Bridge Investment (BRDG) - 2025 Q1 - Quarterly Report

Cautionary Note Regarding Forward-Looking Statements Overview of Forward-Looking Statements The 10-Q report contains forward-looking statements on operations, taxes, earnings, and financial performance, subject to risks - The report contains forward-looking statements about operations, taxes, earnings, financial performance, and dividends, which are not guarantees of future performance and are subject to significant risks and uncertainties[9] - Readers should review the 'Risk Factors' section in this report and the annual report on Form 10-K for factors that could cause actual results to differ materially[10] Certain Definitions This section defines key terms like AUM and fee-earning AUM, and outlines the Merger Agreement with Apollo Global Management - AUM includes the fair value of managed assets, uncalled capital commitments, and assets of managed REITs, and is not reduced by outstanding indebtedness[14] - Fee-earning AUM refers to assets from which the company earns management fees or other revenue[15] - The Merger Agreement, dated February 23, 2025, outlines the acquisition of the Company by Apollo Global Management, Inc. in an all-stock transaction valued at approximately $1.5 billion, expected to close in Q3 2025[15][46] Part I. Financial Information Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), changes in equity, and cash flows, along with detailed notes Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2025 (Unaudited) | December 31, 2024 (Audited) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Total assets | $1,183,254 | $1,247,380 | | Total liabilities | $728,127 | $741,482 | | Total equity | $455,127 | $505,898 | - Total assets decreased by approximately $64.1 million, and total equity decreased by approximately $50.8 million from December 31, 2024, to March 31, 2025[19] Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Total revenues | $96,296 | $102,790 | | Total investment loss | $(7,698) | $(48,701) | | Total expenses | $115,709 | $96,930 | | Loss before provision for income taxes | $(36,958) | $(48,646) | | Net loss | $(37,603) | $(36,800) | | Net (loss) income attributable to Bridge Investment Group Holdings Inc. | $(12,176) | $9,818 | | Basic (Loss) Earnings Per Share of Class A common stock | $(0.37) | $0.24 | | Diluted (Loss) Earnings Per Share of Class A common stock | $(0.37) | $(0.05) | - Total revenues decreased by 6.3% year-over-year, from $102.79 million in Q1 2024 to $96.30 million in Q1 2025[21] - The company reported a net loss attributable to Bridge Investment Group Holdings Inc. of $(12.18) million in Q1 2025, a significant decline from a net income of $9.82 million in Q1 2024[21] Condensed Consolidated Statements of Comprehensive Income (Loss) Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(37,603) | $(36,800) | | Other comprehensive loss—foreign currency translation adjustments, net of tax | $(12) | $(51) | | Total comprehensive loss | $(37,615) | $(36,851) | | Comprehensive (loss) income attributable to Bridge Investment Group Holdings Inc. | $(12,188) | $9,767 | Condensed Consolidated Statements of Changes in Equity Condensed Consolidated Statements of Changes in Equity (in thousands) | Metric | Balance as of Dec 31, 2024 | Net Loss | Share-based Compensation | Distributions | Dividends | Balance as of Mar 31, 2025 | | :-------------------------------- | :------------------------- | :--------- | :----------------------- | :------------ | :---------- | :------------------------- | | Total Equity | $505,898 | $(37,603) | $11,250 | $(18,643) | $(4,889) | $455,127 | - Total equity decreased from $505.9 million at December 31, 2024, to $455.1 million at March 31, 2025, primarily due to net loss, distributions, and dividends, partially offset by share-based compensation[27] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Operating activities | $(8,948) | $25,089 | | Investing activities | $(7,951) | $13,713 | | Financing activities | $(9,267) | $(33,752) | | Net (decrease) increase in cash | $(26,166) | $5,050 | | Cash, cash equivalents and restricted cash - end of period | $76,265 | $72,310 | - Net cash used in operating activities was $(8.95) million in Q1 2025, a significant decrease from $25.09 million provided by operating activities in Q1 2024[30] - Net cash used in investing activities was $(7.95) million in Q1 2025, compared to $13.71 million provided in Q1 2024, primarily due to issuances of notes receivable and purchases of investments[30] Notes to Condensed Consolidated Financial Statements 1. Organization Bridge Investment Group Holdings Inc. is a leading alternative investment manager diversified across specialized asset classes, acting as the sole managing member of Bridge Investment Group Holdings LLC, with a recent Merger Agreement with Apollo Global Management, Inc. - Bridge Investment Group Holdings Inc. is a diversified alternative investment manager with a nationwide operating platform focused on real estate, credit, renewable energy, and secondaries strategies[35] - The Company holds a controlling financial interest (approximately 32% economic interest as of March 31, 2025) in the Operating Company and acts as its sole managing member, consolidating its financial results[36] - A Merger Agreement was entered into on February 23, 2025, for Apollo Global Management, Inc. to acquire the Company in an all-stock transaction valued at approximately $1.5 billion, with closing anticipated in Q3 2025[46] 2. Significant Accounting Policies This section outlines the significant accounting policies used in preparing the condensed consolidated financial statements, including the basis of presentation, principles of consolidation, non-controlling interests, use of estimates, and specific policies for various financial line items - The financial statements are prepared