements.

10


 

BRIDGE INVESTMENT GROUP HOLDINGS INC.

Notes to Condensed Combined and Consolidated Financial Statements

1.
ORGANIZATION

Bridge Investment Group Holdings Inc. (the “Company”) was incorporated in the state of Delaware on March 18, 2021. In connection with its incorporation, the Company issued 100 shares of common stock for $100 to Bridge Investment Group Holdings LLC (the “Operating Company”). The Company was formed for the purpose of completing a public offering and related Transactions in order to conduct the business of Bridge Investment Group Holdings Inc. as a publicly traded entity. On July 20, 2021, the Company completed its initial public offering of 18,750,000 shares of its Class A common stock at a public offering price of $16.00 per share (the “IPO”) receiving approximately $277.2 million in net proceeds, after deducting the underwriting discounts and commissions and estimated offering expenses. The Operating Company used net proceeds from the public offering to pay approximately $137.1 million in cash to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners. The net proceeds from the IPO were used to purchase 18,750,000 newly issued Class A Units from the Operating Company at a price per unit equal to the initial public offering price per share of Class A common stock in the IPO, less the underwriting discounts and commissions and estimated offering expenses. See Note 18, “Shareholders’ Equity,” for additional details.

In connection with the IPO, owners of the Contributed Bridge GPs contributed their interests in the respective Contributed Bridge GPs in exchange for LLC Interests in the Operating Company. Prior to the IPO, the Operating Company did not have any direct interest in the Contributed Bridge GPs. These combined financial statements prior to the IPO include 100% of operations of the Contributed Bridge GPs for the periods presented on the basis of common control.

Subsequently, on August 12, 2021, the underwriters exercised their over-allotment option to purchase an additional 1,416,278 shares of our Class A common stock. The Company used 100% of the net proceeds of approximately $18.2 million, after taking into account the underwriting discounts and commissions and estimated offering expenses, to purchase 1,416,278 newly issued Class A Units directly from the Operating Company, at a price per Class A Unit equal to the IPO price per share of Class A common stock in the IPO, less the underwriting discounts and commissions and estimated offering expenses payable by the Company. The Operating Company used all of the net proceeds from the sale of Class A Units to the Company related to this over-allotment option to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners.

Bridge Investment Group Holdings LLC (formerly Bridge Investment Group LLC) (the “Operating Company”), a Delaware limited liability company, was formed on December 2, 2011, to act as a holding company of certain affiliates that provide an array of real estate-related services. The Operating Company is the ultimate controlling entity, through its wholly owned subsidiary Bridge Fund Management Holdings LLC, of the following investment manager entities (collectively, the “Fund Managers”): Bridge Multifamily Fund Manager LLC, Bridge Seniors Housing Fund Manager LLC (“BSHM”), Bridge Debt Strategies Fund Manager LLC, Bridge Office Fund Manager LLC (“BOFM”), Bridge Development Fund Manager LLC, Bridge Agency MBS Fund Manager LLC, Bridge Logistics Net Lease Fund Manager LLC and Bridge Logistics Properties Fund Manager LLC. The Fund Managers provide real estate and fund investment advisory services on a discretionary basis to multiple investment funds and other vehicles, including joint venture real estate projects, separately managed accounts and privately offered real estate-related limited partnerships, including any parallel investment vehicles and feeder funds (collectively, the “funds”). The Operating Company is entitled to the management fees of the funds. Each time that a new fund family is established, a new general partner for that fund family is also established. These general partners are collectively referred to as the Bridge GPs. The Bridge GPs are entitled to any performance fees from the funds.

The Operating Company and the Bridge GPs, collectively defined as “Bridge” or the “Company,” were under common control by the direct owners of Bridge. The owners had the ability to control the Operating Company and each of Bridge GPs and manage and operate these entities through the Fund Managers, a common board of directors, common ownership, and shared resources and facilities. Bridge represented the predecessor history for the consolidated operations. As a result, the financial statements for the periods prior to the IPO are the combined financial statements of Bridge as the predecessor to the Company for accounting and reporting purposes. We carried forward unchanged the value of the related assets and liabilities recognized in the Contributed Bridge GPs’ financial statements prior to the IPO into our financial statements. We have assessed the Contributed Bridge GPs for consolidation subsequent to the Transactions and IPO and have concluded that the Contributed GPs represent variable interests for which the Operating Company is the primary beneficiary. As a result, the Operating Company consolidates the Contributed Bridge GPs following the Transactions. BDS I GP LLC was not contributed as part of the Transactions and as such, was derecognized upon IPO.

As part of the Transactions, the Operating Company acquired the non-controlling interest of its consolidated subsidiaries BSHM and BOFM, which was accounted for as an equity transaction with no gain or loss recognized in the combined statement of operations. The carrying amounts of the non-controlling interest in BSHM and BOFM were adjusted to zero.

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Following the IPO, the Company is a holding company whose principal asset is a controlling financial interest in the Operating Company through its ownership of the Operating Company’s Class A Units and 100% of the Class B Units (voting only) in the Operating Company. The Company acts as the sole managing member of the Operating Company and, as a result, indirectly operates and controls all of the Operating Company’s business and affairs and its direct and indirect subsidiaries. As a result, the Company consolidates the financial results of the Operating Company and report non-controlling interests related to the Class A Units of the Operating Company that are not owned by the Company. The assets and liabilities of the Operating Company represent substantially all of the Company’s consolidated assets and liabilities, with the exception of certain deferred income taxes and payables due to affiliates pursuant to the Tax Receivable Agreement (see Note 17 “Income Taxes”). Each share of Class A common stock is entitled to 1 vote and each share of Class B common stock is entitled to ten votes. As of September 30, 2021, the Company held approximately 23% of the economic interest in the Operating Company. As the Operating Company’s members exchange their Class A Units into the Company’s Class A common stock in the future, the Company’s economic interest in the Operating Company will increase.

These financial statements should be read in conjunction with our annual financial statements filed with the Registration Statement and include all adjustments necessary for a fair presentation.

2.
SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The accompanying condensed combined and consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Operating Company and Bridge GPs have historically been under common control. Prior to the IPO, the financial statements were the combined financial statements of the Operating Company and the Bridge GPs. Subsequent to the IPO, the financial statements are the consolidated financial statements of the Company. All intercompany accounts and transactions have been eliminated in the condensed combined and consolidated financial statements.

Principles of Consolidation — The Company consolidates entities in which it has a controlling financial interest by first considering if an entity meets the definition of a variable interest entity (“VIE”) for which the Company is deemed to be the primary beneficiary, or if the Company has the power to control an entity through a majority of voting interest or through other arrangements.

Variable Interest Entities — A VIE is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the VIE through (a) power to direct the activities of the VIE that most significantly affect the VIE’s economic performance, and (b) obligation to absorb losses or right to receive benefits of the VIE that could be significant to the VIE. The Company also considers interests held by its related parties, including de facto agents. The Company may perform a related party analysis to assess whether it is a member of a related party group that collectively meets the power and benefits criteria and, if so, whether the Company is most closely associated with the VIE. In performing the related party analysis, the Company considers both qualitative and quantitative factors, including, but not limited to: the amount and characteristics of its investment relative to the related party; the Company’s and the related party’s ability to control or significantly influence key decisions of the VIE including consideration of involvement by de facto agents; the obligation or likelihood for the Company or the related party to fund operating losses of the VIE; and the similarity and significance of the VIE’s business activities to those of the Company and the related party. The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, may involve significant judgment, including the determination of which activities most significantly affect the entities’ performance, and estimates about the current and future fair values and performance of assets held by the VIE.

Voting Interest Entities — Unlike VIEs, voting interest entities have sufficient equity to finance their activities and equity investors exhibit the characteristics of a controlling financial interest through their voting rights. The Company consolidates such entities when it has the power to control these entities through ownership of a majority of the entities’ voting interests or through other arrangements.

At each reporting period, the Company reassesses whether changes in facts and circumstances cause a change in the status of an entity as a VIE or voting interest entity, and/or a change in the Company’s consolidation assessment. Changes in consolidation status are applied prospectively. An entity may be consolidated as a result of this reassessment, in which case, the assets, liabilities and non-controlling interest in the entity are recorded at fair value upon initial consolidation. Any existing equity interest held by the Company in the entity prior to the Company obtaining control will be remeasured at fair value, which may result in a gain or loss recognized upon initial consolidation. The Company may also deconsolidate a subsidiary as a result of this reassessment, which may result in a gain or loss recognized upon deconsolidation depending on the carrying values of deconsolidated assets and liabilities compared to the fair value of any interests retained.

Non-controlling Interests — Non-controlling interests represent the share of consolidated entities owned by third parties. Bridge recognizes each non-controlling shareholder’s respective ownership at the estimated fair value of the net assets at the date of formation or acquisition. Non-controlling interests are subsequently adjusted for the non-controlling shareholder’s additional

12


 

contributions, distributions and their share of the net earnings or losses of each respective consolidated entity. Net income is allocated to non-controlling interests based on the weighted-average ownership interest during the period. The net income that is not attributable to Bridge is reflected in net income attributable to non-controlling interests in the consolidated statements of operations and comprehensive income and shareholders’ equity.

Use of Estimates — The preparation of condensed combined and consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

The COVID-19 pandemic has caused uncertainty and disruption in the global economy and financial markets. As a result, management’s estimates and assumptions may be subject to a higher degree of variability and volatility that may result in material differences from the current period.

Cash and Cash Equivalents — The Company considers all cash on hand, demand deposits with financial institutions and short-term highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are financial instruments that are exposed to concentrations of credit risk. Cash balances may be invested in money market accounts that are not insured. The Company holds and invests its cash with high-credit quality institutions in amounts that regularly exceed the amount insured by the FDIC for a single financial institution. However, the Company has not realized any losses in such cash investments or accounts and believes it is not exposed to any significant credit risk.

Restricted Cash — Restricted cash primarily consists of a collateral trust account for the benefit of the insurance carriers associated with BIGRM. These funds are held as collateral for the insurance carriers in the event of a claim that would require a high deductible payment from BIGRM.

Marketable Securities — The Company’s marketable securities are classified as available-for-sale and reported at fair value, with changes in fair value recognized through realized and unrealized gains (losses) on investments. Fair value is based on quoted prices for identical assets in active markets. Realized gains and losses are determined on the basis for the actual cost of the securities sold. Dividends on equity securities are recognized in income when declared.

Fair Value — GAAP establishes a hierarchal disclosure framework that prioritizes the inputs used in measuring financial instruments at fair value into three levels based on their market price observability. Market price observability is affected by a number of factors, including the type of instrument and the characteristics specific to the instrument. Financial instruments with readily available quoted prices from an active market or for which fair value can be measured based on actively quoted prices generally have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value.

Financial assets and liabilities measured and reported at fair value are classified as follows:

Level 1 — Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in inactive markets; and model-derived valuations with directly or indirectly observable significant inputs. Level 2 inputs include prices in markets with few transactions, non-current prices, prices for which little public information exists or prices that vary substantially over time or among brokered market makers. Level 2 inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates.
Level 3 — Valuations that rely on one or more significant unobservable inputs. These inputs reflect the Company’s assessment of the assumptions that market participants would use to value the instrument based on the best information available.

In some instances, an instrument may fall into more than one level of the fair value hierarchy. In such instances, the instrument’s level within the fair value hierarchy is based on the lowest of the three levels (with Level 3 being the lowest) that is significant to the fair value measurement. The Company’s assessment of the significance of an input requires judgment and considers factors specific to the instrument. The Company accounts for the transfer of assets into or out of each fair value hierarchy level as of the beginning of the reporting period. (See Note 8 “Fair Value Measurements” for further detail.)

Fair Value Option — The fair value option provides an option to elect fair value as a measurement alternative for selected financial instruments. (See Note 8 “Fair Value Measurements” for further detail). The fair value option may be elected only upon the occurrence of certain specified events, including when the Company enters into an eligible firm commitment, at initial recognition of

13


 

the financial instrument, as well as upon a business combination or consolidation of a subsidiary. The election is irrevocable unless a new election event occurs. The Company elected the fair value option for the General Partner Notes Payable.

Investments — A non-controlling, unconsolidated ownership interest in an entity may be accounted for using one of: (i) equity method where applicable; (ii) fair value option if elected; (iii) fair value through earnings if fair value is readily determinable, including election of net asset value (“NAV”) practical expedient where applicable; or (iv) for equity investments without readily determinable fair values, the measurement alternative to measure at cost adjusted for any impairment and observable price changes, as applicable.

Changes in fair value of equity method investments are recorded in realized and unrealized gains (losses) in the condensed combined and consolidated statements of operations.

Equity Method Investments

The Company accounts for investments under the equity method of accounting if it has the ability to exercise significant influence over the operating and financial policies of an entity but does not have a controlling financial interest. The equity method investment is initially recorded at cost and adjusted each period for capital contributions, distributions and the Company’s share of the entity’s net income or loss as well as other comprehensive income or loss. The Company’s share of net income or loss may differ from the stated ownership percentage interest in an entity if the governing documents prescribe a substantive non-proportionate earnings allocation formula or a preferred return to certain investors. The Company’s share of earnings (losses) from equity method investments is determined using a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, at the end of each reporting period Bridge calculates the accrued performance allocations that would be due to Bridge for each fund pursuant to the fund agreements as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as accrued performance allocations to reflect either (a) positive performance resulting in an increase in the accrued performance allocation to the general partner, or (b) negative performance that would cause the amount due to Bridge to be less than the amount previously recognized as revenue, resulting in a negative adjustment to the accrued performance allocation to the general partner. In each scenario, it is necessary to calculate the accrued performance allocation on cumulative results compared to the accrued performance allocation recorded to date and make the required positive or negative adjustments. Bridge ceases to record negative performance allocations once previously accrued performance allocations for such fund have been fully reversed. Bridge is not obligated to pay guaranteed returns or hurdles in this situation, and therefore, cannot have negative performance allocations over the life of a fund. The carrying amounts of equity method investments are reflected in investments in the condensed combined and consolidated balance sheets.

For certain equity method investments, the Company records its proportionate share of income on a one to three-month lag. Distributions of operating profits from equity method investments are reported as operating activities, while distributions in excess of operating profits are reported as investing activities in the condensed combined and consolidated statements of cash flows under the cumulative earnings approach.

Impairment

Evaluation of impairment applies to equity method investments and equity investments under the measurement alternative. If indicators of impairment exist, the Company will estimate the fair value of its investment. In assessing fair value, the Company generally considers, among others, the estimated enterprise value of the investee or fair value of the investee’s underlying net assets, including net cash flows to be generated by the investee as applicable, and for equity method investees with publicly traded equity, the traded price of the equity securities in an active market.

For investments under the measurement alternative, if the carrying value of the investment exceeds its fair value, an impairment is deemed to have occurred.

For equity method investments, further consideration is made if a decrease in value of the investment is other-than-temporary to determine if impairment loss should be recognized. Assessment of other-than-temporary impairment (“OTTI”) involves management judgment, including, but not limited to, consideration of the investee’s financial condition, operating results, business prospects and creditworthiness, the Company’s ability and intent to hold the investment until recovery of its carrying value, or a significant and prolonged decline in traded price of the investee’s equity security. If management is unable to reasonably assert that an impairment is temporary or believes that the Company may not fully recover the carrying value of its investment, then the impairment is considered to be other-than-temporary.

14


 

Receivables from Affiliates — Receivables consist principally of amounts due from the funds and other affiliates. These include receivables associated with fund or asset management fees, property management fees and other fees. Additionally, the Company is entitled to reimbursements and/or recovers certain costs paid on behalf of the private funds managed by the Company and related properties operated by the Company, which include: (i) organization and offering costs associated with the formation and offering; (ii) direct and indirect operating costs associated with managing the operations of the properties; and (iii) costs incurred in performing investment due diligence.

The Company facilitates the payments of these fees, which are recorded as receivables-principally from affiliated parties on the condensed combined and consolidated balance sheets, until such amounts are repaid. The Company assesses the collectability of such receivables considering the offering period, historical and forecasted capital raising, and establishes an allowance for any balances considered not collectible. None of the receivables were considered not collectible at the respective balance sheet dates.

