Bridge Investment (BRDG) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported GAAP net income of approximately $10.6 million for Q3 2024, with diluted net income per share of Class A common stock at$ 0.04 [5] - Distributable earnings were $28.2 million or$ 0.15 per share after tax, with a declared dividend of $0.10 per share [5][39] - Fee-related revenue increased by 3% from the previous quarter to$ 82.5 million, driven by inflows into workforce and affordable housing and debt strategies [39] Business Line Data and Key Metrics Changes - The company acquired $349 million in multifamily and workforce assets,$ 40 million in logistics assets, and deployed $966 million in debt strategies during Q3 2024 [10] - The debt strategies vertical had its largest lending quarter in over two years, originating 15 loans totaling over$ 720 million [27] - In the multifamily segment, investments of $784 million were underwritten to unlevered IRRs that are 23% better than pre-pandemic levels [30] Market Data and Key Metrics Changes - The commercial property price index showed signs of stabilization, with a 3% increase in 2024 [24] - Absorption in the multifamily sector exceeded deliveries, with 193,000 units absorbed compared to 163,000 delivered in Q3 [33] - The company noted that multifamily starts are down 42% from peak levels, indicating a strong demand picture [33] Company Strategy and Development Direction - The company aims to capitalize on investment opportunities in a buyer's market while remaining selective in capital deployment [9] - Investments have been made in logistics, PE secondaries, and renewable energy to supplement traditional residential rental and commercial real estate-backed fixed income [52] - The company is expanding its distribution capabilities both domestically and internationally, with a focus on major pension funds and consultants [19] Management's Comments on Operating Environment and Future Outlook - Management believes the long winter of real estate declines has bottomed, with increasing investor dialogue and deal evaluations [6] - There is optimism regarding the recovery of commercial real estate values and transaction volumes, driven by a significant loan maturity wall and pent-up demand [60] - The company expects to see substantial improvements in capital raising and deployment in the coming quarters [51] Other Important Information - The company raised approximately$ 607 million in Q3, with $429 million in debt strategies and$ 115 million in workforce and affordable housing [22] - Fee-related earnings for the operating company were $32.4 million, decreasing from the previous quarter due to higher compensation-related expenses [44] - The company anticipates that insurance income will stabilize to more normalized levels in the next quarter [48] Q&A Session Summary Question: Outlook for real estate market recovery - Management expects a significant pent-up demand for transaction volumes and believes that the recovery in values will take place despite some short-term challenges [60][61] Question: Fundraising expectations for retail side - The company is optimistic about breaking escrow on a retail vehicle this quarter and expects positive momentum in fundraising [64] Question: Operating leverage and investment spend levels - Management indicated that investments in logistics and distribution will continue, with expectations for significant development fees from existing projects [69][70] Question: Fundraising magnitude improvement in Q4 - Management anticipates notable increases in logistics contributions and overall fundraising in Q4 compared to Q3 [75] Question: Compensation and performance expectations - Management emphasized the importance of maintaining morale and motivation among teams, leading to a step-up in compensation [78][80] Question: Deployment backdrop in multifamily - Management highlighted strong absorption rates in multifamily and expects continued growth in rent and NOI [87][88]