in accordance with GAAP for interim financial information, with management making necessary adjustments and reasonable estimates[54] - The Company consolidates entities where it has a controlling financial interest, either as a primary beneficiary of a VIE or through a majority voting interest[56] - Revenue recognition policies are detailed for various income streams, including fund management fees, property management fees, construction/development fees, transaction fees, fund administration fees, insurance premiums, and other asset management income[89][90][91][92][93][94][95][96] 3. Revenue The Company's revenue streams include various management and administration fees, insurance premiums, and other asset management income, totaling $96.3 million in Q1 2025, down from $102.8 million in the prior year Revenues by Category (Three Months Ended March 31, in thousands) | Revenue Category | 2025 (in thousands) | 2024 (in thousands) | | :------------------------------- | :------------------ | :------------------ | | Fund management fees | $59,308 | $61,105 | | Property management and leasing fees | $16,984 | $19,937 | | Construction management fees | $1,289 | $1,697 | | Development fees | $1,046 | $831 | | Transaction fees | $3,193 | $6,800 | | Fund administration fees | $4,860 | $5,058 | | Insurance premiums | $5,786 | $4,697 | | Other asset management and property income | $3,830 | $2,665 | | Total revenues | $96,296 | $102,790 | - Total revenues decreased by $6.5 million (6%) year-over-year, primarily driven by a 53% decrease in transaction fees and a 15% decrease in property management and leasing fees[125] - The Company recognized a $1.4 million credit loss in Q1 2025, primarily related to Bridge Office Fund LP (BOF I) and Bridge Office Fund II LP (BOF II), due to sustained unfavorable market conditions in the commercial office sector[127] 4. Marketable Securities The Company invests a portion of insurance premiums in exchange-traded funds, mutual funds, and common shares of a publicly traded company, with total fair value of $21.4 million as of March 31, 2025 Marketable Securities Fair Value (in thousands) | Security Type | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Common shares in publicly traded company | $51 | $73 | | Exchange traded funds | $3,268 | $3,157 | | Mutual funds | $18,078 | $17,889 | | Total marketable securities | $21,397 | $21,119 | 5. Investments The Company holds interests in 199 partnership or joint venture entities, primarily in real estate, credit, renewable energy, and secondaries, with total investments decreasing to $502.0 million at March 31, 2025, and recognized losses of $15.2 million in Q1 2025 Investments Carrying Value (in thousands) | Investment Category | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Accrued performance allocations | $327,150 | $339,560 | | Partnership interests in Company-sponsored funds | $146,255 | $153,181 | | Investments in third-party partnerships | $15,780 | $15,364 | | Other | $12,801 | $12,615 | | Total Investments | $501,986 | $520,720 | - The Company recognized total losses of $15.2 million from accrued performance allocations and other investments for the three months ended March 31, 2025, compared to $52.9 million in the prior year period[131] - Accrued performance allocations are valued using NAV of the respective vehicle, based on asset valuations one quarter in arrears or current NAV for the managed perpetual REIT[129][133] 6. Notes Receivable from Affiliates The Company holds notes receivable from affiliates and employees, totaling $47.7 million as of March 31, 2025, with interest rates ranging from 4.44% to 5.34%, and management determined these notes to be recoverable Notes Receivable from Affiliates (in thousands) | Affiliate | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Bridge Office Fund II | $18,375 | $15,800 | | Bridge Office Holdings LLC | $15,000 | $15,000 | | Bridge Single-Family Rental Fund IV | $6,754 | $4,924 | | Bridge Seniors Housing Fund III | $2,350 | $0 | | Notes receivable from employees | $5,224 | $5,954 | | Total notes receivable from affiliates | $47,703 | $41,878 | - Interest on notes receivable from affiliates accrued at a weighted-average fixed rate of 5.34% as of March 31, 2025[137] - Management assessed the recoverability of notes receivable, considering challenging debt and equity capital markets, particularly in the commercial office sector, and determined estimated fair values were sufficient to recover the notes as of March 31, 2025[137] 7. Fair Value Measurements The Company categorizes financial instruments measured at fair value into a three-level hierarchy, with total assets at fair value of $523.4 million as of March 31, 2025, and $489.2 million measured using NAV - Fair value hierarchy levels: Level 1 (quoted prices in active markets), Level 2 (observable inputs other than quoted prices), and Level 3 (significant unobservable inputs)[73] - Accrued performance allocations and partnership interests are generally valued using the NAV per share equivalent as a practical expedient[144] Assets Measured at Fair Value (in thousands) | Category | Level 1 | Level 2 | Level 3 | Measured at NAV | Total | | :-------------------------------- | :------ | :------ | :------ | :-------------- | :------ | | March 31, 2025: | | | | | | | Common shares in publicly traded company | $51 | $— | $— | $— | $51 | | Exchange traded funds | $3,268 | $— | $— | $— | $3,268 | | Mutual funds | $18,078 | $— | $— | $— | $18,078 | | Accrued performance allocations | $— | $— | $— | $327,150 | $327,150 | | Partnership interests | $— | $— | $— | $162,035 | $162,035 | | Other investments | $— | $— | $12,801 | $— | $12,801 | | Total assets at fair value | $21,397 | $— | $12,801 | $489,185 | $523,383 | 8. Insurance Loss Reserves and Loss and Loss Adjustment Expenses Bridge Investment Group Risk