Notes Receivable from Affiliates and Employees — During the normal course of business, the Company makes short-term uncollateralized loans to the funds for asset acquisition and working capital. The Company also has notes receivable with employees to purchase an equity interest in the Company or its affiliates or managed funds. Interest income is recognized based upon contractual interest rate and unpaid principal balance of the loans. Loan fees on originated loans are deferred and amortized as adjustments to interest income over the expected life of the loans using the effective yield method.

Prepaid and Other Current Assets — Prepaid and other current assets consist of prepaid expenses, primarily related to software contracts, which are usually for multiple months and are amortized on a straight-line basis over the life of the contract. Additionally, there was a $1.1 million refundable deposit until January 1, 2021 related to a subscription in a sponsored fund, which was invested on January 1, 2021.

Tenant Improvements, Furniture and Equipment — Tenant improvements, furniture and equipment are stated at cost, net of depreciation. Tenant improvements are depreciated on a straight-line basis over shorter of remaining lease term or remaining useful life of the improvement. Depreciation of furniture and equipment is computed on the straight-line basis over estimated useful lives of three to ten years.

Intangible Assets — The Company’s finite-lived intangible assets primarily consist of acquired contractual rights to earn future management and advisory fee income. Intangible assets with a finite life are amortized based on the pattern in which the estimated economic benefits of the intangible asset on a straight-line basis, ranging from 6 to 10 years. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the intangible. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount exceeds the fair value of the asset.

Goodwill — The Company has goodwill of $9.8 million related to the acquisition of Bridge Property Management, L.C. (“BPM”) and Bridge Acquisitions, Asset Management, and Dispositions LLC (“BAA&D”) in 2012, and Bridge Commercial Real Estate LLC (“BCRE”) and affiliated companies in 2016. Goodwill represents the excess amount of consideration transferred in a business combination above the fair value of the identifiable net assets. Goodwill is assessed for impairment at least annually using a qualitative and, if necessary, a quantitative approach. The Company performs its annual goodwill impairment test as of December 31, or more frequently, if events and circumstances indicate that an impairment may exist. Goodwill is tested for impairment at the reporting unit level. The initial assessment for impairment under the qualitative approach is to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If the qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, a quantitative assessment is performed to measure the amount of impairment loss, if any. The quantitative assessment includes comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, an impairment loss is recognized equal to the lesser of (a) the difference between the carrying amount of the reporting unit and its fair value and (b) the total carrying amount of the reporting unit’s goodwill. The Company performed an annual goodwill impairment assessment as of December 31, 2020 and determined that there was 0 impairment of goodwill.

The Company also tests goodwill for impairment in other periods if an event occurs or circumstances change such that is more likely than not to reduce the fair value of the reporting unit below its carrying amount. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including the Company’s interpretation of current economic indicators and market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due to the uncertainties associated with such estimates, actual results could differ from such estimates. As of September 30, 2021, there were 0 indicators of goodwill impairment.

15


 

Other Assets — Other assets is comprised of deferred income taxes related to the operations of BIGRM and financing costs related to a line of credit arrangement, which are amortized on the straight-line basis over the life of the line of credit. Additionally, the Company capitalized costs to obtain the contracts when the investor is deemed to be a customer.

Accounts Payable and Accrued Expenses — Accounts payables and accrued expenses include payables to vendors, interest payable, and payables to the properties and funds during the normal course of business.

Other Current Liabilities — Other current liabilities include unearned management fees, advanced payments and short-term deferred rent obligations.

Other Long-term Liabilities — Other long-term liabilities include long-term deferred rent obligations and lease incentives.

Business Combinations

Definition of a Business — The Company evaluates each purchase transaction to determine whether the acquired assets meet the definition of a business. If substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, then the set of transferred assets and activities is not a business. If not, for an acquisition to be considered a business, it would have to include an input and a substantive process that together significantly contribute to the ability to create outputs (i.e., there is a continuation of revenue before and after the transaction). A substantive process is not ancillary or minor, cannot be replaced without significant costs, effort or delay or is otherwise considered unique or scarce. To qualify as a business without outputs, the acquired assets would require an organized workforce with the necessary skills, knowledge and experience that performs a substantive process.

Asset Acquisitions — For acquisitions that are not deemed to be businesses, the assets acquired are recognized based on their cost to the Company as the acquirer and no gain or loss is recognized. The cost of assets acquired in a group is allocated to individual assets within the group based on their relative fair values and does not give rise to goodwill. Transaction costs related to acquisition of assets are included in the cost basis of the assets acquired.

Acquisitions of Businesses — The Company accounts for acquisitions that qualify as business combinations by applying the acquisition method. Transaction costs related to acquisition of a business are expensed as incurred and excluded from the fair value of consideration transferred. The identifiable assets acquired, liabilities assumed and non-controlling interests in an acquired entity are recognized and measured at their estimated fair values. The excess of the fair value of consideration transferred over the fair values of identifiable assets acquired, liabilities assumed and non-controlling interests in an acquired entity, net of fair value of any previously held interest in the acquired entity, is recorded as goodwill. Such valuations require management to make significant estimates and assumptions.

Revenue Recognition — Revenues consist of fund management fees, property management and leasing fees, construction management fees, development fees, transaction fees, insurance premiums and other asset management and property income. The Company recognizes revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company’s revenue is based on contracts with a determinable transaction price and distinct performance obligations with probable collectability. Revenues are not recognized until the performance obligation(s) are satisfied.

Fund Management Fees

Fund management fees are generally based on a defined percentage of total commitments, invested capital or NAV of the investment portfolios managed by the Fund Managers. Following the expiration or termination of the investment period, the basis on which management fees are earned for certain closed-end funds and managed accounts, generally changes from committed capital to invested capital with no change in the management fee rate. The fees are generally based on a quarterly measurement period and amounts are paid in advance of recognizing revenue. Management fees are recognized as revenue in the period advisory services are rendered, subject to our assessment of collectability. Fund management fees also include management fees for joint ventures and separately managed accounts. For Company sponsored closed-end funds, the capital raising period is generally 18-24 months. The Fund Managers charge catch-up management fees to investors who subscribe in later closings in amounts equal to the fees they would have paid if they had been in the initial closing (plus interest as if the investor had subscribed in the initial closing). Catch-up management fees are recognized in the period in which the limited partner subscribes to the fund. Fund management fees are presented net of placement agent fees, where Bridge is acting as an agent in the arrangement.

16


 

Property Management and Leasing Fees

Property management fees are earned as the related services are provided under the terms of the respective property management agreements. Included in management fees are certain expense reimbursements where the Company is considered the principal under the agreements and is required to record the expense and related reimbursement revenue on a gross basis. The Company also earns revenue associated with the leasing of commercial assets. The revenue is recognized upon the execution of the lease agreement.

Construction Management Fees

Construction management fees are earned as the services are provided under the terms of the property management agreement with each property.

Development Fees

Development fees are earned as the services are provided under the terms of the development agreement with each asset.

Transaction Fees

The Company earns transaction fees associated with the due diligence related to the acquisition of assets and financing of assets. The fees are recognized upon the acquisition of the asset or origination of the mortgage or other debt, as applicable.

Insurance Premiums

BIGRM insures multifamily and commercial properties owned by the funds. BIGRM insures direct risks including lease security deposit fulfillment, lessor legal liability, workers compensation deductible, property deductible and general liability deductible reimbursements. Tenant liability premiums are earned monthly. Deposit eliminator premiums are earned in the month that they are written. Workers’ compensation and property deductible premiums are earned over the terms of the policy period.

Other Asset Management and Property Income

Other Asset Management and Property Income is comprised of, among other things interest on catch-up management fees, fees related to in-house legal and tax professional fees, which is generally billed on an hourly rate to various Bridge funds and properties and other miscellaneous fees.

Investment Income (inclusive of incentive fees and performance allocation)

Performance income is based on certain specific hurdle rates as defined in the applicable investment management agreements or fund or joint venture governing documents. Substantially all performance income is earned from funds and joint ventures managed by affiliates of the Company.

Incentive Fees

Incentive fees comprise fees earned from certain fund investor investment mandates for which the Company does not have a general partner interest in a fund. The Company recognizes incentive fee revenue only when these amounts are realized and no longer subject to significant reversal, which is typically at the end of a defined performance period and/or upon expiration of the associated clawback period.

Performance Allocation

Carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s partnership agreement or other governing documents. At the end of each reporting period, a fund will allocate carried interest applicable to the Company based upon an assumed liquidation of that fund’s net assets on the reporting date, irrespective of whether such amounts have been realized. Carried interest is recorded to the extent such amounts have been allocated and may be subject to reversal to the extent that the amount allocated exceeds the amount due to the general partner based on a fund’s cumulative investment returns. Accordingly,

17


 

the amount recognized as performance allocation revenue reflects our share of the gains and losses of the associated fund’s underlying investments measured at their then-fair values, relative to the fair values as of the end of the prior period.

As the fair value of underlying assets varies between reporting periods, it is necessary to make adjustments to amounts recorded as carried interest to reflect either (i) positive performance resulting in an increase in the carried interest allocated to the Company or (ii) negative performance that would cause the amount due to the Company to be less than the amount previously recognized as revenue, resulting in a reversal of previously recognized carried interest allocated to the Company. Accrued but unpaid carried interest as of the reporting date is recorded within accrued performance allocations compensation in the condensed combined and consolidated balance sheet.

Carried interest is realized when an underlying investment is profitably disposed of, and the fund’s cumulative returns are in excess of the specific hurdle rates as defined in the applicable investment management agreements or fund or joint venture governing documents. Since carried interest is subject to reversal, the Company may need to accrue for potential repayment of previously received carried interest. This accrual represents all amounts previously distributed to the Company that would need to be repaid to the funds if the funds were to be liquidated based on the current fair value of the underlying funds’ investments as of the reporting date. The actual repayment obligations, however, generally do not become realized until the end of a fund’s life.

The Company accounts for carried interest, which represents a performance-based capital allocation from a fund General Partner to the Company, as earnings from financial assets within the scope of ASC 323, Investments—Equity Method and Joint Ventures. The underlying investments in the funds upon which the allocation is based reflect valuations on a three-month lag. The Company recognizes performance allocation as a separate revenue line item in the condensed combined and consolidated statements of operations with uncollected carried interest as of the reporting date reported within investments in the condensed combined and consolidated balance sheet.

Employee Compensation and Benefits — Compensation comprises salaries, bonus (including discretionary awards), related benefits, share-based compensation, and cost of processing payroll. Bonuses are accrued over the employment period to which they relate. Equity-classified awards granted to employees that have a service condition only are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. Fair value is determined using a Monte Carlo valuation at date of grant or date of remeasurement. The Company recognizes compensation expense over the requisite service period of the awards, with the amount of compensation expense recognized at the end of a reporting period at least equal to the fair value of the portion of the award that has vested through that date. Compensation expense is adjusted for actual forfeitures upon occurrence. Please refer to Note 22 for additional information.

Performance Allocations Compensation — A portion of the performance allocations earned is awarded to employees in the form of carried interest (“carry awards”). The Company evaluates performance allocation awards to determine if they are liability-classified carry awards or equity-classified carry awards.

Liability-classified carry awards granted to employees and other participants are accounted for as a component of compensation and benefits expense contemporaneously with our recognition of the related realized and unrealized performance allocation revenue. Upon a reversal of performance allocation revenue, the related compensation expense, if any, is also reversed. Liabilities recognized for carried interest amounts due to affiliates are not paid until the related performance allocation revenue is realized. The Company records incentive fee compensation when it is probable that a liability has been incurred and the amount is reasonably estimable. The incentive fee compensation accrual is based on a number of factors, including the cumulative activity for the period and the expected timing of the distribution of the net proceeds in accordance with the applicable governing agreement. There was $14.2 million of accrued performance allocations accrued prior to the IPO related to the Contributed Bridge GPs that were previously treated as liabilities that were exchanged for interests in the Operating Company at fair value and as such were treated as an extinguishment of a liability with equity. No gain or loss was recorded in the statement of operations related to this transaction.

Third-party Operating Expenses — Third-party operating expenses represent transactions, largely operation and leasing of assets, with third-party operators of real estate owned by the funds where the Company was determined to be the principal rather than the agent in the transaction.

Realized and Unrealized Gains (Losses) — Realized gains (losses) occur when the Company redeems all or a portion of its investment or when the Company receives cash income, such as dividends or distributions. Unrealized appreciation (depreciation) results from changes in the fair value of the underlying investment as well as from the reversal of previously recognized unrealized appreciation (depreciation) at the time an investment is realized. The Company’s share of the investee’s income and expenses for the Company’s equity method investments (exclusive of carried interest) is also included within realized and unrealized gains (losses). Realized and unrealized gains (losses) are presented together as realized and unrealized gains (losses) in the condensed combined and consolidated statements of operations.

18


 

The realized and unrealized change in gain (loss) associated with the financial instruments that we elect the fair value option is also included in realized and unrealized gains (losses).

Interest Income — Interest (other than interest on catch-up management fees) and other investment income are included in interest income. Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method.

Foreign Currency — The U.S. dollar is the Company’s functional currency; however, certain transactions of the Company may not be denominated in U.S. dollars. Foreign exchange revaluation arising from these transactions is recognized within other income (expense) in the condensed and combined and consolidated statements of operations. For the three and nine months ended September 30, 2021, transaction losses related to foreign currencies revaluation were immaterial.

In addition, the condensed combined and consolidated results include certain foreign subsidiaries that use functional currencies other than the U.S. dollar. Assets and liabilities of these foreign subsidiaries are translated to U.S. dollars at the prevailing exchange rates as of the reporting date. Income and expense and gain and loss transactions denominated in foreign currencies are generally translated into U.S. dollars monthly using the average exchange rates during the respective transaction period. Translation adjustments resulting from this process are recorded to currency translation adjustment in accumulated other comprehensive income (loss).

Income Taxes — The Company is a corporation for U.S. federal income tax purposes and therefore is subject to U.S. federal and state income taxes on its share of taxable income generated by the Operating Company. The Operating Company is treated as a pass-through entity for U.S. federal and state income tax purposes. As such, income generated by the Operating Company flows through to its members, including the Company, and is generally not subject to U.S. federal or state income tax at the level of the Operating Company. The Operating Company’s non-U.S. subsidiaries generally operate as corporate entities in non-U.S. jurisdictions, with certain of these entities subject to local or non-U.S. income taxes. Additionally, certain subsidiaries are subject to local jurisdiction taxes at the entity level, with the related tax provision reflected in the condensed combined and consolidated statements of operations. As a result, the Operating Company does not generally record U.S. federal and state income taxes on its income or that of its subsidiaries, except for certain local and foreign income taxes discussed above.

Taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases, using tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period when the change is enacted. The principal items giving rise to temporary differences are certain basis differences resulting from exchanges of units in the Operating Company.

Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The realization of deferred tax assets is dependent on the amount, timing and character of the Company’s future taxable income. When evaluating the realizability of deferred tax assets, all evidence – both positive and negative – is considered. This evidence includes, but is not limited to, expectations regarding future earnings, future reversals of existing temporary tax differences and tax planning strategies.

The Company is subject to the provisions of ASC Subtopic 740-10, Accounting for Uncertainty in Income Taxes. This standard establishes consistent thresholds as it relates to accounting for income taxes. It defines the threshold for recognizing the benefits of tax return positions in the financial statements as more likely than not to be sustained by the relevant taxing authority and requires measurement of a tax position meeting the more likely than not criterion, based on the largest benefit that is more than 50% likely to be realized. If upon performance of an assessment pursuant to this subtopic, management determines that uncertainties in tax positions exist that do not meet the minimum threshold for recognition of the related tax benefit, a liability is recorded in the condensed combined and consolidated financial statements. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as general, administrative and other expenses in the condensed combined and consolidated statements of operations. See Note 17 “Income Taxes” for more information.