Management, Inc. (BIGRM) provides various insurance policies for affiliated properties, with $30.6 million reserved for insurance loss reserves and $2.7 million for medical self-insurance reserves as of March 31, 2025 - BIGRM provides insurance policies for lease security deposit fulfillment, lessor legal liability, workers' compensation deductible reimbursement, property deductible reimbursement, and general liability deductible reimbursement[155] - Insurance loss reserves increased to $30.6 million as of March 31, 2025, from $21.3 million at December 31, 2024, based on estimated settlement costs for reported and unreported claims[153] - Medical self-insurance reserves for employee health benefits were $2.7 million as of March 31, 2025, with stop-loss coverage for claims exceeding $225,000 per individual[154] 9. General Partner Notes Payable General Partner Notes Payable represent commitments to funds satisfied by notes, with the Company electing the fair value option for these notes, totaling $2.5 million as of March 31, 2025 General Partner Notes Payable Fair Value (in thousands) | Fund | Commitment | March 31, 2025 | December 31, 2024 | | :-------------------------- | :--------- | :------------- | :---------------- | | Bridge Seniors Housing Fund I | $4,775 | $2,356 | $2,681 | | Bridge Multifamily Fund III | $9,300 | $99 | $101 | | Total | $14,075 | $2,455 | $2,782 | - 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[156] 10. Line of Credit The Operating Company's Credit Facility has revolving commitments of $150.0 million maturing in June 2026, with $14.5 million outstanding at an interest rate of approximately 6.49% as of March 31, 2025, and the Company was in full compliance with all covenants - The Credit Facility's total revolving commitments were reduced to $150.0 million in February 2024, with maturity extended to June 3, 2026[159] - As of March 31, 2025, the outstanding balance on the Credit Facility was $14.5 million, with an interest rate of approximately 6.49%[163][346] - The Credit Facility includes financial covenants requiring maintenance of a debt to EBITDA ratio of no more than 3.75x, minimum liquidity of $15.0 million, and minimum quarterly EBITDA of $15.0 million[161][345] 11. Notes Payable The Operating Company has issued $450.0 million in Private Placement Notes across three tranches with fixed interest rates ranging from 3.90% to 6.10% and maturities between 2025 and 2034, with a net carrying value of $447.5 million as of March 31, 2025 - The Operating Company has $450.0 million in Private Placement Notes, issued in 2020, 2022, and 2023, with maturities ranging from July 2025 to March 2033[166][167][168][171] - The notes bear fixed interest rates between 3.90% and 6.10%[166][167][168] - As of March 31, 2025, the net carrying value of the Private Placement Notes was $447.5 million, and the Operating Company was in full compliance with all debt covenants[170] 12. Realized and Unrealized Gains (Losses) This section summarizes net realized and unrealized gains (losses) on investments and other financial instruments, reporting total net realized and unrealized losses of $(7.4) million for Q1 2025 Net Realized and Unrealized Gains (Losses) (in thousands) | Investment Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Investment in Company sponsored funds | $(7,205) | $(4,942) | | Investment in third-party partnerships | $(212) | $132 | | Other investments | $0 | $272 | | Total realized and unrealized (losses) gains | $(7,417) | $(4,538) | - Realized gains (losses) occur upon redemption or cash income receipt, while unrealized gains (losses) result from fair value changes[174] 13. Income Taxes The Company is taxed as a corporation for U.S. federal and state income tax purposes, with income tax expense for Q1 2025 at $0.6 million, a significant shift from a benefit of $11.8 million in Q1 2024, primarily due to the timing of unrealized accrued performance allocations - The Company is subject to U.S. federal and state income taxes on its share of the Operating Company's taxable income[176] - The deferred income tax asset related to the TRA was $74.2 million as of March 31, 2025, an increase from $73.9 million at December 31, 2024, primarily due to the redemption of Class A units[178] - Income tax expense was $0.6 million for Q1 2025, a significant change from an $11.8 million income tax benefit in Q1 2024, mainly due to the reversal of unrealized accrued performance allocations[21][307] 14. Shareholders' Equity This note details the Company's shareholders' equity structure, including Class A and Class B common stock, and non-controlling interests, with 44.7 million Class A common shares and 79.1 million Class B common shares outstanding as of March 31, 2025 - As of March 31, 2025, the Company had 44,696,258 shares of Class A common stock and 79,142,364 shares of Class B common stock outstanding[189] - During Q1 2025, 490,000 Class A Units were redeemed for Class A common stock on a one-for-one basis[187] Dividends Paid on Class A Common Stock (in thousands, except per share data) | Dividend Record Date | Dividend Payment Date | Dividend per Share | Dividend to Common Stockholders | | :------------------- | :-------------------- | :----------------- | :------------------------------ | | March 14, 2025 | March 28, 2025 | $0.11 | $4,889 | | March 8, 2024 | March 22, 2024 | $0.07 | $2,582 | 15. Commitments and Contingencies This note details the Company's commitments, primarily operating lease liabilities totaling $16.6 million as of March 31, 2025, and potential clawback obligations related to performance income, estimated at $203.2 million if all investments were worthless Operating Lease Liabilities (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Right-of-use assets | $14,162 | $15,147 | | Lease Liabilities | $16,628 | $17,759 | | Weighted-average remaining lease term (years) | 5.1 | 5.3 | | Weighted-average discount rate | 4.99% | 4.97% | - If all existing investments were worthless, the performance income subject to potential repayment by Bridge GPs, net of tax distributions, would be approximately $203.2 million as of March 31, 2025, with $159.5 million reimbursable by professionals[198] - The Company has guaranteed a $10.1 million standby letter of credit for its self-insurance program and a $0.4 million standby letter of credit for an operating lease[200] 16. Variable Interest Entities The Company sponsors private funds and other investment vehicles, many of which are considered VIEs, with consolidated VIE assets totaling $1,115.4 million and liabilities of $663.8 million as of March 31, 2025 - The Company sponsors private funds and investment vehicles, many of which are classified as VIEs due to limited partner characteristics[204] - The assets of the Operating Company's consolidated VIEs totaled $1,115.4 million and liabilities totaled $663.8 million as of March 31, 2025[207] - The Company's maximum exposure to loss from unconsolidated private funds (VIEs where it is not the primary beneficiary) is limited to the carrying value of its investments, which was $162.0 million as of March 31, 2025[205] 17. Related Party Transactions Substantially all of the Company's revenue is earned from affiliates, with receivables from affiliates at $32.6 million and notes receivable from affiliates at $47.7 million as of March 31, 2025 Receivables from Affiliates (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | Fees receivable from non-consolidated funds | $16,524 | $35,246 | | Payments made on behalf of and amounts due from non-consolidated entities | $16,075 | $19,066 | | Total receivables from affiliates | $32,599 | $54,312 | - The Company recognized a $1.4 million credit loss in Q1 2025 related to Bridge Office Fund I and II, impacting fund management and administration fees and general and administrative expenses[211] - Amounts due to affiliates, primarily in connection with the Tax Receivable Agreement (TRA), were $75.2 million as of March 31, 2025[213] 18. Share-Based Compensation and Profits Interests The Company grants Restricted Stock, RSUs, and profits interests awards to employees, with 5,584,667 shares available for future grants and total share-based compensation expense of $11.3 million for Q1 2025 - The 2021 Incentive Award Plan had 5,584,667 shares available for future grants as of March 31, 2025[215] Share-Based Compensation Expense (in thousands) | Award Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Profits interests award shares | $2,333 | $3,158 | | Restricted Stock and RSUs | $8,917 | $8,652 | | Total share-based compensation | $11,250 | $11,810 | - As of March 31, 2025, the aggregate unrecognized compensation cost for all unvested awards was $69.6 million, expected to be recognized over a weighted-average period of 1.7 years for Restricted Stock/RSUs and 1.8 years for profits interests[221][223] 19. (Loss) Earnings Per Share This note presents the calculation of basic and diluted (loss) earnings per share for Class A common stock, with both at $(0.37) for Q1 2025 (Loss) Earnings Per Share of Class A Common Stock (Three Months Ended March 31, in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------------------------------ | :----- | :----- | | Net (loss) income attributable to Bridge Investment Group Holdings Inc. | $(12,176) | $9,818 | | Net (loss) income available to Class A common shareholders—Basic | $(13,218) | $7,560 | | (Loss) earnings per share of Class A common stock—Basic | $(0.37) | $0.24 | | (Loss) earnings per share of Class A common stock—Diluted | $(0.37) | $(0.05) | - Basic and diluted loss per share for Class A common stock were $(0.37) in Q1 2025, reflecting a shift from positive basic EPS in Q1 2024[224] 20. Segment Reporting The Company operates as a single reportable and operating segment: a fully integrated alternative investment manager, with the executive chairman reviewing financial performance and allocating resources on a consolidated basis - Bridge operates as one reportable and operating segment: a fully integrated alternative investment manager[227] - The CODM uses a consolidated approach to assess financial performance and allocate resources, primarily relying on consolidated net income and secondary non-GAAP metrics[227] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial condition and results of operations, highlighting key trends, recent events, and detailed analysis of revenues, expenses, and non-GAAP financial measures Overview - Bridge is a leading alternative investment manager with approximately $49.4 billion of AUM as of March 31, 2025, diversified across real estate, credit, renewable energy, and secondaries strategies[232] - The Company's growth has been driven by strong investment returns and the organic development and strategic acquisition of investment platforms[232] Business Segment - The Company operates as a single, fully integrated alternative investment manager, with the executive chairman serving as the chief operating decision maker[233] Recent Events - On February 23, 2025, the Company entered into a Merger Agreement with Apollo Global Management, Inc. for an all-stock transaction valued at approximately $1.5 billion, expected to close in Q3 2025[234] Trends Affecting Our Business - Business performance is influenced by financial market conditions, economic and political factors, and the ability to attract new capital, generate strong returns, and source attractive investments[236][237] - Ongoing economic headwinds, particularly in the commercial office sector (3% of AUM), have led to the cessation of fund management fees for Bridge Office Fund LP (BOF I) and reserving fees for Bridge Office Fund II LP (BOF II)[237] - The Company's ability to grow