Other than BIGRM and Bridge PM, Inc., the Operating Company and its subsidiaries are limited liability companies and partnerships, as such, are not subject to income taxes; the individual members of the Operating Company are required to report their distributive share of the Operating Company’s realized income, gains, losses, deductions, or credits on their individual income tax returns.

Tax Receivable Agreement — In connection with the IPO, the Company entered into a Tax Receivable Agreement with the Operating Company and each of the Continuing Equity Owners that provides for the payment by the Company to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that the Company actually realizes (or in some circumstances is deemed to realize) as a result of (1) increases in the Company’s allocable share of the tax basis of the Operating Company’s assets resulting

19


 

from (a) the Company’s purchase of Class A Units directly from the Operating Company and the partial redemption of Class A Units by the Operating Company in connection with the IPO, (b) future redemptions or exchanges (or deemed exchanges in certain circumstances) of Class A Units for Class A common stock or cash and (c) certain distributions (or deemed distributions) by the Operating Company; (2) the Company’s allocable share of the existing tax basis of the Operating Company’s assets at the time of any redemption or exchange of Class A Units (including in connection with the IPO), which tax basis is allocated to the Class A Units being redeemed or exchanged and acquired by the Company and (3) certain additional tax benefits arising from payments made under the Tax Receivable Agreement. The Company will retain the benefit of the remaining 15% of these net cash tax savings under the Tax Receivable Agreement.

Comprehensive Income — Other comprehensive income consists of net income and other appreciation (depreciation) affecting the Company that, under GAAP, are excluded from net income. The Company’s other comprehensive income includes foreign currency translation adjustments.

Segments — The Company operates its business in a single segment, which is how the chief operating decision maker (who is our chairman) reviews financial performance and allocates resources.

Recently Adopted Accounting Standards

Consolidation — In October 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2018-17, an update to ASC Topic 810, Consolidations. ASU 2018-17 requires reporting entities to consider indirect interests held by related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety in determining whether a decision-making fee is a variable interest. ASU 2018-17 is effective for interim and annual reporting periods in fiscal years that begin after December 15, 2019, with early adoption permitted. The Company adopted the provisions of ASU 2018-17 on January 1, 2020. This adoption did not have an impact on the condensed combined and consolidated financial statements.

Fair Value — In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements. The ASU requires new disclosures of changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements of instruments held at balance sheet date, as well as the range and weighted-average or other quantitative information, if more relevant, of significant unobservable inputs for recurring and nonrecurring Level 3 fair values. Certain previously required disclosures are eliminated, specifically around the valuation process required for Level 3 fair values, policy for timing of transfers between levels of the fair value hierarchy, as well as amounts and reason for transfers between Levels 1 and 2. Additionally, the new guidance clarifies or modifies certain existing disclosures, including clarifying that information about measurement uncertainty of Level 3 fair values should be as of reporting date and requiring disclosures of the timing of liquidity events for investments measured under the NAV practical expedient, but only if the investee has communicated this information or has announced it publicly. The provisions on new disclosures and modification to disclosure of Level 3 measurement uncertainty are to be applied prospectively, while all other provisions are to be applied retrospectively. ASU No. 2018-13 was effective January 1, 2020. The adoption of this standard did not have a material effect on the Company’s existing disclosures.

Income Taxes —In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for public entities for annual reporting periods beginning after December 15, 2020 and interim periods within those reporting periods, with early adoption permitted. The amendments in this update related to separate financial statements of legal entities that are not subject to tax should be applied on a retrospective basis for all periods presented. The amendments related to changes in ownership of foreign equity method investments or foreign subsidiaries should be applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The amendments related to franchise taxes that are partially based on income should be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. All other amendments should be applied on a prospective basis. The adoption of this standard did not have a material effect on the Company’s combined and consolidated financial statements.

Recent Accounting Pronouncements (Not Yet Adopted)

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires an entity to recognize right-of-use assets and lease liabilities on its balance sheet for all leases and to disclose certain information about leasing arrangements. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. For public business entities, ASU 2016-02 was effective for annual reporting periods beginning after December 15, 2018. On June 3, 2020, the FASB extended the

20


 

adoption date for all other entities, including emerging growth companies (“EGCs”), as defined by the SEC, that have elected to defer adoption until the standard is effective for non-public business entities, to annual periods beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022, with early adoption permitted. The Company qualifies as an EGC and has elected to take advantage of the extended transition period afforded to EGCs as it applies to the adoption of new accounting standards. Upon adoption of this guidance, the Company expects to record right-of-use assets and lease liabilities on its consolidated balance sheets, relating to its operating leases. However, the Company does not expect the adoption to materially impact its consolidated statements of operations because substantially all of its leases are classified as operating leases, which will continue to be recognized as expense on a straight-line basis under the new guidance.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, which changes the accounting for recognizing impairments of financial assets. Under this guidance, credit losses for certain types of financial instruments will be estimated based on expected losses. The guidance also modifies the impairment models for available-for-sale debt securities and purchased financial assets with credit deterioration since their origination. This guidance is effective for annual and interim periods beginning after December 15, 2022 for EGCs that have elected to defer adoption until the guidance becomes effective for non-public entities, with early adoption permitted. The Company does not expect the adoption to have a material impact to our consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. An entity may elect to adopt the amendments in ASU 2020-04 and ASU 2021-01 at any time after March 12, 2020 but no later than December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. 

3.
REVENUE

The Company earns base management fees for the day-to-day operations and administration of its managed private funds and other investment vehicles. Other revenue sources include insurance premiums, other asset management and property income and are described elsewhere in the Quarterly Report. The following tables present revenues disaggregated by product offering, which aligns with the Company’s performance obligations and the basis for calculating each amount:

 

FUND MANAGEMENT FEES

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Funds

 

$

38,827

 

 

$

25,152

 

 

$

101,808

 

 

$

73,791

 

Joint ventures and separately managed accounts

 

 

1,749

 

 

 

1,472

 

 

 

4,155

 

 

 

4,275

 

Total fund management fees

 

$

40,576

 

 

$

26,624

 

 

$

105,963

 

 

$

78,066

 

 

PROPERTY MANAGEMENT AND LEASING FEES

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Seniors Housing

 

$

6,433

 

 

$

6,490

 

 

$

19,589

 

 

$

20,641

 

Multifamily

 

 

4,536

 

 

 

3,839

 

 

 

12,951

 

 

 

11,227

 

Office

 

 

11,541

 

 

 

3,418

 

 

 

21,052

 

 

 

13,246

 

Total property management and leasing fees

 

$

22,510

 

 

$

13,747

 

 

$

53,592

 

 

$

45,114

 

 

CONSTRUCTION MANAGEMENT FEES

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Multifamily

 

$

1,295

 

 

$

911

 

 

$

3,353

 

 

$

2,906

 

Office

 

 

730

 

 

 

796

 

 

 

2,308

 

 

 

2,297

 

Seniors Housing

 

 

72

 

 

 

85

 

 

 

327

 

 

 

366

 

Total construction management fees

 

$

2,097

 

 

$

1,792

 

 

$

5,988

 

 

$

5,569

 

 

21


 

 

TRANSACTION FEES

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Acquisition fees

 

$

19,838

 

 

$

3,793

 

 

$

37,627

 

 

$

15,877

 

Brokerage fees

 

 

2,069

 

 

 

1,292

 

 

 

5,848

 

 

 

4,847

 

Total transaction fees

 

$

21,907

 

 

$

5,085

 

 

$

43,475

 

 

$

20,724

 

 

For the three and nine months ended September 30, 2021 and 2020, no individual client represented 10% or more of the Company’s total reported revenues and substantially all of revenue was derived from operations in the United States.

As of September 30, 2021 and December 31, 2020, the Company had $5.9 million and $2.9 million, respectively, of deferred revenues, which is included in other current liabilities in the condensed combined and consolidated balance sheets. During the three and nine months ended September 30, 2021, the Company recognized $0.3 million and $2.3 million, respectively, as revenue from amounts included in the deferred revenue balance as of December 31, 2020. The Company expects to recognize the deferred revenues within a year of the balance sheet date.

4.
MARKETABLE SECURITIES

The Company invests a portion of the premiums received at BIGRM in exchange traded funds and mutual funds. As of September 30, 2021 and December 31, 2020, the Company’s investment securities are summarized as follows:

 

 

 

 

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

(in thousands)

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

September 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

Exchange traded funds

 

$

1,306

 

 

$

21

 

 

$

 

 

$

1,327

 

Mutual funds

 

 

7,743

 

 

 

39

 

 

 

(1

)

 

 

7,781

 

Total marketable securities

 

$

9,049

 

 

$

60

 

 

$

(1

)

 

$

9,108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

Exchange traded funds

 

$

713

 

 

$

23

 

 

$

 

 

$

736

 

Mutual funds

 

 

4,301

 

 

 

16

 

 

 

 

 

 

4,317

 

Total marketable securities

 

$

5,014

 

 

$

39

 

 

$

 

 

$

5,053

 

 

5.
INVESTMENTS

The Company has interests in 144 partnership or joint venture entities. The limited liability companies and limited partnerships in which the Company is the general partner are generally engaged directly or indirectly in the acquisition, development, operation and ownership of real estate. The accounting principles of these entities are substantially the same as those of the Company. Additionally, the Company has direct investments in several funds, including certain Bridge-sponsored funds. The Company’s investments are summarized below:

 

 

 

 

 

Carrying Value at

 

(in thousands)

 

 

 

September 30,

 

 

December 31,

 

Investments

 

 

 

2021

 

 

2020

 

Accrued performance allocations

 

(1)

 

$

301,910

 

 

$

199,410

 

Partnership interest in Company sponsored funds

 

(2)

 

 

27,871

 

 

 

12,975

 

Investments in third-party partnership

 

(3)

 

 

6,393

 

 

 

2,697

 

Other investments

 

(4)

 

 

4,221

 

 

 

345

 

 

 

 

 

$

340,395

 

 

$

215,427

 

 

(1)
Represents an investment in carried interest in the funds. There is a disproportionate allocation of returns to the Company as general partner or equivalent based on the extent to which cumulative performance of the fund exceeds minimum return hurdles. Investment is valued using NAV of the respective vehicle.
(2)
Investments in the funds and limited partnership interest, included in “other investments” on the consolidated balance sheet, are valued using NAV of the respective vehicle.
(3)
Investments in limited partnership interest in third-party private proptech venture capital firms, included in “other investments” on the consolidated balance sheet. Valued using NAV of the respective vehicle.

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(4)
Other investments, included in “other investments” on the balance sheet, are accounted for using the measurement alternative to measure at cost adjusted for any impairment and observable price changes.

Fair value of the investments is reported on a three-month lag from the fund financial statements due to timing of the information provided by the funds and third-party entities unless information is available on a more-timely basis.

The Company’s equity method investments include investments that are not consolidated, but over which the Company exerts significant influence. The Company evaluates each of its equity method investments to determine if any were significant as defined by guidance from the Securities Exchange Commission. At September 30, 2021, the Company’s investment in Bridge Multifamily Fund III and Bridge Multifamily Fund IV represented 12% and 16% of total assets, respectively. NaN other investment represented greater than 10% of total assets.

The following table presents financial information of our significant equity investment in Bridge Multifamily Fund III:

 

(in thousands)

 

Three Months Ended

 

Investment income

 

September 30, 2021

 

 

September 30, 2020

 

Net earnings from investments in real estate

 

$

5,154

 

 

$

543

 

Interest and other income

 

 

15

 

 

 

0

 

Total investment income

 

 

5,169

 

 

 

543

 

Expenses

 

 

 

 

 

 

Management fees

 

 

1,496

 

 

 

60

 

Partnership expense

 

 

570

 

 

 

42

 

Total expenses

 

 

2,066

 

 

 

102

 

Net investment income

 

 

3,103

 

 

 

441

 

 

 

 

 

 

 

 

Net realized gain on investments in real estate

 

 

90,752

 

 

 

50

 

Changes in unrealized gain on investments in real estate

 

 

41,445

 

 

 

873

 

Unrealized gain on interest rate swap

 

 

1,023

 

 

 

 

Net gain on investments

 

 

133,220

 

 

 

923

 

Net increase in partnersʼ capital resulting from operations

 

$

136,323

 

 

$

1,364

 

 

 

(in thousands)

 

Nine Months Ended

 

Investment income

 

September 30, 2021

 

 

September 30, 2020

 

Net earnings from investments in real estate

 

$

18,716

 

 

$

722

 

Interest and other income

 

 

26

 

 

 

12

 

Total investment income

 

 

18,742

 

 

 

734

 

Expenses

 

 

 

 

 

 

Management fees

 

 

4,796

 

 

 

187

 

Partnership expense

 

 

1,198

 

 

 

326

 

Interest expense

 

 

25

 

 

 

1

 

Total expenses

 

 

6,019

 

 

 

514

 

Net investment income

 

 

12,723

 

 

 

220

 

 

 

 

 

 

 

 

Net realized gain on investments in real estate

 

 

209,867

 

 

 

4,192

 

Changes in unrealized gain on investments in real estate

 

 

63,187

 

 

 

(1,489

)

Unrealized gain on interest rate swap

 

 

3,952

 

 

 

 

Net gain on investments

 

 

277,006

 

 

 

2,703

 

Net increase in partnersʼ capital resulting from operations

 

$

289,729

 

 

$

2,923

 

 

23


 

The following table presents financial information of our significant equity investment in Bridge Multifamily Fund IV:

 

(in thousands)

 

Three Months Ended

 

Investment income

 

September 30, 2021

 

 

September 30, 2020

 

Net earnings from investments in real estate

 

$

18,189

 

 

$

15,169

 

Interest and other income

 

 

136

 

 

 

1

 

Total investment income

 

 

18,325

 

 

 

15,170

 

Expenses

 

 

 

 

 

 

Management fees

 

 

3,822

 

 

 

4,767

 

Partnership expense

 

 

1,617

 

 

 

494

 

Interest expense

 

 

57

 

 

 

110

 

Total expenses

 

 

5,496

 

 

 

5,371

 

Net investment income

 

 

12,829

 

 

 

9,799

 

 

 

 

 

 

 

 

Changes in unrealized gain on investments in real estate

 

 

366,490

 

 

 

45,681

 

Net gain on investments

 

 

366,490

 

 

 

45,681

 

Net increase in partnersʼ capital resulting from operations

 

$

379,319

 

 

$

55,480

 

 

 

 

 

 

 

 

(in thousands)

 

Nine Months Ended

 

Investment income

 

September 30, 2021

 

 

September 30, 2020

 

Net earnings from investments in real estate

 

$

51,268

 

 

$

27,185

 

Interest and other income

 

 

241

 

 

 

2

 

Total investment income

 

 

51,509

 

 

 

27,187

 

Expenses

 

 

 

 

 

 

Management fees

 

 

12,576

 

 

 

14,414

 

Partnership expense

 

 

2,585

 

 

 

1,474

 

Interest expense

 

 

912

 

 

 

920

 

Total expenses

 

 

16,073

 

 

 

16,808

 

Net investment income

 

 

35,436

 

 

 

10,379

 

 

 

 

 

 

 

 

Changes in unrealized gain on investments in real estate

 

 

693,496

 

 

 

120,013

 

Net gain on investments

 

 

693,496

 

 

 

120,013

 

Net increase in partnersʼ capital resulting from operations

 

$

728,932

 

 

$

130,392

 

 

6.
NOTES RECEIVABLE FROM AFFILIATES

As of September 30, 2021 and December 31, 2020, the Company had the following short-term notes receivable from affiliates outstanding:

 

 

 

September 30,

 

 

December 31,

 

(in thousands)

 

2021

 

 

2020

 

Bridge Office Fund II

 

$

14,140

 

 

$

25,770

 

Bridge Debt Strategies Fund I

 

 

5,335

 

 

 

4,500

 

Bridge Seniors Housing Fund I

 

 

0

 

 

 

5,000

 

Bridge Seniors Housing Fund II

 

 

0

 

 

 

5,000

 

Bridge Seniors Housing Fund III

 

 

0

 

 

 

525

 

Total

 

$

19,475

 

 

$

40,795

 

 

As of September 30, 2021, interest on these loans accrued at a fixed rate of 4.025%.