revenue depends on expanding and diversifying product offerings, maintaining a data advantage through proprietary platforms, and adapting to changing investor priorities[242] Business Environment - Global markets have experienced significant volatility due to inflation, high interest rates, and geopolitical uncertainty, though the U.S. economy showed signs of growth in late 2023 with decelerating inflation[238] - The Federal Reserve paused interest rate increases in Q4 2023 and made its first rate cut in September 2024, with additional cuts expected in 2025[238] Key Financial Measures Revenues The Company generates revenue from various fee-based services, including fund management, property management, construction management, development, transaction, and fund administration fees, as well as insurance premiums and other asset management income, with $18.0 billion of carry-eligible fee-earning AUM as of March 31, 2025 - Fund management fees are generally based on a defined percentage of total commitments, invested capital, or NAV, with a weighted-average management fee of 1.34% as of March 31, 2025[243][288] - The Company manages approximately 100% of multifamily, single-family rental, workforce and affordable housing, and net lease properties owned by its funds, earning property management fees ranging from 2% to 9.5% depending on property type[244] - As of March 31, 2025, the Company had approximately $18.0 billion of carry-eligible fee-earning AUM across 57 funds and other vehicles, with 20 in accrued carried interest positions[250] Expenses Key expense categories include employee compensation and benefits, performance allocations compensation, loss and loss adjustment expenses, third-party operating expenses, general and administrative expenses, and depreciation and amortization - Employee compensation and benefits include salaries, bonuses, related benefits, share-based compensation, and compensatory awards[255] - Up to 60% of performance allocation revenue is awarded to employees as long-term incentive compensation, fostering alignment with fund investors[257] - Loss and loss adjustment expenses cover estimated liabilities for reported and unreported claims in the captive insurance company, based on actuarial reports[258] Other Income (Expense) Other income (expense) includes realized and unrealized gains (losses) on investments, interest income, and interest expense, reflecting changes in fair value of investments and costs related to privately offered notes and the Credit Facility - Realized and unrealized gains (losses) result from changes in the fair value of underlying investments and are presented together in the consolidated statements of operations[261] - Interest expense primarily stems from privately offered notes with a weighted-average fixed coupon rate of 5.03% and the Credit Facility, which had an interest rate of approximately 6.49% as of March 31, 2025[264] Net Income (Loss) Attributable to Non-Controlling Interests in Bridge Investment Group Holdings LLC This represents the economic interests held by management and third parties in the consolidated subsidiaries of the Operating Company and fund manager entities, with income or loss allocated proportionally based on ownership and contractual arrangements - Net income (loss) attributable to non-controlling interests in Bridge Investment Group Holdings LLC reflects economic interests of management and third parties in consolidated subsidiaries and fund manager entities[266] Net Income (Loss) Attributable to Non-Controlling Interests in Bridge Investment Group Holdings Inc. This represents the economic interests in the Operating Company held by third-party owners of Class A Units, with income or loss allocated proportionally based on their ownership interests and contractual arrangements - Net income (loss) attributable to non-controlling interests in Bridge Investment Group Holdings Inc. represents economic interests of third-party Class A Unit owners in the Operating Company[267] Operating Metrics Assets Under Management (AUM) AUM represents the total assets managed by the Company, including fair value of fund assets, uncalled capital commitments, and REIT assets, totaling $49.35 billion as of March 31, 2025, a 1.0% decrease from the beginning of the period - AUM includes the fair value of managed assets, contractual uncalled capital commitments, and assets of managed REITs[270] AUM Rollforward (in millions) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | AUM as of beginning of period | $49,845 | $47,702 | | New capital / commitments raised | $216 | $153 | | Distributions / return of capital | $(531) | $(339) | | Change in fair value and acquisitions | $(180) | $513 | | AUM as of end of period | $49,350 | $48,029 | | Increase % | (1.0)% | 0.7% | Fee-Earning AUM Fee-earning AUM represents assets from which the Company earns management fees, totaling $21.98 billion as of March 31, 2025, a 1.5% decrease from the beginning of the period, primarily due to timing of capital raising, deployment, and fee basis conversions - Fee-earning AUM was $21.98 billion as of March 31, 2025, a 1.5% decrease from the beginning of the period[274][276] - The decrease was largely attributed to the timing of capital raising activities, deployment, the conversion of Newbury Fund III's management fee basis from committed capital to NAV, and distributions[276] Fee-Earning AUM Rollforward (in millions) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Fee-earning AUM as of beginning of period | $22,306 | $21,703 | | Increases (capital raised/deployment) | $397 | $375 | | Changes in fair market value | $6 | $23 | | Decreases (liquidations/other) | $(727) | $(148) | | Fee-earning AUM as of end of period | $21,982 | $21,953 | | (Decrease) increase % | (1.5)% | 1.2% | Undeployed Capital As of March 31, 2025, the Company had $3.1 billion of undeployed capital available for future investment or reinvestment, with $1.4 billion currently fee-earning and $1.7 billion becoming fee-earning upon deployment - As of March 31, 2025, the Company had $3.1 billion of undeployed capital[280] - Of the undeployed capital, $1.4 billion is currently fee-earning, and $1.7 billion will become fee-earning upon deployment[280] Our Performance The Company has a demonstrated record of producing attractive returns for fund investors across its platforms, with historical investment returns for closed-end funds summarized by platform, including MOIC and Investor Levered/Unlevered Net IRR - The Company's closed-end funds have a demonstrated record of producing attractive returns across various equity and debt strategies[281] - Total Multifamily Funds show a Total Investment MOIC of 1.60x and Investor Levered Net IRR of 13.1%[281] - Total Debt Strategies Funds show a Total Investment MOIC of 1.10x and Investor Levered Net IRR of 8.4%[282] Results of Operations Three Months Ended March 31, 2025 Compared to the Three Months Ended March 31, 2024 This section provides a detailed comparison of the Company's financial performance for the three months ended March 31, 2025, against the same period in 2024, covering changes in revenues, investment income (loss), expenses, and net income attributable to controlling and non-controlling interests Revenues Total revenues decreased by $6.5 million (6%) to $96.3 million in Q1 2025, primarily due to significant reductions in transaction fees (down 53%) and property management and leasing fees (down 15%), partially offset by increases in insurance premiums (up 23%) and other asset management income (up 44%) Revenue Comparison (in thousands) | Revenue Category | 2025 | 2024 | Change | % Change | | :------------------------------- | :----- | :----- | :----- | :------- | | Fund management fees | $59,308 | $61,105 | $(1,797) | (3%) | | Property management and leasing fees | $16,984 | $19,937 | $(2,953) | (15%) | | Construction management fees | $1,289 | $1,697 | $(408) | (24%) | | Development fees | $1,046 | $831 | $215 | 26% | | Transaction fees | $3,193 | $6,800 | $(3,607) | (53%) | | Fund administration fees | $4,860 | $5,058 | $(198) | (4%) | | Insurance premiums | $5,786 | $4,697 | $1,089 | 23% | | Other asset management and property income | $3,830 | $2,665 | $1,165 | 44% | | Total revenues | $96,296 | $102,790 | $(6,494) | (6%) | - Fund management fees decreased by $1.8 million (3%), mainly due to dispositions and fee basis conversions, partially offset by new capital deployment[289] - Transaction fees saw the largest percentage decrease, down $3.6 million (53%), driven by reduced due diligence fees due to the timing of real estate transactions[292] Investment income (loss) Net performance allocations increased significantly by $41.0 million (84%) to $(7.7) million in Q1 2025, primarily due to a substantial decrease in unrealized performance allocation losses (from $(61.7) million in Q1 2024 to $(12.4) million in Q1 2025), while realized performance allocations decreased by $8.3 million (64%) Investment Income (Loss) Comparison (in thousands) | Investment Income (Loss) | 2025 | 2024 | Change | % Change | | :------------------------------- | :----- | :----- | :----- | :------- | | Performance allocations: Realized | $4,712 | $12,969 | $(8,257) | (64%) | | Performance allocations: Unrealized | $(12,410) | $(61,670) | $49,260 | 80% | | Total investment income (loss) | $(7,698) | $(48,701) | $41,003 | (84%) | - The 80% increase in unrealized performance allocations (reduction in loss) was largely due to underlying market fundamentals in 2024, which contributed to depreciation in multifamily, workforce, and affordable housing funds and credit funds[297] - Realized performance income allocations were primarily related to the timing of tax distributions in Bridge Debt Strategies Funds II, III, IV, and V[296] Expenses Total expenses increased by $18.8 million (19%) to $115.7 million in Q1 2025, primarily driven by a 323% increase in loss and loss adjustment expenses and a 148% increase in general and administrative expenses, partially offset by a 63% decrease in performance allocations compensation Expense Comparison (in thousands) | Expense Category | 2025 | 2024 | Change | % Change | | :------------------------------- | :----- | :----- | :----- | :------- | | Employee compensation and benefits | $64,860 | $62,840 | $2,020 | 3% | | Performance allocations compensation: Realized | $2,827 | $7,407 | $(4,580) | (62%) | | Performance allocations compensation: Unrealized | $1,090 | $3,178 | $(2,088) | (66%) | | Loss and loss adjustment expenses | $11,345 | $2,682 | $8,663 | 323% | | Third-party operating expenses | $2,674 | $4,037 | $(1,363) | (34%) | | General and administrative expenses | $28,113 | $11,349 | $16,764 | 148% | | Depreciation and amortization | $4,800 | $5,437 | $(637) | (12%) | | Total expenses | $115,709 | $96,930 | $18,779 | 19% | - General and administrative expenses increased by $16.8 million (148%), primarily due to $16.6 million in non-recurring transaction costs related to the Merger Agreement and $0.6 million in credit loss write-offs[302] - Loss and loss adjustment expenses surged by $8.7 million (323%) due to increased claims in the captive insurance company and rising costs[300] Other (expense) income Total other expense increased by $4.0 million (70%) to $(9.8) million in Q1 2025, driven by higher net realized and unrealized losses (up 77%) and a decrease in interest income (down 33%), partially offset by a decrease in interest expense (down 16%) Other (Expense) Income Comparison (in thousands) | Other (Expense) Income | 2025 | 2024 | Change | % Change | | :------------------------------- | :----- | :----- | :----- | :------- | | Realized and unrealized gains (losses), net | $(7,478) | $(4,230) | $(3,248) | 