The Company had interest receivable on these notes as of September 30, 2021 and December 31, 2020 totaling $0.2 million and $0.3 million, respectively, which are included in prepaid and other current assets in the accompanying condensed combined and consolidated balance sheets.

7.
NOTES RECEIVABLE FROM EMPLOYEES

During 2021, the Company executed multiple notes with employees, none of whom are officers, to invest in the Company or the Operating Company. As of September 30, 2021, the aggregate outstanding principal amount outstanding was $4.4 million. These

24


 

notes mature in 2029 and are interest only for the first two years after origination, after which they accrue interest at 4.025%. The Company had an interest receivable from balances on these notes as of September 30, 2021 totaling approximately $10,000, which is included prepaid and other current assets in the accompanying condensed combined and consolidated balance sheets.

As of December 31, 2020, the Company had multiple notes with employees with an aggregate outstanding principal amount of $7.4 million. These notes were short-term in nature and accrued interest at 4.025%. During the first quarter of 2021 all of the notes from employees were repaid. The Company had interest receivable from balances on these notes as of December 31, 2020 totaling approximately $2,000, which is included in prepaid and other current assets in the accompanying condensed combined and consolidated balance sheets.

8.
FAIR VALUE MEASUREMENTS

Exchange traded funds: Valued using the market price of the fund as of the combined and consolidated balance sheet dates, September 30, 2021 and December 31, 2020. Exchange traded funds valued using quoted prices are classified within Level 1 of the fair value hierarchy.

Mutual funds: Valued at the number of shares of the underlying fund multiplied by the closing NAV per share quoted by that fund as of the combined and consolidated balance sheet dates, September 30, 2021 and December 31, 2020. The value of the specific funds the Company has invested in are validated with a sufficient level of observable activity to support classification of the fair value measurement as Level 1 in the fair value hierarchy.

Accrued performance allocations and partnership interests: The Company generally values its investments in accrued performance allocations and partnership interests using the NAV per share equivalent calculated by the investment manager as a practical expedient to determining an independent fair value. The Company does not categorize within the fair value hierarchy investments where fair value is measured using the NAV per share practical expedient.

Other Investments: Investments are accounted for using the measurement alternative to measure at cost adjusted for any impairment and observable price changes.

General Partner Notes Payable: Valued using the NAV per share equivalent calculated by the investment manager as a practical expedient to determining an independent fair value.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

25


 

The following table presents assets that are measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

Measured at

 

 

 

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

NAV

 

 

Total

 

September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange traded funds

 

$

1,327

 

 

$

 

 

$

 

 

$

 

 

$

1,327

 

Mutual funds

 

 

7,781

 

 

 

 

 

 

 

 

 

 

 

 

7,781

 

Accrued performance allocations

 

 

 

 

 

 

 

 

 

 

 

301,910

 

 

 

301,910

 

Partnership interests

 

 

 

 

 

 

 

 

 

 

 

34,264

 

 

 

34,264

 

Other

 

 

 

 

 

 

 

 

4,221

 

 

 

 

 

 

4,221

 

Total assets

 

$

9,108

 

 

$

 

 

$

4,221

 

 

$

336,174

 

 

$

349,503

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Partner Notes Payable

 

$

 

 

$

 

 

$

 

 

$

12,007

 

 

$

12,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exchange traded funds

 

$

736

 

 

$

 

 

$

 

 

$

 

 

$

736

 

Mutual funds

 

 

4,317

 

 

 

 

 

 

 

 

 

 

 

 

4,317

 

Accrued performance allocations

 

 

 

 

 

 

 

 

 

 

 

199,410

 

 

 

199,410

 

Partnership interests

 

 

 

 

 

 

 

 

 

 

 

15,672

 

 

 

15,672

 

Other

 

 

 

 

 

 

 

 

345

 

 

 

 

 

 

345

 

Total assets

 

$

5,053

 

 

$

 

 

$

345

 

 

$

215,082

 

 

$

220,480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General Partner Notes Payable

 

$

 

 

$

 

 

$

 

 

$

16,458

 

 

$

16,458

 

 

Accrued carried interest allocations, investments in funds, and investments in limited partnership interests in third-party private funds are valued using NAV of the respective vehicle. The following table presents investments carried at fair value using NAV:

 

 

 

 

 

 

Unfunded

 

(in thousands)

 

Fair Value

 

 

Commitments

 

September 30, 2021:

 

 

 

 

 

 

Accrued performance allocations

 

$

301,910

 

 

$

0

 

Company-sponsored open-end fund

 

 

15,525

 

 

 

0

 

Company-sponsored closed-end funds

 

 

12,346

 

 

 

58

 

Third-party closed-end funds

 

 

6,393

 

 

 

3,352

 

Total

 

$

336,174

 

 

$

3,410

 

 

 

#REF!

 

 

 

 

December 31, 2020:

 

 

 

 

 

 

Accrued performance allocations

 

$

199,410

 

 

$

0

 

Company-sponsored open-end fund

 

 

12,643

 

 

 

0

 

Company-sponsored closed-end funds

 

 

332

 

 

 

58

 

Third-party closed-end funds

 

 

2,697

 

 

 

4,802

 

Total

 

$

215,082

 

 

$

4,860

 

 

The Company can redeem its investment in the Company-sponsored open-end fund with a sixty-day notice. The Company’s interests in its closed-end funds are not subject to redemption, with distributions to be received through liquidation of underlying investments of the funds. The closed-end funds generally have eight-to-ten year lives, which may be extended in one year increments up to two years.

26


 

Fair Value Information of Financial Instruments Reported at Cost

The carrying values of cash, accounts receivable, due from and to affiliates, interest payable and accounts payable approximate fair value due to their short-term nature and negligible credit risk. The following table presents the carrying amounts and estimated fair values of financial instruments reported at amortized cost.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying

 

(in thousands)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

 

Value

 

September 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes Payable, Net (private notes)

 

$

 

 

$

 

 

$

146,211

 

 

$

146,211

 

 

$

150,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes Payable, Net (private notes)

 

$

 

 

$

 

 

$

149,225

 

 

$

149,225

 

 

$

150,000

 

 

Fair values of the Private Notes were estimated by discounting expected future cash outlays at interest rates available to the Company for similar instruments.

9.
TENANT IMPROVEMENTS, FURNITURE AND EQUIPMENT

The following table presents the balances per asset class as of September 30, 2021 and December 31, 2020:

 

 

 

September 30,

 

 

December 31,

 

(in thousands)

 

2021

 

 

2020

 

Tenant improvements

 

$

4,642

 

 

$

3,893

 

Office furniture

 

 

1,674

 

 

 

1,602

 

Office equipment

 

 

211

 

 

 

211

 

Computer equipment

 

 

1,210

 

 

 

1,138

 

Total tenant improvements, furniture and equipment

 

 

7,737

 

 

 

6,844

 

Accumulated depreciation

 

 

(3,537

)

 

 

(2,686

)

Net tenant improvements, furniture and equipment

 

$

4,200

 

 

$

4,158

 

 

Depreciation expense for the Company was $0.3 million for both the three months ended September 30, 2021 and 2020, and $0.9 million for the nine months ended September 30, 2021 compared to $0.8 million for the nine months ended September 30, 2020.

10.
INTANGIBLE ASSETS

The Company amortizes its intangible assets from its business combinations over 6 to 10 years. Amortization is based on the pattern in which the estimated economic benefits of the intangible asset will be consumed. The Company evaluates the recoverability of its intangible assets periodically if there is a triggering event. The amortization expense for these intangible assets was $0.4 million for both the three months ended September 30, 2021 and 2020 and $1.1 million and $1.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Summarized below are the carrying values for the major classes of intangible assets as of September 30, 2021 and 2020:

 

 

 

Weighted

 

Gross

 

 

 

 

 

Net

 

 

 

Average

 

Carrying

 

 

Accumulated

 

 

Carrying

 

(in thousands)

 

Life

 

Amount

 

 

Amortization

 

 

Amount

 

September 30, 2021:

 

 

 

 

 

 

 

 

 

 

 

Customer Lists

 

10 yrs

 

$

6,835

 

 

$

(6,835

)

 

$

0

 

Management Contracts

 

6 yrs

 

 

9,063

 

 

 

(5,272

)

 

 

3,791

 

Total

 

 

 

$

15,898

 

 

$

(12,107

)

 

$

3,791

 

December 31, 2020:

 

 

 

 

 

 

 

 

 

 

 

Customer Lists

 

10 yrs

 

$

6,835

 

 

$

(6,781

)

 

$

54

 

Management Contracts

 

6 yrs

 

 

9,063

 

 

 

(4,207

)

 

 

4,856

 

Total

 

 

 

$

15,898

 

 

$

(10,988

)

 

$

4,910

 

 

27


 

 

11.
INSURANCE LOSS RESERVES AND LOSS AND LOSS ADJUSTMENT EXPENSES

BIGRM is a wholly owned subsidiary of Bridge and is licensed under the Utah Captive Insurance Companies Act. BIGRM provides the following insurance policies:

Lease Security Deposit Fulfillment (limits $500 per occurrence/per property unit)
Lessor Legal Liability (limits $100,000 per occurrence/per property unit)
Workers’ Compensation Deductible Reimbursement (limit $250,000 per occurrence)
Property Deductible Reimbursement ($750,000 per occurrence/$2,000,000 policy annual aggregate)
General Liability Deductible Reimbursement ($5,000,000 in excess of $25,000 per occurrence; $10,000,000 policy annual aggregate)

For BIGRM’s insured risks, claim expenses and the related insurance loss reserve liabilities are based on the estimated cost necessary to settle all reported and unreported claims occurring prior to the balance sheet dates. Additionally, claims are expensed when insured events occur or the estimated settlement costs are updated based on the current facts and the reporting date. Additionally, insurance claim expenses and insurance loss reserves include provisions for claims that have occurred but have yet to be reported. Insurance expenses and the insurance loss reserves for both reported and unreported claims are based on the Company’s previous experience and the analysis of a licensed actuary. Management believes such amounts are adequate to cover the ultimate net cost of insured events incurred through the balance sheet date, September 30, 2021. The insurance loss provisions are estimates and the actual amounts may ultimately be settled for a significantly greater or lesser amount. Any subsequent differences arising will be recorded in the period in which they are determined. As of September 30, 2021 and December 31, 2020, the Company had reserved $5.4 million and $4.4 million, respectively.

12.
SELF-INSURANCE RESERVES

Medical Self-Insurance Reserves — The Company is primarily self-insured for employee health benefits. The Company records its self-insurance liability based on claims filed and an estimate of claims incurred but not yet reported. There is stop-loss coverage for amounts in excess of $125,000 per individual per year. If more claims are made than were estimated or if the costs of actual claims increase beyond what was anticipated, reserves recorded may not be sufficient and additional accruals may be required in future periods. As of September 30, 2021 and December 31, 2020, the Company had reserved $3.4 million and $3.3 million, respectively.

Property and Casualty Reserves — As part of its property management business, the Company arranges for property and casualty risk management for the properties and entities affiliated with the Company (the “Insurance Program”). The Company uses a broker to arrange for insurers to provide coverage deemed necessary by management and required by lenders or property owners. Under the terms of the risk management program, each property has a $25,000 deductible for property and casualty claims for insured events. Insured property losses in excess of $25,000 for multifamily properties and $50,000 of commercial office properties are self-insured or fully insured as described below.

The Risk Management Program for property risks includes a Self-Insured Retention (“SIR”) component in order to more efficiently manage the risks. The Company’s SIR is comprised of a layer of losses that the Company is responsible for satisfying after the properties have met their $25,000 deductible for each claim. That layer covers losses between $25,000 and $100,000 and has no aggregate limit for that layer of risk. All multifamily losses above $100,000 are fully insured. For commercial office, all losses are fully insured after the $50,000 deductible has been met. BIGRM, the captive risk management company wholly owned by the Operating Company, provides a $5.0 million insurance policy to cover the following: 100% of the $2.0 million layer above the multifamily deductible and SIR. All losses above $2.0 million are fully insured by multiple outside insurance carriers. There is also a $750,000 per occurrence limit for any single loss. All losses above the SIR thresholds are fully insured with the exception of catastrophic loss deductibles in excess of the deductibles outlined above. Catastrophic losses, in zones deemed catastrophic (CAT Zones), such as earthquake, named storm and flood zones, have deductibles that equal up to 5% of the insurable value of the property affected for a particular loss. Any catastrophic losses in non-CAT Zones are insured with the same $25,000/$50,000 deductibles and SIR of $75,000 for multifamily properties as outlined above.

On June 20, 2020, the Company added a general liability self-insured retention aggregate limit of $10.0 million with a per occurrence limit of $2.0 million and per location limit of $4.0 million. Any insurance claims above these limits are fully insured by multiple insurance carriers. BPM insured this retention with the BIGRM captive. As of September 30, 2021 and December 31, 2020, the Company had reserved $0.9 million and $0.4 million, respectively.

28


 

As of September 30, 2021 and December 31, 2020, the total self-insurance reserve liability was $4.3 million and $3.7 million, respectively.

13.
GENERAL PARTNER NOTES PAYABLE

The Bridge GPs traditionally have a General Partner commitment to the respective fund, which is usually satisfied by affiliates direct investment into the funds. For the General Partner commitments for BSH I GP, BMF III GP and BDS I GP, this commitment was satisfied by notes payable (“General Partner Notes Payable”) between the General Partner and certain related parties or outside investors (“GP Lenders”) for reduced management fees. Under the terms of the General Partner Notes Payable, the GP Lender enters into a notes payable with the respective General Partner, which then subscribes to the respective fund for the same amount as the amount of the General Partner Note Payable. The General Partner Notes Payable mature based upon the terms of the limited partnership agreement of the respective fund. The carrying value of the General Partner Notes Payable represents the related GP Lender’s net asset value in the fund. The GP Lenders are entitled to all returned capital and profit distributions net of management fees and carried interest. We have elected the fair value option for the General Partner Notes Payable. The changes in value are recorded in realized and unrealized gains (losses). The following table summarizes the carrying value of the General Partner Notes Payable:

 

 

 

 

 

 

Fair Value as of

 

 

Fair Value as of

 

(in thousands)

 

Commitment

 

 

September 30, 2021

 

 

December 31, 2020

 

Bridge Seniors Housing Fund I

 

$

4,775

 

 

 

5,274

 

 

$

5,243

 

Bridge Multifamily Fund III

 

 

9,300

 

 

 

6,733

 

 

 

8,643

 

Bridge Debt Strategies Fund I

 

 

 

 

 

 

 

 

2,572

 

Total

 

$

14,075

 

 

 

12,007

 

 

$

16,458

 

 

The Company has no repayment obligation other than the return of capital and profit distributions, net of management fees and carried interest allocation of the respective fund.

14.
LINE OF CREDIT

On July 22, 2020, the Company entered in a secured revolving line of credit to borrow up to $75.0 million (“Line of Credit”). Debt issuance costs related to the Line of Credit are included in other assets in the condensed combined and consolidated balance sheets. The Company did 0t have an outstanding balance on the Line of Credit as of September 30, 2021 and December 31, 2020. Borrowings under this arrangement accrue interest at LIBOR plus 2.25%. The revolving Line of Credit contains various financial covenants applicable to the Company. The covenants require the Company to maintain (1) a Consolidated Total Debt to Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) ratio of no more than 3.0, (2) minimum liquidity of $2.5 million, (3) $20.0 million of affiliate deposits in a specific financial institution and (4) minimum quarterly EBITDA of $10.0 million. As of September 30, 2021, the Company was in full compliance with all debt covenants. The Line of Credit matures on July 22, 2022.

15.
NOTES PAYABLE

On July 22, 2020, Bridge entered into a $150.0 million Note Purchase Agreement, pursuant to which it issued two tranches of notes (the “Private Notes”). As of September 30, 2021 and December 31, 2020, unamortized deferred financing costs were $2.0 million and $2.3 million, respectively, and the net carrying value of the Private Notes was $148.0 million and $147.7 million, respectively. The Private Notes has two tranches, a 5-year 3.9% fixed rate tranche that matures on July 22, 2025 and a 7-year 4.15% fixed rate tranche that matures on July 22, 2027. The Private Notes contain various financial covenants applicable to the Company. The covenants require the Company to maintain (1) a Consolidated Total Debt to Consolidated EBITDA ratio no more than 3.0, (2) minimum liquidity of $2.5 million, and (3) minimum quarterly EBITDA of $10.0 million. As of September 30, 2021, the Company was in full compliance with all debt covenants. The Private Notes are collateralized by the assets held by the Company.

The following table presents scheduled principal payments of the Company’s debt as of September 30, 2021:

 

(in thousands)

 

 

 

2021

 

$

0

 

2022

 

 

0

 

2023

 

 

0

 

2024

 

 

0

 

2025

 

 

75,000

 

Thereafter

 

 

75,000

 

Total

 

$

150,000

 

 

29


 

The Company typically incurs and pays debt issuance costs when entering into a new debt obligation or when amending an existing debt agreement. Debt issuance costs related to the Company’s Private Notes are recorded as a reduction of the corresponding debt obligation. All debt issuance costs are amortized over the remaining term of the related obligation.

The following table presents the activity of the Company’s debt issuance costs:

 

 

 

 

 

 

Line of

 

 

 

Private

 

 

credit and

 

(in thousands)

 

Notes

 

 

term loan

 

Unamortized debt issuance costs as of December 31, 2020

 

$

2,257

 

 

$

170

 

Amortization of debt issuance costs

 

 

(322

)

 

 

(70

)

Unamortized debt issuance costs as of September 30, 2021

 

$

1,935

 

 

$

100

 

 

16.
INVESTMENT INCOME (LOSS)

Investment income (loss) in the condensed combined and consolidated statements of operations consist primarily of the realized and unrealized gains and losses on investments (including foreign exchange gains and losses attributable to foreign denominated investments and related activities) and other financial instruments, including those for which the fair value option has been elected. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments during a period. Upon disposition of an investment or financial instrument, previously recognized unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period.

The following table summarizes total investment income (loss) on investments and other financial instruments for the three and nine months ended September 30, 2021 and 2020, respectively.

 

 

 

For the three months ended September 30, 2021

 

(in thousands)

 

Net Realized
Gains (Losses)

 

 

Net Unrealized
Gains (Losses)

 

 

Total

 

Investment in Company-sponsored funds

 

$

(1

)

 

$

(1,269

)

 

$

(1,270

)

Investment in third-party partnerships

 

 

(98

)

 

 

683

 

 

 

585

 

Other investments

 

 

4

 

 

 

2,832

 

 

 

2,836

 

General Partner Notes Payable

 

 

0

 

 

 

414

 

 

 

414

 

Total investment income (loss)

 

$

(95

)

 

$

2,660

 

 

$

2,565

 

 

 

 

For the three months ended September 30, 2020

 

(in thousands)

 

Net Realized
Gains (Losses)

 

 

Net Unrealized
Gains (Losses)

 

 

Total

 

Investment in Company-sponsored funds

 

$

(34

)

 

$

(27

)

 

$

(61

)

Investment in third-party partnerships

 

 

38

 

 

 

(12

)

 

 

26

 

Other investments

 

 

64

 

 

 

(1

)

 

 

63

 

General Partner Notes Payable

 

 

0

 

 

 

(171

)

 

 

(171

)

Total investment income (loss)

 

$

68

 

 

$

(211

)

 

$

(143

)

 

 

 

For the nine months ended September 30, 2021

 

(in thousands)

 

Net Realized
Gains (Losses)

 

 

Net Unrealized
Gains (Losses)

 

 

Total

 

Investment in Company-sponsored funds

 

$

(5

)

 

$

3,184

 

 

$

3,179

 

Investment in third-party partnerships

 

 

(410

)

 

 

2,206

 

 

 

1,796

 

Other investments

 

 

4

 

 

 

2,854

 

 

 

2,858

 

General Partner Notes Payable

 

 

0

 

 

 

830

 

 

 

830

 

Total investment income (loss)

 

$

(411

)

 

$

9,074

 

 

$

8,663

 

 

30


 

 

 

 

For the nine months ended September 30, 2020

 

(in thousands)

 

Net Realized
Gains (Losses)

 

 

Net Unrealized
Gains (Losses)

 

 

Total

 

Investment in Company-sponsored funds

 

$

(35

)

 

$

(26

)

 

$

(61

)

Investment in third-party partnerships

 

 

2

 

 

 

154

 

 

 

156

 

Other investments

 

 

(88

)

 

 

(1

)

 

 

(89

)

General Partner Notes Payable

 

 

0

 

 

 

657

 

 

 

657

 

Total investment income (loss)

 

$

(121

)

 

$

784

 

 

$

663

 

 

17.
INCOME TAXES

Following our IPO, we became a public company on July 16, 2021 and are taxed as a corporation for U.S. federal and state income tax purposes. We are subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to our allocable share of any taxable income generated by the Operating Company that flows through to the Company.

Prior to our becoming a public company, other than BIGRM and Bridge PM, Inc., the Company and its subsidiaries were limited liability companies or limited partnerships and, as such, were not subject to income taxes; the individual owners of Bridge are required to report their distributive share of the Company’s realized income, gains, losses, deductions, or credits on their individual income tax returns.

In connection with the exchanges of Operating Company interests for Class A common stock by the Original Equity Owners in July and August 2021, the Company’s ownership in the Operating Company increased, which resulted in an increase to deferred tax assets in the amount of $62.2 million. Additionally, in connection with the exchange transactions the Company recorded a corresponding Tax Receivable Agreement liability of $44.4 million, representing 85% of the incremental net cash tax savings for the Company due to the exchanging Original Equity Owners.

The Company’s effective tax rate was 2% for the three months ended September 30, 2021. The Company’s effective tax rate is dependent on many factors, including the estimated amount of income subject to tax. Consequently, the effective tax rate can vary from period to period. The Company’s overall effective tax rate in each of the periods described above is less than the statutory rate primarily because (a) the Company was not subject to U.S. federal taxes prior to the Transactions and the IPO and (b) a portion of income is allocated to non-controlling interests, and the tax liability on such income is borne by the holders of such non-controlling interests.

The Company evaluates the realizability of its deferred tax asset on a quarterly basis and adjusts the valuation allowance when it is more likely than not that all or a portion of the deferred tax asset may not be realized.

As of September 30, 2021, the Company had 0 unrecognized tax positions and does not expect any changes to uncertain tax positions within the next 12 months.

The Company files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by U.S. federal, state, local and foreign tax authorities. Although the outcome of tax audits is always uncertain, the Company does not believe the outcome of any future audit will have a material adverse effect on the Company’s condensed combined and consolidated financial statements.

18.
SHAREHOLDERS’ EQUITY

Bridge Investment Group Holdings Inc.

The Company has two classes of common stock outstanding, Class A common stock and Class B common stock. Class A common stock is traded on the New York Stock Exchange. The Company is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.01 per share, 239,208,722 shares of Class B common stock with a par value of $0.01 per share, and 20,000,000 shares of preferred stock, with a par value of $0.01 per share. Each share of Class A common stock is entitled to one vote and each share of Class B common stock is entitled to ten votes. See Note 1 “Organization” for more information about our common stock. As of September 30, 2021, 25,162,561 shares of Class A common stock (including restricted stock) were outstanding, 86,672,703 shares of Class B common stock were outstanding, and there were 0 shares of our preferred stock outstanding. See “Initial Public Offering” for equity transactions resulting from the Company’s IPO.

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The following table presents a reconciliation of Bridge Investment Group Holdings Inc. common stock for the nine months ended September 30, 2021.

 

 

Bridge Investment

 

 

Group Holdings Inc.

 

 

 

 

 

Class A

 

 

 

 

 

Class A

 

 

restricted

 

 

Class B

 

 

common

 

 

common

 

 

common

 

 

stock

 

 

stock

 

 

stock

 

Balance at January 1, 2021

 

0

 

 

 

0

 

 

 

0

 

Effect of Transactions and purchase of
  common stock

 

2,614,690

 

 

 

245,959

 

 

 

97,463,981

 

Class A common stock issued - sold in IPO

 

20,166,278

 

 

 

 

 

 

(10,791,278

)

Restricted stock issued

 

 

 

 

2,153,204

 

 

 

 

Restricted stock forfeited

 

 

 

 

(17,570

)

 

 

 

Balance at September 30, 2021

 

22,780,968

 

 

 

2,381,593

 

 

 

86,672,703

 

 

Bridge Investment Group Holdings LLC

Prior to the IPO, the Operating Company had three classes of membership interests: (i) Class A; (ii) Class B-1; and (iii) Class B-2. Class A and Class B-1 represented the voting equity holders and Class B-2 represented profits interests awarded to employees of the Operating Company. Class B-1 and B-2 interests were issued as “profits interests,” pursuant to agreements entered into with certain employees during 2021, 2020 and 2019. At the time of issuance, the Class B-1 and B-2 interests had a capital account interest of zero percent. The holders of Class B-1 and B-2 interests were entitled to distributions in excess of the defined threshold per the respective award. The holders of Class B-2 interests did not have voting rights. As part of the Transactions, the Class B-1 and Class B-2 Units were exchanged for Class A Units in the Operating Company. As part of the Transactions and IPO, 97,463,981 new Class B Units were issued.

Net profits and any other items of income are allocated to the members’ capital accounts in a manner that is consistent with their respective ownership percentages. Distributions to members are generally made in a manner consistent with their respective ownership percentages at the time the profits were generated and are subject to approval of the Company’s board of directors.

The Operating Company’s Members’ capital interests are transferable; however, transfers are subject to obtaining the prior written consent of the Company, with certain exceptions for transfers to affiliated parties. Members’ liability is limited to the capital account balance. Distributions are reflected in the condensed combined and consolidated statements of changes in shareholders and members’ equity when declared by the board of directors and consist of distributions to members and non-controlling interest holders.

Subsequent to the IPO, the Company is the sole managing member of the Operating Company, and owns 109.7 million Class A Units and 97.5 million Class B Units (voting only), respectively, of the Operating Company, which is 23% and 100% of the total outstanding Class A Units and Class B Units, respectively. The Company controls the business and affairs of the Operating Company and its direct and indirect subsidiaries.

The following table presents a reconciliation of Bridge Investment Group Holdings LLC Interests for the nine months ended September 30, 2021.

 

 

Bridge Investment

 

 

Group Holdings LLC

 

 

 

 

 

 

 

 

Class B-1/2

 

 

Class A

 

 

Class B

 

 

common

 

 

Units

 

 

Units

 

 

units

 

Balance at December 31, 2020

 

75,718,797

 

 

 

0

 

 

 

5,064,378

 

Equity reallocation prior to Transactions
  and IPO

 

5,064,378

 

 

 

97,463,981

 

 

 

(5,064,378

)

Effect of Transactions and purchase of
  units in the partnerships

 

19,541,455

 

 

 

 

 

 

 

Purchase of partnership interests with
  IPO net proceeds

 

9,375,000

 

 

 

 

 

 

 

Exchange of Class A shares issued in IPO

 

 

 

 

 

 

 

 

Balance at September 30, 2021

 

109,699,630

 

 

 

97,463,981

 

 

 

0

 

 

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Initial Public Offering

Bridge GPs

On closing of the IPO, owners of the Contributed Bridge GPs contributed their interests in the respective Contributed Bridge GPs in exchange for LLC Interests in the Operating Company. Prior to the IPO, the Operating Company did not have any direct interest in the Contributed Bridge GPs. These condensed combined and consolidated financial statements include 100% of operations of the Contributed Bridge GPs for the periods presented on the basis of common control prior to the Transactions. Subsequent to the Transactions, the Operating Company consolidated the Contributed Bridge GPs. The net income that is not attributable to the Operating Company is reflected in net income attributable to non-controlling interests in the subsidiaries in the condensed combined and consolidated statements of operations and comprehensive income.

Prior to the Transactions, the Contributed Bridge GPs had three classes of shares: (i) Class A; (ii) Class C; and (iii) Class D. Class A represents the voting interest and Classes C and D represent allocations of carried interest to employees of the Operating Company, which are included in performance allocations compensation. As part of the Transactions, all of the Class C shares of the Contributed Bridge GPs were exchanged for interests in the Operating Company. Generally, if at the termination of a fund, the fund has not achieved investment returns that exceed the preferred return threshold or the funds have received net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Bridge GPs will be obligated to repay an amount equal to the excess of amounts previously distributed to the general partner over the amounts to which the general partner was ultimately entitled (generally net of income tax liabilities associated with related allocations of taxable income).

Dividends and distributions are reflected in the condensed combined and consolidated statements of stockholders’ equity when declared by the Company’s board of directors. Dividends are made to Class A common stockholders and distributions are made to members of the Operating Company and holders of non-controlling interests in subsidiaries.

All of the distributable earnings of the Operating Company prior to the IPO are payable to the Original Equity Owners. As of September 30, 2021, there was $2.3 million that was declared that had not yet been distributed to Original Equity Owners.

19.
COMMITMENTS AND CONTINGENCIES

Long-Term Leases — The Company leases office space generally under long-term non-cancelable operating lease agreements. The terms of each lease are unique and some permit early cancellation, while other leases have only a short period of time remaining on what was originally a longer dated lease agreement that is nearing the maturity.

The table below provides the future minimum rental payments required as of the combined and consolidated balance sheet date, September 30, 2021, in the aggregate and for each of the five succeeding fiscal years for leases greater than a year in length, taking into consideration cancellation options during the life of the lease. As of September 30, 2021, the future minimum lease payments for the remainder of 2021 and the next four years (excluding short-term leases) as well as the total of the minimum lease payments after the next five years for the non-cancellable portion of the lease term described above are as follows:

 

 

 

For the Years Ended

 

(in thousands)

 

December 31,

 

Remainder of 2021

 

$

1,033

 

2022

 

 

3,825

 

2023

 

 

3,621

 

2024

 

 

3,345

 

2025

 

 

3,163

 

Thereafter

 

 

5,485

 

Total

 

$

20,472

 

 

Certain leases contain renewal options, rent escalations based on increases in certain costs incurred by the lessor or increases in the fair market value of the leased property, and terms to pay a proportionate share of the operating expenses. Rent expense is recorded on a straight-line basis over the lease term for leases with determinable rent escalation and lease incentives. These items resulted in long term deferred rent of $0.8 million and $0.7 million as of September 30, 2021 and December 31, 2020, respectively, and short-term deferred rent of $0.1 million as of both September 30, 2021 and December 31, 2020. Total rent expense for all of the Company’s office leases for both the three months ended September 30, 2021 and 2020 was $1.0 million (net of lease incentive

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amortization of $0.1 million). Total rent expense for all of the Company’s office leases for both the nine months ended September 30, 2021 and 2020 was $3.0 million and $3.1 million, respectively, (net of lease incentive amortization of $0.2 million for both periods).

The Company has other operating leases related to computers, copiers and other office equipment that were determined to be immaterial and are not included in the table above.

Allocated Performance Income —Allocated performance income is affected by changes in the fair values of the underlying investments in the funds that we advise. Valuations, on an unrealized basis, can be significantly affected by a variety of external factors including, but not limited to, public equity market volatility, industry trading multiples and interest rates. Generally, if at the termination of a fund (and at interim points in the life of a fund), the fund has not achieved investment returns that (in most cases) exceed the preferred return threshold or (in all cases) the applicable Bridge GP receives net profits over the life of the fund in excess of its allocable share under the applicable partnership agreement, the Bridge GP will be obligated to repay carried interest that was received by the Bridge GP in excess of the amounts to which the Bridge GP is entitled. This contingent obligation is normally reduced by income taxes paid by the members of the Bridge GP (including the Company) related to its carried interest. Additionally, at the end of the life of the funds there could be a payment due to a fund by the Bridge GP if the Bridge GP has recognized more performance income than was ultimately earned. The general partner clawback obligation amount, if any, will depend on final realized values of investments at the end of the life of the fund.