77% | | Interest income | $3,853 | $5,790 | $(1,937) | (33%) | | Interest expense | $(6,222) | $(7,365) | $1,143 | (16%) | | Total other expense | $(9,847) | $(5,805) | $(4,042) | 70% | - Net realized and unrealized losses increased by $3.2 million (77%), primarily due to depreciation on certain other investments in 2025[304] - Interest income decreased by $1.9 million (33%), largely due to the timing of distribution income from Newbury Funds[305] Net (Loss) Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings LLC Net loss attributable to non-controlling interests in Bridge Investment Group Holdings LLC decreased to $(13.1) million in Q1 2025 from $(41.9) million in Q1 2024, primarily due to a significant reduction in unrealized losses related to General Partners Net (Loss) Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings LLC (in thousands) | Category | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Non-controlling interests related to General Partners - realized | $654 | $2,448 | | Non-controlling interests related to General Partners - unrealized | $(9,348) | $(42,143) | | Non-controlling interests related to Fund Managers | $(4,447) | $(2,226) | | Net loss attributable to non-controlling interests in Bridge Investment Group Holdings LLC | $(13,141) | $(41,921) | - The decrease in net loss attributable to non-controlling interests was largely driven by a $32.8 million reduction in unrealized losses related to General Partners[306] Income tax (expense) benefit Income tax expense was $0.6 million for Q1 2025, a significant shift from an income tax benefit of $11.8 million in Q1 2024, primarily attributed to the amount and timing of the reversal of unrealized accrued performance allocations between periods - Income tax expense was $0.6 million in Q1 2025, compared to an $11.8 million benefit in Q1 2024[307] - The change was primarily due to the amount and timing of the reversal of unrealized accrued performance allocations[307] Non-GAAP Financial Measures The Company uses non-GAAP financial measures such as Distributable Earnings, Fee Related Earnings, Fee Related Revenues, and Fee Related Expenses to supplement GAAP results, providing insights into core operating performance and profitability from fee-based revenues - Non-GAAP measures like Distributable Earnings and Fee Related Earnings are used to assess core operating performance and profitability from recurring fee-based revenues[309][312][314] - Distributable Earnings excludes depreciation and amortization, unrealized performance allocations, share-based compensation, and non-recurring items[313] - Fee Related Earnings further adjusts Distributable Earnings by excluding realized performance allocations, net insurance income, and net investment/interest income/loss[314] Distributable Earnings - Distributable Earnings is a key performance measure used by management for resource deployment, compensation decisions, and performance assessment[312] - It excludes non-cash items like depreciation, unrealized performance allocations, share-based compensation, and non-recurring charges to provide a clearer view of core operating performance[313] Fee Related Earnings - Fee Related Earnings assesses the ability to generate profits from recurring fee-based revenues[314] - It adjusts Distributable Earnings by excluding realized performance allocations, net insurance income, earnings from investments, net interest, and net realized gain/loss[314] Fee Related Revenues - Fee Related Revenues include fund management fees, transaction fees, fee-related performance revenue, net earnings from Bridge property operators, development fees, fund administration fees, and other asset management income[315] - Net earnings from Bridge property operators are considered part of fee-related revenue due to the vertical integration enhancing shareholder and fund investor returns[317] Fee Related Expenses - Fee Related Expenses exclude incentive fee compensation, performance allocations compensation, share-based compensation, insurance loss expenses, depreciation, amortization, and non-recurring charges[319] - These expenses are reduced by costs associated with property operations managed internally to enhance returns for Limited Partners[319] Reconciliation of Net Income to Distributable Earnings and Fee Related Earnings Reconciliation of Net Loss to Distributable Earnings and Fee Related Earnings (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(37,603) | $(36,800) | | Loss before provision for income taxes | $(36,958) | $(48,646) | | Distributable Earnings attributable to the Operating Company | $16,975 | $32,171 | | Total Fee Related Earnings attributable to the Operating Company | $24,565 | $33,943 | - Distributable Earnings attributable to the Operating Company decreased by $15.2 million (47%) in Q1 2025 compared to Q1 2024[322][326] - Total Fee Related Earnings attributable to the Operating Company decreased by $9.4 million in Q1 2025 compared to Q1 2024[322][326] Fee Related and Distributable Earnings Related to the Operating Company - Total fee related revenues decreased by $6.7 million (8%), primarily due to lower fund management fees and transaction fees[327] - Net earnings from Bridge property operators decreased by $2.3 million (85%), driven by reduced property management, construction, and leasing fees[327] - Net insurance loss increased by $7.6 million (376%) due to higher claims in the captive insurance company[327] Liquidity and Capital Resources The Company's liquidity needs are met through operating activities, cash on hand, and credit facilities, with total assets of $1,183.3 million and $65.1 million in cash and cash equivalents as of March 31, 2025, and $14.5 million outstanding on the Credit Facility - The Company's liquidity sources include cash from operating activities, cash on hand, and available credit facilities[326][328] Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(8,948) | $25,089 | | Net cash (used in) provided by investing activities | $(7,951) | $13,713 | | Net cash used in financing activities | $(9,267) | $(33,752) | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(26,166) | $5,050 | - As of March 31, 2025, $14.5 million was outstanding under the Credit Facility, with $150.0 million of available capacity, and the Company was in full compliance with all debt covenants[328][346][351] Critical Accounting Estimates The preparation of financial statements requires management to make estimates and assumptions, particularly in the valuation of investments, deferred tax balances, goodwill, and intangible assets, with no significant changes reported during Q1 2025 - Critical accounting estimates involve valuation of investments, deferred tax balances, goodwill, and intangible assets, which require significant judgment[352] - No significant changes in critical accounting estimates were reported for the quarter ended March 31, 2025[353] Recent Accounting Pronouncements This section refers to Note 2 for a discussion of recently adopted and not yet adopted accounting pronouncements, including ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Tax Disclosures), and ASU 2024-01 (Profits Interest and Similar Awards) - The Company adopted ASU 2023-07 (Segment Reporting) as of December 31, 2024, with no material impact on consolidated financial statements other than additional disclosures[121] - ASU 2023-09 (Income Tax Disclosures) is effective for fiscal years beginning after December 15, 2024, and is not anticipated to materially change consolidated financial statements[122] - ASU 2024-01 (Profits Interest and Similar Awards) clarifies accounting for profits interests and is consistent with the Company's historical policies, requiring no material change[123] JOBS Act As an emerging growth company under the JOBS Act, the Company has elected to use an extended transition period for complying with new or revised accounting standards, which may result in financial statements not being comparable to other public companies - As an emerging growth company, Bridge has elected to use the extended transition period for complying with new or revised accounting standards, delaying adoption until private company effective dates[355] - This election means the Company's financial statements may not be comparable to other public companies that do not use this exemption[355] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is exposed to various financial market risks, including market risk, interest rate risk, credit and counterparty risk, liquidity risk, and foreign exchange rate risk, which management aims to mitigate through investment strategies and by limiting counterparties to reputable financial institutions - The Company's primary market risk exposure relates to the fair value movements of investments in its specialized funds, which can affect equity in income of affiliates[358] - Interest rate risk primarily stems from the Credit Facility, which bears interest based on Term SOFR; the Company does not use derivative financial instruments to manage this risk[359] - Credit and counterparty risk is managed by limiting financial transactions to reputable financial institutions[360] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures as of March 31, 2025, concluding they were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of March 31, 2025[364] - No material changes in internal control over financial reporting occurred during the three months ended March 31, 2025[365] Part II. Other Information Item 1. Legal Proceedings The Company is occasionally involved in legal claims and proceedings in the ordinary course of business but does not believe any of these will have a material adverse effect on its financial position, liquidity, or results of operations - The Company is party to various claims and legal actions in the ordinary course of business[367] - Management believes that the resolution of these matters will not have a material adverse effect on the Company's business, financial condition, or results of operations[367] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2024 - No material changes to risk factors were reported from the annual report on Form 10-K for the fiscal year ended December 31, 2024[368] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered equity securities were sold from January 1, 2025, to March 31, 2025, other than those previously disclosed in current reports on Form 8-K - No unregistered equity securities were sold during Q1 2025, beyond what was previously disclosed[369] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities - There were no defaults upon senior securities[370] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[371] Item 5. Other Information No other information was reported under this item - No other information was reported[372] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Merger Agreement, Amended and Restated Certificate of Incorporation and Bylaws, Second Amended and Restated Tax Receivable Agreement, and various certifications - Key exhibits include the Merger Agreement (2.1), Amended and Restated Certificate of Incorporation (3.1), Amended and Restated Bylaws (3.2), and the Second Amended and Restated Tax Receivable Agreement (10.1)[373] - Certifications from the CEO and CFO (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104) are also included[373] Signatures Signature Details The report is signed on May 9, 2025, by Jonathan Slager, Chief Executive Officer, and Katherine Elsnab, Chief Financial Officer, confirming compliance with Securities Exchange Act requirements - The report was signed on May 9, 2025, by Jonathan Slager, Chief Executive Officer, and Katherine Elsnab, Chief Financial Officer[379]