At September 30, 2021 and December 31, 2020, if the Company assumed all existing investments were worthless, the amount of performance income subject to potential repayment by the Bridge GPs, net of tax distributions, which may differ from the recognition of revenue, would have been approximately $117.5 million and $62.7 million, respectively, all of which is reimbursable to the Bridge GPs by certain professionals who are the recipients of such performance income. Management believes the possibility of all of the investments becoming worthless is remote. If the funds were liquidated at their fair values as of September 30, 2021, there is 0 contingent repayment obligation or liability.

Guarantees and Other Commitments — The Company has guaranteed a financing facility of $36.0 million, of which $5.1 million is outstanding at September 30, 2021. This facility has been used to finance acquisition of ownership in the Company. Borrowers under the financing facility have pledged their interest in the Company, which Bridge has a right to in the event of default.

Legal Matters — In the normal course of business, the Company is party to certain claims or legal actions. Although the amount of the ultimate exposure cannot be determined at this time, the Company believes that the resolution of these matters will not have a material adverse effect on its financial position, liquidity or results of operations.

Letters of Credit — In September 2020, the Company agreed to guarantee a $3.0 million standby letter of credit related to the self-insurance program of the properties owned by the funds. Additionally, the Company has agreed to guarantee a $363,000 letter of credit related to one of its operating leases.

Indemnification Arrangements — In the normal course of business and consistent with standard business practices, the Company has provided general indemnifications to certain officers and directors when they act in good faith in the performance of their duties for the Company. The Company’s maximum exposure under these arrangements cannot be determined as these indemnities relate to future claims that may be made against the Company or related parties, but which have not yet occurred. No liability related to these indemnities has been recorded in the condensed combined and consolidated balance sheets as of September 30, 2021. Based on past experience, management believes that the risk of loss related to these indemnities is remote.

20.
VARIABLE INTEREST ENTITIES

A VIE is an entity that lacks sufficient equity to finance its activities without additional subordinated financial support from other parties, or whose equity holders lack the characteristics of a controlling financial interest. The Company sponsors private funds and other investment vehicles as general partner for the purpose of providing investment management services in exchange for management fees and performance-based fees. These private funds are established as limited partnerships or equivalent structures. Limited partners of the private funds do not have either substantive liquidation rights, or substantive kick-out rights without cause, or substantive participating rights that could be exercised by a simple majority of limited partners or by a single limited partner. Accordingly, the absence of such rights, which represent voting rights in a limited partnership, results in the private funds being considered VIEs. The nature of the Company’s involvement with its sponsored funds comprises fee arrangements and equity interests. The fee arrangements are commensurate with the level of management services provided by the Company and contain terms and conditions that are customary to similar at-market fee arrangements.

The Company does not consolidate its sponsored private funds where it has insignificant direct equity interests or capital commitments to these funds as general partner. As the Company’s direct equity interests in its sponsored private funds as general

34


 

partner absorb insignificant variability, the Company is considered to be acting in the capacity of an agent of these funds and is therefore not the primary beneficiary of these funds. The Company accounts for its equity interests in unconsolidated sponsored private funds under the equity method. Additionally, the Company has investments in funds sponsored by third parties that we do not consolidate as we are not the primary beneficiary. The Company’s maximum exposure to loss is limited to the carrying value of its investment in the unconsolidated private funds, totaling $38.5 million and $16.0 million at September 30, 2021 and December 31, 2020, respectively, included in other investments on the condensed combined and consolidated balance sheets.

The Company combines certain VIEs for which it is the primary beneficiary. Pre-IPO VIEs consist of certain operating entities not wholly owned by the Company and include Bridge Seniors Housing Fund Manager LLC, Bridge Debt Strategies Fund Manager LLC, Bridge Office Fund Manager LLC, Bridge Agency MBS Fund Manager LLC, Bridge Logistics Net Lease Fund Manager LLC, Bridge Logistics Properties Fund Manager LLC, and the Bridge GPs. As part of the Transactions and IPO, the Operating Company acquired the non-controlling interest of its consolidated subsidiaries BSHM and BOFM which was accounted for as an equity transaction with no gain or loss recognized in combined net income. The carrying amounts of the non-controlling interest in BSHM and BOFM were adjusted to zero. The assets of the consolidated VIEs totaled $327.2 million and $244.3 million as of September 30, 2021 and December 31, 2020, respectively, while the liabilities of the consolidated VIEs totaled $44.3 million and $51.3 million as of same dates. The assets of the consolidated VIEs may only be used to settle obligations of the same VIE. In addition, there is no recourse to the Company for the consolidated VIEs’ liabilities. Additionally, the Operating Company is a VIE that is consolidated by the Company.

21.
RELATED PARTY TRANSACTIONS

Substantially all of the Company’s revenue is earned from its affiliates, including fund management fees, property management and leasing fees, construction management fees, development fees, transaction fees, insurance premiums, and real estate mortgage brokerage and administrative expense reimbursements. The related accounts receivable is included within Receivables from Affiliates within the condensed combined and consolidated balance sheets.

The Company has investment management agreements with the funds that it manages. In accordance with these agreements, the funds may bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the funds.

The Company also has entered into agreements to be reimbursed for its expenses incurred for providing administrative services to certain related parties, including Bridge Founders Group, LLC. Employees and other related parties may be permitted to invest in Bridge funds alongside fund investors. Participation is limited to individuals who qualify under applicable securities laws. These funds generally do not require these individuals to pay management or performance fees. The Company considers its corporate professionals and non-consolidated funds to be affiliates. Amounts due from and to affiliates were composed of the following:

 

 

 

September 30,

 

 

December 31,

 

(in thousands)

 

2021

 

 

2020

 

Fees receivable from non-consolidated funds

 

$

16,777

 

 

$

15,350

 

Payments made on behalf of and amounts due from non-consolidated entities

 

 

16,891

 

 

 

10,131

 

Total receivables from affiliates

 

$

33,668

 

 

$

25,481

 

 

 

 

 

 

 

 

Related party transactions also include a long-term debt due to affiliates of $44.4 million incurred in connection with the Tax Receivable Agreement (see Note 2 “Significant Accounting Policies” for more details).

22.
SHARE-BASED COMPENSATION AND PROFITS INTERESTS

Restricted Stock and RSUs

On July 6, 2021, the Company adopted the 2021 Incentive Award Plan, which became effective on July 20, 2021, under which 6,600,000 shares of the Company’s Class A common stock were reserved for issuance. As of September 30, 2021, 4,436,674 were still available for future grants. In connection with the IPO, the Company granted 2,146,826 shares of Class A restricted stock and 16,500 restricted stock units (“RSUs”) associated with Class A common stock. Approximately one-third of such restricted stock and RSUs granted vest on the third, fourth and fifth anniversaries of the grant date.

The fair value of the restricted stock and RSUs is based upon our stock price at grant date and is expensed over the vesting period. We classify both restricted stock and RSUs as equity instruments. Compensation expense is included in salaries and employee benefits in the statement of income, with the corresponding increase included in additional paid-in capital. If the recipient leaves prior

35


 

to vesting of the restricted stock or RSUs, the awards are forfeited. During both the three and nine months ended September 30, 2021, the Company reversed $0.3 million of share-based compensation related to restricted stock and RSU forfeitures.

Restricted stock is Class A common stock with certain restrictions that relate to trading and carry the possibility of forfeiture. Holders of restricted stock have full voting rights and receive dividend equivalents during the vesting period. In addition, holders of restricted stock can make an election to be subject to income tax on the grant date rather than the vesting date. RSUs represent rights to one share of common stock for each unit. Holders of RSUs receive dividend equivalents during the vesting period but do not have voting rights.

At September 30, 2021, the aggregate unrecognized compensation cost for all unvested restricted stock and RSU awards was $32.9 million, which is expected to be recognized over a weighted-average period of 3.2 years.

Profits Interests

The Operating Company issued profits interests in the Operating Company and certain Fund Managers in 2019, 2020, and 2021 to certain members of management to participate in the growth of the Operating Company and the respective Fund Managers. A holding company was formed for each of the Fund Managers to hold these profits interests. The holding company’s ownership equates to 5% to 40% of the related Fund Managers above a certain income and valuation threshold. The Operating Company issued two types of profits interests: (i) award shares and (ii) anti-dilutive shares. The fair value of these awards was determined using a Monte Carlo Valuation model. Each of the awards has an earnings threshold for distributions and equity appreciation. The grant date fair value of the profits interests awards are expensed over the vesting period. The award shares are subject to graded vesting with one-third vesting on the third, fourth and fifth anniversaries of the grant date. The Operating Company also issued anti-dilutive awards to active partners. Since the anti-dilutive awards were fully vested, the Company recorded 100% of the fair value as share-based compensation in the year the anti-dilutive shares were granted, which represents $13.6 million, for the nine months ended September 30, 2021.

If the recipient leaves after the awards vest, the Company has the option to repurchase the shares at fair value. If the recipient leaves prior to vesting, the awards are forfeited. The Company reversed share-based compensation expense related to forfeitures of $0.3 million for both the three and nine months ended September 30, 2021.

At September 30, 2021, the aggregate unrecognized compensation cost for all unvested profits interests awards was $11.3 million, which is expected to be recognized over a weighted-average period of 3.0 years.

The following table summarizes our share-based compensation expense associated with our profits interests awards, restricted stock, and RSUs, which is recorded in employee compensation and benefits on the condensed combined and consolidated statement of operations and comprehensive income:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Antidilutive profits interests awards

 

$

0

 

 

$

0

 

 

$

13,609

 

 

$

0

 

Profits interests award shares

 

 

956

 

 

 

387

 

 

 

2,811

 

 

 

1,161

 

Restricted stock

 

 

1,486

 

 

 

0

 

 

 

1,486

 

 

 

0

 

RSUs

 

 

11

 

 

 

0

 

 

 

11

 

 

 

0

 

Total share-based compensation

 

$

2,453

 

 

$

387

 

 

$

17,917

 

 

$

1,161

 

 

As of September 30, 2021, unrecognized share-based compensation on restricted stock, RSUs and profits interests awards is expected to be recognized as follows:

 

 

 

Years Ended December 31,

 

 

 

 

 

 

 

 

 

Profits

 

 

 

 

 

 

Restricted stock

 

 

interests

 

(in thousands)

 

Total

 

 

and RSUs

 

 

awards

 

Remainder of 2021

 

$

3,173

 

 

$

2,248

 

 

$

925

 

2022

 

 

12,694

 

 

 

8,993

 

 

 

3,701

 

2023

 

 

12,088

 

 

 

8,993

 

 

 

3,095

 

2024

 

 

9,607

 

 

 

7,399

 

 

 

2,208

 

2025

 

 

4,964

 

 

 

3,971

 

 

 

993

 

Thereafter

 

 

1,671

 

 

 

1,340

 

 

 

331

 

Total

 

$

44,197

 

 

$

32,944

 

 

$

11,253

 

 

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23.
EARNINGS PER SHARE

We compute earnings per share (“EPS”) only for the period our Class A common stock was outstanding during 2021, specifically the post-IPO period. Basic and diluted net earnings per share of Class A common stock is presented for the period from July 16, 2021 through September 30, 2021, the period following the Transactions and IPO. There were no shares of Class A common stock outstanding prior to the Transactions and the IPO, therefore, no net earnings per share information has been presented for any period prior to the date of the IPO. The following table presents our EPS for July 16, 2021 through September 30, 2021:

 

(in thousands, except share and per share amounts)

 

 

 

Numerator

 

 

 

Net income

 

$

118,882

 

Less: income attributable to non-controlling interests in
  Bridge Investment Group Holdings LLC

 

 

(60,900

)

Less: net income attributable to Common Control Group
  prior to Transactions and IPO

 

 

(3,775

)

Less: income attributable to non-controlling interests in
  Bridge Investment Group Holdings Inc. subsequent to
  Transactions and IPO

 

 

(44,153

)

Net income attributable to Bridge Investment Group
   Holdings Inc. subsequent to Transactions and IPO

 

 

10,054

 

Less: income allocated to restricted stock

 

 

(979

)

Net income available to common shareholders - basic and diluted

 

$

9,075

 

 

 

 

 

Denominator

 

 

 

Weighted-average shares of Class A common stock outstanding - basic and diluted

 

 

22,284,351

 

 

 

 

 

Earnings per share of Class A common stock - basic and diluted

 

$

0.41

 

 

Diluted earnings per share of Class A common stock is computed by dividing net income attributable to Bridge Investment Group Holdings Inc, giving consideration to the reallocation of net income between holders of Class A common stock and non-controlling interest, by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive securities, if any.

Shares of the Company’s Class B common stock do not share in the earnings or losses attributable to the Company and therefore are not participating securities. As a result, a separate presentation of basic and diluted earnings per share of Class B common stock under the two-class method has not been included.

The calculation of diluted earnings per share excludes 97,463,981 Class B Units of the Operating Company, as the inclusion of such shares would be anti-dilutive.

24.
EMPLOYEE BENEFIT PLAN

The Company participates in a defined contribution plan covering all eligible employees whereby employees may elect to contribute a percentage of their compensation to the plan. Employees that are age 21 or older, and have completed 60 days of service, are eligible to participate. During both the three months ended September 30, 2021 and 2020 the Company made contributions of $0.5 million to the plan as an employer match to the employee’s contributions. During the nine months ended September 30, 2021 and 2020, the Company made similar contributions of $2.0 million and $1.6 million.

25.
SUBSEQUENT EVENTS

Dividends to Class A common stockholders

In November 2021, the Company’s board of directors declared a quarterly dividend of $0.24 per share of Class A common stock payable on December 17, 2021 to common stockholders of record at the close of business on December 3, 2021.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section presents management’s perspective on our financial condition and results of operations. The following discussion and analysis is intended to highlight and supplement data and information presented elsewhere in this Quarterly Report on Form 10-Q, including the condensed combined and consolidated financial statements and related notes, and should be read in conjunction with the accompanying tables and our annual audited financial statements in our final prospectus for our IPO, filed with the SEC on July 19, 2021 pursuant to Rule 424(b) under the Securities Act, or the Prospectus. To the extent that this discussion describes prior performance, the descriptions relate only to the periods listed, which may not be indicative of our future financial outcomes. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause results to differ materially from management’s expectations. Factors that could cause such differences are discussed in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors.” We assume no obligation to update any of these forward-looking statements.

Overview

We are a leading, vertically integrated real estate investment manager, diversified across specialized asset classes, with approximately $31.8 billion of AUM as of September 30, 2021. Our ability to scale our specialized and operationally driven investment approach across multiple attractive sectors within real estate equity and debt, in a way that creates sustainable and thriving communities, is the ethos of who we are and the growth engine of our success. We have enjoyed significant growth since our establishment as an institutional fund manager in 2009, driven by strong investment returns, and our successful efforts to develop an array of investment platforms focused on sectors of the U.S. real estate market that we believe are the most attractive. We have extensive multi-channel distribution capabilities and currently manage capital on behalf of more than one hundred global institutions and more than 6,500 individual investors across our investment strategies.

Business Segment

We operate our business in a single segment, real estate investment management, which is how our chief operating decision maker (who is our chairman) reviews financial performance and allocates resources.

Trends Affecting Our Business

Our business is affected by a variety of factors, including conditions in the financial markets and economic and political conditions. Changes in global economic conditions and regulatory or other governmental policies or actions can materially affect the values of our holdings and the ability to source attractive investments and completely deploy the capital that we have raised. However, we believe our disciplined investment philosophy across our diversified investment strategies has historically contributed to the stability of our performance throughout market cycles.

In addition to these macroeconomic trends and market factors, our future performance is heavily dependent on our ability to attract new capital, generate strong, stable returns, source investments with attractive risk-adjusted returns and provide attractive investment products to a growing investor base. We believe our future performance will be influenced by the following factors:

The extent to which fund investors favor private markets investments. Our ability to attract new capital is partially dependent on fund investors’ views of alternative investments relative to traditional asset classes. We believe our fundraising efforts will continue to be subject to certain fundamental asset management trends, including (1) the increasing importance and market share of alternative investment strategies to fund investors of all types as fund investors focus on lower- correlated and absolute levels of return, (2) the increasing demand for private markets from private wealth fund investors, (3) shifting asset allocation policies of institutional fund investors, (4) de-leveraging of the global banking system, bank consolidation and increased regulatory requirements and (5) increasing barriers to entry and growth.
Our ability to generate strong, stable returns and retain investor capital throughout the market cycle. Our ability to raise and retain capital is significantly dependent on our track record and the investment returns we are able to generate for our fund investors. The capital we raise drives growth in our AUM, management fees and performance fees. Although our AUM and fees generated have grown significantly since our inception and particularly in recent years, a significant deterioration in the returns we generate for our fund investors, adverse market conditions or an outflow of capital in the alternative asset management industry in general, or in the real estate space in which we specialize, could negatively affect our future growth rate. In addition, market dislocations, contractions or volatility could adversely affect our returns in the future, which could in turn affect our fundraising abilities. Our ability to retain and attract fund investors also depends on our ability to build and maintain strong relationships with both existing and new fund investors, many of whom place significant emphasis on an asset manager’s track record of strong fund performance and distributions. While we believe that our reputation for generating attractive risk-adjusted returns is favorable to our ability to continue to attract investors,

38


 

we may face greater challenges in raising capital for new verticals as we continue to expand our market presence and asset classes.
Our ability to source investments with attractive risk-adjusted returns. Our ability to continue to grow our revenue is dependent on our continued ability to source attractive investments and efficiently deploy the capital that we have raised. Although the capital deployed in any one quarter may vary significantly from period to period due to the availability of attractive opportunities and the long-term nature of our investment strategies, we believe that our ability to efficiently and effectively invest our growing pool of fund capital puts us in a favorable position to maintain our revenue growth over time. Our ability to identify attractive investments and execute on those investments, including any value-add strategies with respect to such investments, is dependent on a number of factors, including the general macroeconomic environment, market positioning, valuation, size, and the liquidity of such investment opportunities. Moreover, with respect to our Debt Strategies and Agency MBS Funds, macro-economic trends or adverse credit and interest rate environments affecting the quality or quantity of new issuance debt and mortgage-backed securities or a substantial increase in defaults could adversely affect our ability to source investments with attractive risk-adjusted returns. Furthermore, fluctuations in prevailing interest rates could affect not only our returns on debt and mortgage-backed securities, but also our cost of, and ability to secure, borrowings to finance our equity asset acquisitions.
The attractiveness of our product offerings to a broad and evolving investor base. Investors in our industry may have changing investment priorities and preferences over time, including with respect to risk appetite, portfolio allocation, desired returns and other considerations. We continue to expand and diversify our product offerings to increase investment options for our fund investors, while balancing this expansion with our goal of continuing to deliver the consistent, attractive returns that have cultivated our reputation. We believe that continuing to strike that balance is crucial to both our fund investors’ success and satisfaction, as well as our ability to maintain our competitive position and grow our revenue.
Our ability to maintain our data advantage relative to competitors. Our proprietary data and technology platforms, analytical tools and deep industry knowledge allow us to provide our fund investors with customized investment solutions, including specialized asset management services, tailored reporting packages, customized performance benchmarks as well as experienced and responsive compliance, administration, and tax capabilities. Our ability to maintain our data advantage is dependent on a number of factors, including our continued access to a broad set of private market information and our ability to grow our relationships with sophisticated partners and wealth management platforms.

Impact of COVID-19

In March 2020, the World Health Organization declared the outbreak of COVID-19 a global pandemic. The spread of COVID-19 throughout the world led many countries to institute a variety of measures to contain the viral spread, which led to significant disruption and uncertainty in the global financial markets. While many of the initial restrictions in the United States have been relaxed or lifted in an effort to generate more economic activity, the risk of future outbreaks of COVID-19, or variants thereof, or of other public health crises remain, and some restrictions remain in place and lifted restrictions may be reimposed to mitigate risks to public health in jurisdictions where additional outbreaks have been detected. Moreover, even where restrictions are and remain lifted, the timing and effectiveness of vaccine distribution and other factors could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time, potentially further delaying global economic recovery.

We continue to closely monitor developments related to COVID-19 and assess any negative impacts to our business. The COVID-19 pandemic has affected, and may further affect, our business in various ways. In particular, it is possible that our future results may be adversely affected by slowdowns in fundraising activity, the pace of capital deployment and the expansion of our tenant base and our ability to collect rental income when due. See “Risk Factors—Risks Related to Our Industry—The COVID-19 pandemic has caused severe disruptions in the U.S. and global economy, may affect the investment returns of our funds, has disrupted, and may continue to disrupt, industries in which we and our funds operate and could potentially negatively impact us or our funds.”

As the global response to COVID-19 continues to evolve, including recovery from the pandemic, our primary focus continues to be the safety and well-being of our employees and their families, as well as the seamless functioning of the firm in serving our stakeholders and fund investors who have entrusted us with their capital, as well as our tenants and residents at properties we own and/or manage. Some of our employees continue to work remotely. Our technology infrastructure has proven to be robust and capable of supporting this model. We have implemented rigorous protocols for remote work across the firm, including increased cadence of group calls and updates, and frequent communication across leadership and working levels. We are leveraging technology to ensure our teams stay connected and productive, and that our culture remains strong even in these unusual circumstances. In cases where we are not yet able to meet with our fund investors in person, we continue to actively communicate with our fund investors and all of our

39


 

stakeholders through videoconference, teleconference and email. Investment committees continue to convene on their normal schedule, and the firm continues to operate across investment, asset management and corporate support functions.

Key Financial Measures

Our key financial and operating measures are discussed below. Additional information regarding our significant accounting policies can be found in Note 2, “Significant Accounting Policies,” to our condensed combined and consolidated financial statements, which appear elsewhere in this Quarterly Report on Form 10-Q.

Revenues

Fund Management Fees. Fund Management fees are generally based on a defined percentage of total commitments, invested capital, or net asset value (“NAV”), of the investment portfolios that we manage. Generally, with respect to fund management fees charged on committed capital, fund management fees are earned at the management fee rate on committed capital and, beginning at the expiration of the investment period, on invested capital. The majority of our fee-earning AUM pays fees on committed capital during the respective funds’ investment periods, which generally produces more management fee revenue than fees paid on invested capital. The fees are generally based on a quarterly measurement period and paid in advance. We typically share a portion of the fees we earn on capital raised through wirehouse and distribution channels. Fund management fees are recognized as revenue in the period in which advisory services are rendered, subject to our assessment of collectability. As of September 30, 2021, our weighted-average management fee varies by fund and based upon the size of the commitment; however, the low average for a single fund is 0.56% and our high average for a single fund is 1.99% of committed or invested capital for our closed-end funds. Fund management fees also includes management fees for joint ventures and separately managed assets. For our sponsored closed-end funds, our capital raising period is traditionally 18 to 24 months. After the initial closing of a closed-end fund, we charge catch-up management fees to investors who subscribe in subsequent closings in amounts equal to the fees they would have paid if they had subscribed in the initial closing plus interest. Catch-up management fees are recognized in the period in which the investor subscribes to the fund.

Property Management and Leasing Fees. We have vertically integrated platforms where we operate a significant percentage of the real estate properties owned by our funds. As of September 30, 2021, we managed approximately 97% of the multifamily properties, 86% of the office properties and 31% of the seniors housing properties owned by our funds. We also provide property management services for a limited number of third-party owned assets. These fees are based upon cash collections at the managed properties and traditionally range from 2.5% to 3.5% for multifamily assets, 2% to 3% for office assets and 4% to 5% for seniors housing assets. Additionally, we receive leasing fees upon the execution of a leasing agreement for our office assets. We determined that certain third-party asset management costs, for which we are deemed to be the primary obligor, are recorded as gross revenue with a corresponding expense. The gross presentation has no impact on our net income to the extent the expense incurred, and corresponding cost reimbursement income are recognized in the same period. The offset is recorded in third-party operating expenses on the condensed combined and consolidated statement of operations.

Construction Management Fees and Development Fees. The majority of our equity funds have a value-add component, where we seek to make improvements or reposition the properties or have a development strategy. Similar to Property Management Fees, we perform the construction management and development management for certain managed properties and receive fees for these services. These fees are earned as the work is completed. The rates used are based upon market rates and are updated on an annual basis. For small projects, we occasionally charge an immaterial flat fee. For significant projects, the range is generally 0.5% to 5.0% of construction costs.

Transaction Fees. We earn transaction fees associated with the due diligence related to the acquisition of assets and origination of debt financing for assets. The fee is recognized upon the acquisition of the asset or origination of the mortgage or other debt. The rates used are based upon market rates and are updated on an annual basis. For the nine months ended September 30, 2021, the fee range for acquisition fees was 0.5% to 1.0% of the gross acquisition cost of the investment or, in the case of development projects, the total development budget, and the fee range for debt origination was 0.25% to 1.0% of the acquisition price of the real estate acquired or value of the mortgage.

Insurance Premiums. BIGRM is our subsidiary that provides certain insurance products for multifamily and commercial properties owned by the funds. BIGRM insures direct risks including lease security deposit fulfillment, tenant legal liability, workers compensation deductible, property deductible and general liability deductible reimbursements. Tenant legal liability premiums are earned monthly. Deposit eliminator premiums are earned in the month that they are written. Workers’ compensation and property deductible premiums are earned over the terms of the policy period.

40


 

Other Asset Management and Property Income. Other asset management and property income is comprised of, among other things, interest on catch-up management fees, fees related to in-house legal and tax professional fees, which is generally billed on an hourly rate to various Bridge funds and properties, and other miscellaneous fees.

Performance Fees. We earn two types of performance fee revenues: incentive fees and performance allocations, as described below. Incentive fees comprise fees earned from certain fund investor investment mandates for which we do not have a general partner interest in a fund. Performance allocations include the allocation of performance-based fees, commonly referred to as carried interest, from limited partners in the funds to us. As September 30, 2021, we had approximately $12.1 billion of carry-eligible capital across approximately 43 funds and joint ventures, of which 22 were in accrued carried interest positions.

Incentive fees are generally calculated as a percentage of the profits earned with respect to certain accounts for which we are the investment manager, subject to the achievement of minimum return levels or performance benchmarks. Incentive fees are a form of variable consideration and represent contractual fee arrangements in our contracts with our customers. Incentive fees are typically subject to reversal until the end of a defined performance period, as these fees are affected by changes in the fair value of the assets under management or advisement over such performance period. Moreover, incentive fees that are received prior to the end of the defined performance period are typically subject to clawback, net of tax. We recognize incentive fee revenue only when these amounts are realized and no longer subject to significant reversal, which is typically at the end of a defined performance period and/or upon expiration of the associated clawback period (i.e., crystallization). However, clawback terms for incentive fees received prior to crystallization only require the return of amounts on a net of tax basis. Accordingly, the tax basis portion of incentive fees received in advance of crystallization is not subject to clawback and is therefore recognized as revenue immediately upon receipt. Incentive fees received in advance of crystallization that remain subject to clawback are recorded as deferred incentive fee revenue and included in accrued performance allocations compensation in the condensed combined and consolidated balance sheets.

Performance allocations include the allocation of performance-based fees to us from limited partners in the funds in which we hold an equity interest. We are entitled to a performance allocation (typically 15% to 20%) based on cumulative fund or account performance to date, irrespective of whether such amounts have been realized. These performance allocations are subject to the achievement of minimum return levels (typically 6% to 8%), in accordance with the terms set forth in the respective fund’s governing documents. We account for our investment balances in the funds, including performance allocations, under the equity method of accounting because we are presumed to have significant influence as the general partner or managing member. Accordingly, performance allocations are not deemed to be within the scope of Accounting Standards Codification Topic 606, or ASC 606, Revenue from Contracts with Customers. We recognize income attributable to performance allocations from a fund based on the amount that would be due to us pursuant to the fund’s governing documents, assuming the fund was liquidated based on the current fair value of its underlying investments as of that date. Accordingly, the amount recognized as performance allocation income reflects our share of the gains and losses of the associated fund’s underlying investments measured at their then-fair values, relative to the fair values as of the end of the prior period. We record the amount of carried interest allocated to us as of each period end as accrued performance allocations, which is included as a component of investments in the condensed combined and consolidated balance sheets. Performance allocations are realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the specific hurdle rates, as defined in the applicable governing documents. Performance allocations are subject to reversal to the extent that the amount received to date exceeds the amount due to us based on cumulative results. As such, a liability is accrued for the potential clawback obligations if amounts previously distributed to us would require repayment to a fund if such fund were to be liquidated based on the current fair value of their underlying investments as of the reporting date. Actual repayment obligations generally do not become realized until the end of a fund’s life.

Expenses

Employee Compensation and Benefits. Compensation comprises salaries, bonuses (including discretionary awards), related benefits, share-based compensation, and the cost of processing payroll. Bonuses are accrued over the employment period to which they relate.

Share-Based Compensation. To further align the interests of our employees with our shareholders and to cultivate a strong sense of ownership and commitment to our Company, certain employees also are eligible to receive restricted stock, RSUs, profits interests awards and performance allocations. Equity-classified awards granted to employees that have a service condition only are measured at fair value at date of grant and remeasured at fair value only upon a modification of the award. The fair value of the restricted stock and RSUs is based upon our stock price at grant date. The fair value for profits interests awards classified as equity is determined using a Monte Carlo valuation on the grant date or date of remeasurement. We recognize compensation expense on a straight-line basis over the requisite service period of the awards not contingent on employment, with the amount of compensation expense recognized at the end of a reporting period at least equal to the fair value of the portion of the award that has vested through that date. Compensation expense is adjusted for actual forfeitures upon occurrence. See Note 22 “Share-Based Compensation and Profits Interests” to our condensed combined and consolidated financial statements for more information about equity awards.

41


 

Performance Allocations Compensation. Performance fee-related compensation deemed to be liability awards represents the portion of performance allocation revenue and incentive fees that have been awarded to employees as a form of long-term incentive compensation. Performance fee-related compensation is generally tied to the investment performance of the funds. Up to 40% of performance allocation revenue is awarded to employees as part of our long-term incentive compensation plan, fostering alignment of interest with our fund investors and investors, and retaining key investment professionals. Performance allocations related compensation is accounted for as compensation expense in conjunction with the related performance allocation revenue and, until paid, is recorded as a component of accrued performance allocations compensation in the condensed combined and consolidated balance sheets. Amounts presented as realized indicate the amounts paid or payable to employees based on the receipt of performance allocation revenue from realized investment activity. Performance allocations related compensation expense may be subject to reversal to the extent that the related performance allocation revenue is reversed. Performance allocations related compensation paid to employees may be subject to clawback on an after-tax basis under certain scenarios. Incentive fee-related compensation is accrued as compensation expense when it is probable and estimable that payment will be made.

Loss and Loss Adjustment Expenses. Amount includes the estimated liability (based upon actuarial reports) of both losses which have been reported to us, but have not been processed and paid, and losses relating to insured events which have occurred but have not been reported to us.

Third-party Operating Expenses. Costs represents transactions, largely operation and leasing of assets, with third-party operators of real estate owned by the funds where we were determined to be the principal rather than the agent in the transaction.

General and Administrative Expenses. General and administrative expenses include costs primarily related to professional services, occupancy, travel, communication and information services, and other general operating items.

Depreciation and Amortization. Deprecation or amortization of tenant improvements, furniture and equipment and intangible assets is expensed on a straight-line basis over the useful life of the asset.

Other Income (Expense)

Investment Income (Loss). Realized investment income (loss) occurs when the Company redeems all or a portion of its investment or when the Company receives cash income, such as dividends or distributions. Unrealized investment income (loss) results from changes in the fair value of the underlying investment as well as from the reversal of previously recognized unrealized income (loss) at the time an investment is realized. The Company’s share of the investee’s income and expenses for the Company’s equity method investments (exclusive of carried interest) is also included within other investment income (loss). Investment income (loss) is presented together as realized and unrealized income (losses) in the condensed combined and consolidated statements of operations. Finally, the realized and unrealized change in income (loss) associated with the financial instruments that we elect the fair value option is also included in realized and unrealized investment income (loss).

Interest Income. Interest (other than interest on catch-up management fees), dividends and other investment income are included in interest income. Interest income is recognized on an accrual basis to the extent that such amounts are expected to be collected using the effective interest method. Dividends and other investment income are recorded when the right to receive payment is established.

Interest Expense. Interest expense includes interest related to our two tranches of privately offered notes, or the Private Placement Notes, which have a weighted-average fixed coupon rate of 4.03% and our revolving credit facility, which has a variable interest rate of LIBOR plus 2.25%.

Income Tax Provision. Income tax expense consists of taxes paid or payable by us and our operating subsidiaries. Following our IPO, we became a public company on July 16, 2021, and are taxed as a corporation for U.S. federal and state income tax purposes and, as a result, are subject to U.S. federal and state income taxes, in addition to local and foreign income taxes, with respect to our allocable share of any taxable income generated by the Operating Company that will flow through to its members. The Operating Company has been historically treated as a partnership for U.S. federal and state income tax purposes. As such, income generated by the Operating Company flows through to its members and is generally not subject to U.S. federal or state income tax at the Operating Company level. Our non-U.S. subsidiary operates as a corporate entity in non-U.S. jurisdictions. Accordingly, in some cases, this entity is subject to local or non-U.S. income taxes. In addition, certain subsidiaries are subject to local jurisdiction taxes at the entity level, with the related tax provision reflected in the condensed combined and consolidated statements of operations.

Net Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings Inc. Net Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings Inc. represents the economic interests in the Operating Company held by the third-party owners of Class A Units of the Operating Company. Non-controlling interests in Bridge Investment Group Holdings

42


 

Inc. are allocated a share of income or loss in the Operating Company in proportion to their relative ownership interests, after consideration of contractual arrangements that govern allocations of income or loss.

Net Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings LLC. Net Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings LLC represent the economic interests held by management and third parties in the consolidated subsidiaries of the Operating Company, fund manager entities, and employees in those entities. These non-controlling interests are allocated a share of income or loss in the respective consolidated subsidiary in proportion to their relative ownership interests, after consideration of contractual arrangements that govern allocations of income or loss.

For additional discussion of components of our condensed combined and consolidated financial statements, see Note 2, “Significant Accounting Policies,” to our condensed combined and consolidated financial statements.

Operating Metrics

We monitor certain operating metrics that are either common to the asset management industry or that we believe provide important data regarding our business.

Assets Under Management

Assets under management (“AUM”) refers to the assets we manage. Our AUM represents the sum of (a) the fair value of the assets of the funds and vehicles we manage, plus (b) the contractual amount of any uncalled capital commitments to those funds and vehicles (including our commitments to the funds and vehicles and those of Bridge affiliates). Our AUM does not deduct any outstanding indebtedness or other accrued but unpaid liabilities of the assets we manage. We view AUM as a metric to measure our investment and fundraising performance as it reflects assets generally at fair value plus available uncalled capital. Our calculations of AUM and fee-earning AUM may differ from the calculations of other investment managers. As a result, these measures may not be comparable to similar measures presented by other investment managers. In addition, our calculation of AUM includes uncalled commitments to (and the fair value of the assets in) the funds and vehicles we manage from Bridge and Bridge affiliates, regardless of whether such commitments or investments are subject to fees. Our definition of AUM is not based on any definition contained in the agreements governing the funds and vehicles we manage or advise.

The table below presents rollforwards of our AUM for the three and nine months ended September 30, 2021:

 

 

 

Three Months

 

 

Nine Months

 

 

 

Ended

 

 

Ended

 

(in millions)

 

September 30, 2021

 

 

September 30, 2021

 

Balance as of beginning of period

 

$

28,749

 

 

$

25,214

 

New capital / commitments raised(1)

 

 

1,496

 

 

 

2,891

 

Distributions / return of capital(2)

 

 

(345

)

 

 

(661

)

Change in fair value and acquisitions(3)

 

 

1,882

 

 

 

4,338

 

AUM as of end of period

 

$

31,782

 

 

$

31,782

 

Increase

 

 

3,033

 

 

 

6,568

 

Increase %

 

 

10

%

 

 

21

%

 

 

 

 

 

 

 

 

(1)
New capital / commitments raised generally represents limited partner capital raised by our funds and other vehicles, including any reinvestments in our open-ended vehicles.
(2)
Distributions / return of capital generally represents realized proceeds from the disposition of assets, current income, or capital returned to investors.
(3)
Change in fair value and acquisitions generally represents realized and unrealized activity on investments held by our funds and other vehicles (including changes in fair value and changes in leverage) as well as the net impact of fees, expenses, and non-investment income.

Fee-Earning AUM

Fee-earning AUM reflects the assets from which we earn management fee revenue. The assets we manage that are included in our fee-earning AUM typically pay management fees based on capital commitments, invested capital or, in certain cases, NAV, depending on the fee terms.

Management fees are only marginally affected by market appreciation or depreciation because substantially all of the funds pay management fees based on commitments or invested capital.

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Our calculation of fee-earning AUM may differ from the calculations of other investment managers and, as a result, may not be comparable to similar measures presented by other investments managers. The table below presents rollforwards of our total fee-earning AUM for the three and nine months ended September 30, 2021:

 

 

 

Three Months

 

 

Nine Months

 

 

 

Ended

 

 

Ended

 

($ in millions)

 

September 30, 2021

 

 

September 30, 2021

 

Balance as of beginning of period

 

$

10,819

 

 

$

10,214

 

Increases (capital raised/deployment)(1)

 

 

1,422

 

 

 

2,838

 

Changes in fair market value

 

 

5

 

 

 

(21

)

Decreases (liquidations/other)(2)

 

 

(106

)

 

 

(891

)

Fee-earning AUM as of end of period

 

$

12,140

 

 

$

12,140

 

Increase

 

 

1,321

 

 

 

1,926

 

Increase %

 

 

12

%

 

 

19

%

 

(1)
Increases generally represent limited partner capital raised or deployed by our funds and other vehicles that is fee-earning when raised or deployed, respectively, including any reinvestments in our open-ended vehicles.
(2)
Decreases generally represent liquidations of investments held by our funds or other vehicles or other changes in fee basis, including the change from committed capital to invested capital after the expiration or termination of the investment period.

The launch of new funds resulted in an increased fee-earning AUM during first nine months of 2021 and in 2020. Fee-earning AUM increased from approximately $10.2 billion as of December 31, 2020 to $12.1 billion as of September 30, 2021 due to our capital raising activities and deployment. The following table summarizes our balances of fee-earning AUM by fund at September 30, 2021 and 2020 and December 31, 2020 and 2019:

 

 

 

September 30,

 

 

December 31,

 

(in millions)

 

2021

 

 

2020

 

 

2020

 

 

2019

 

Fee-Earning AUM by Fund

 

 

 

 

 

 

 

 

 

 

 

 

Bridge Multifamily Fund III

 

$

294

 

 

$

468

 

 

$

401

 

 

$

527

 

Bridge Multifamily III JV Partners

 

 

5

 

 

 

10

 

 

 

10

 

 

 

13

 

Bridge Multifamily Fund IV

 

 

1,284

 

 

 

1,574

 

 

 

1,574

 

 

 

1,579

 

Bridge Multifamily Fund V

 

 

305

 

 

 

 

 

 

 

 

 

 

Bridge Workforce Fund I

 

 

523

 

 

 

419

 

 

 

499

 

 

 

608

 

Bridge Workforce Fund II

 

 

616

 

 

 

72

 

 

 

166

 

 

 

 

Bridge Opportunity Zone Fund I

 

 

482

 

 

 

482

 

 

 

482

 

 

 

466

 

Bridge Opportunity Zone Fund II

 

 

408

 

 

 

408

 

 

 

408

 

 

 

414

 

Bridge Opportunity Zone Fund III

 

 

1,019

 

 

 

330

 

 

 

1,028

 

 

 

 

Bridge Opportunity Zone Fund IV

 

 

1,002

 

 

 

 

 

 

 

 

 

 

Bridge Office Fund I

 

 

500

 

 

 

500

 

 

 

500

 

 

 

548

 

Bridge Office I JV Partners

 

 

129

 

 

 

154

 

 

 

154

 

 

 

154

 

Bridge Office Fund II

 

 

130

 

 

 

89

 

 

 

89

 

 

 

81

 

Bridge Office II JV Partners

 

 

6

 

 

 

21

 

 

 

21

 

 

 

7

 

Bridge Seniors Housing Fund I

 

 

626

 

 

 

626

 

 

 

626

 

 

 

626

 

Bridge Seniors Housing Fund II

 

 

809

 

 

 

789

 

 

 

769

 

 

 

937

 

Bridge Seniors Housing Fund III

 

 

33

 

 

 

 

 

 

33

 

 

 

 

Bridge Debt Strategies Fund I

 

 

40

 

 

 

48

 

 

 

41

 

 

 

48

 

Bridge Debt Strategies I JV Partners

 

 

18

 

 

 

18

 

 

 

18

 

 

 

18

 

Bridge Debt Strategies Fund II

 

 

516

 

 

 

819

 

 

 

678

 

 

 

933

 

Bridge Debt Strategies II JV Partners

 

 

221

 

 

 

361

 

 

 

343

 

 

 

408

 

Bridge Debt Strategies Fund III

 

 

1,485

 

 

 

1,549

 

 

 

1,549

 

 

 

1,279

 

Bridge Debt Strategies III JV Partners

 

 

334

 

 

 

403

 

 

 

416

 

 

 

81

 

Bridge Debt Strategies Fund IV

 

 

1,118

 

 

 

 

 

 

305

 

 

 

 

Bridge Debt Strategies Fund IV JV Partners

 

 

79

 

 

 

 

 

 

 

 

 

 

Bridge Logistics Net Lease Fund

 

 

31

 

 

 

 

 

 

 

 

 

 

Bridge Agency MBS Fund

 

 

127

 

 

 

70

 

 

 

104

 

 

 

 

Total Fee-Earning AUM by Fund

 

$

12,140

 

 

$

9,210

 

 

$

10,214

 

 

$

8,727

 

 

Our average remaining fund life for our closed-end funds was approximately 7.5 years as of September 30, 2021 compared to 8.3 years as of December 31, 2020.

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Undeployed Capital

As of September 30, 2021, we had $2.1 billion of undeployed capital available to be deployed for future investment or reinvestment. Of this amount $0.8 billion is currently fee earning based on commitments and $1.3 billion will be fee earning if and when it is deployed.

Our Performance

We have a demonstrated record of producing attractive returns for our fund investors across our platforms. Our historical investment returns have been recognized by third parties such as Preqin Ltd., which ranked each of our last three multifamily funds and our workforce and affordable housing funds in the top quartile for their vintage. Our historical investment returns for our closed-end funds by platform are shown in the chart below.

 

Performance Summary as of September 30, 2021

 

 

 

 

 

 

Unreturned

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Drawn

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

Fund

 

 

 

 

 

 

Fund

 

 

Capital +

 

 

Cumulative

 

 

Realized

 

 

Remaining

 

 

 

 

Fair

 

 

TFV

 

Gross

 

 

Net

 

 

 

Committed

 

 

Accrued

 

 

Invested

 

 

Proceeds

 

 

Fair Value

 

 

Unrealized

 

Value

 

 

MOIC

 

IRR

 

 

IRR

 

(in millions)

 

Capital (2)

 

 

Pref (3)

 

 

Capital (4)

 

 

(5)

 

 

(RFV) (6)

 

 

MOIC (7)

 

TFV (8)

 

 

(9)

 

(10)

 

 

(11)

 

Closed-End Funds(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Investment Period Beginning, Ending Date)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Strategies Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Multifamily

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridge Multifamily I
   (Mar 2009, Mar 2012)

 

$

124

 

 

$

 

 

$

150

 

 

$

280

 

 

$

 

 

NA

 

$

280

 

 

1.87x

 

 

21.0

%

 

 

15.3

%

Bridge Multifamily II
   (Apr 2012, Mar 2015)

 

 

596

 

 

 

 

 

 

605

 

 

 

1,264

 

 

 

 

 

NA

 

 

1,264

 

 

2.09x

 

 

30.2

%

 

 

23.4

%

Bridge Multifamily III
   (Jan 2015, Jan 2018)

 

 

912

 

 

 

 

 

 

873

 

 

 

1,341

 

 

 

710

 

 

2.77x

 

 

2,051

 

 

2.35x

 

 

28.0

%

 

 

21.4

%

Bridge Multifamily IV
   (Jun 2018, Jun 2021)

 

 

1,590

 

 

 

1,444

 

 

 

1,312

 

 

 

144

 

 

 

2,222

 

 

1.80x

 

 

2,366

 

 

1.80x

 

 

44.8

%

 

 

33.9

%

Total Multifamily Funds

 

 

3,221

 

 

 

1,444

 

 

 

2,941

 

 

 

3,030

 

 

 

2,932

 

 

1.98x

 

 

5,962

 

 

2.03x

 

29.3%

 

 

 

22.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridge Workforce Housing I
   (Aug 2017, Aug 2020)

 

 

619

 

 

 

598

 

 

 

531

 

 

 

72

 

 

 

1,037

 

 

2.09x

 

 

1,109

 

 

2.09x

 

 

41.8

%

 

 

33.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Seniors Housing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridge Seniors I
   (Jan 2014, Jan 2018)

 

 

578

 

 

 

754

 

 

 

629

 

 

 

295

 

 

 

590

 

 

1.41x

 

 

885

 

 

1.41x

 

 

7.8

%

 

 

5.3

%

Bridge Seniors II
   (Mar 2017, Mar 2020)

 

 

820

 

 

 

812

 

 

 

709

 

 

 

148

 

 

 

768

 

 

1.28x

 

 

915

 

 

1.29x

 

 

40.4

%

 

 

6.9

%

Total Senior Housing Funds

 

 

1,399

 

 

 

1,566

 

 

 

1,338

 

 

 

442

 

 

 

1,358

 

 

1.34x

 

 

1,801

 

 

1.35x

 

 

8.7

%

 

 

5.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridge Office I
   (Jul 2017, Jul 2020)

 

 

573

 

 

 

609

 

 

 

537

 

 

 

115

 

 

 

582

 

 

1.29x

 

 

697

 

 

1.30x

 

 

10.1

%

 

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Equity Strategies Funds

 

 

5,812

 

 

 

4,216

 

 

 

5,347

 

 

 

3,659

 

 

 

5,910

 

 

1.70x

 

 

9,569

 

 

1.79x

 

 

24.0

%

 

 

17.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Strategies Funds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bridge Debt I
   (Sep 2014, Sep 2017)

 

 

132

 

 

 

51

 

 

 

219

 

 

 

215

 

 

 

48

 

 

1.02x

 

 

263

 

 

1.20x

 

 

8.5

%

 

 

6.5

%

Bridge Debt II
   (July 2016, July 2019)

 

 

1,002

 

 

 

538

 

 

 

2,299

 

 

 

2,217

 

 

 

530

 

 

1.29x

 

 

2,746

 

 

1.19x

 

 

11.7

%

 

 

9.3

%

Bridge Debt III
   (May 2018, May 2021)

 

 

1,624

 

 

 

1,507

 

 

 

5,207

 

 

 

4,173

 

 

 

1,572

 

 

1.21x

 

 

5,745

 

 

1.10x

 

 

15.1

%

 

 

11.8

%

Total Debt Strategies Funds

 

 

2,757

 

 

 

2,095

 

 

 

7,725

 

 

 

6,605

 

 

 

2,149

 

 

1.23x

 

 

8,754

 

 

1.13x

 

 

12.9

%

 

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Footnotes:

(1)
May not foot due to rounding. Does not include performance for (i) Opportunity Zone funds, as such funds are invested in active development projects and have minimal stabilized assets, or (ii) funds that are currently raising capital, including our open-ended funds.
(2)
Fund Committed Capital represents total capital commitments to the fund, excluding joint ventures or separately manage