QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ |
Smaller reporting company | |||||
Emerging growth company |
Page |
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3 |
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6 |
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Item 1. |
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Item 2. |
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Item 3. |
61 | |||||
Item 4. |
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63 |
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Item 1. |
63 | |||||
Item 1A. |
63 | |||||
Item 2. |
88 | |||||
Item 3. |
89 | |||||
Item 4. |
89 | |||||
Item 5. |
89 | |||||
Item 6. |
89 | |||||
91 |
• | “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”) |
• | 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 Multifamily Fund III GP LLC (“BMF III GP”) |
• | Bridge Multifamily Fund IV GP LLC (“BMF IV 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”) |
• | “CAGR” refers to compound annual growth rate. |
• | “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 immediately following consummation of our Initial Public Offering (“IPO”) who may, following the consummation of the IPO, 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. |
• | “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 and the IPO, and the application of the net proceeds therefrom. See Note 5 to Bridge Investment Group Holdings Inc.’s balance sheets for a description of the Transactions. |
• | The historical performance of our investments may not be indicative of the future results of our investments; |
• | The substantial growth of our business in recent years may be difficult to sustain in the future; |
• | Valuation methodologies for certain assets can be subject to significant subjectivity, and the value of assets may not be the same when realized; |
• | Our revenues are subject to the risks inherent in the ownership and operation of real estate and the construction and development of real estate; |
• | The success of our business depends on the identification and availability of suitable investment opportunities for our funds; |
• | Difficult economic, market and political conditions may adversely affect our businesses; |
• | Our ability to retain our senior leadership team and attract additional qualified investment professionals is critical to our success; |
• | We intend to expand our business and may enter into new investment asset classes, new lines of business and/or new markets; |
• | Defaults by investors in our funds could adversely affect that fund’s operations and performance; |
• | The COVID-19 pandemic has caused severe disruptions in the U.S. and global economy and may affect the investment returns of our funds; |
• | Fund investors may be unwilling to commit new capital to our funds; |
• | The due diligence process that we undertake in connection with investments may not reveal all facts that may be relevant in connection with an investment; |
• | The investment management business is intensely competitive; |
• | Increased government regulation, compliance failures and changes in law or regulation could adversely affect us and the operation of our funds; |
• | Our principal asset is our interest in the Operating Company, and, as a result, we will depend on distributions from the Operating Company to pay our taxes and expenses and to pay dividends to holders of our Class A common stock; |
• | Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition; and |
• | The Continuing Equity Owners continue to have significant influence over us, including control over decisions that require the approval of stockholders. |
Item 1. |
Financial Statements (unaudited) |
June 30, 2021 |
April 2, 2021 |
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(unaudited) |
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Assets : |
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Cash and cash equivalents |
$ | |
$ |
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Total assets |
$ | |
$ |
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Stockholder’s equity : |
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Common stock, par value $ |
$ | |
$ |
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Additional paid-in capital |
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Total stockholders’ equity |
$ | |
$ |
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1. |
ORGANIZATION |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3. |
STOCKHOLDERS EQUITY |
4. |
COMMITMENTS AND CONTINGENCIES |
5. |
SUBSEQUENT EVENTS |
• |
The acquisition of the Blocker Company (the “Blocker Merger”), and issuance to the Blocker Shareholder of |
• |
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 shares of Class A common stock, which the Company further contributed to the Operating Company in exchange for |
• |
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 Bridge GPs, with the exception of BDS I GP, to (i) the Operating Company, in exchange for |
• | 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 |
• |
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 |
• |
The contribution by the Former Equity Owners of their indirect ownership of Class A Units to the Company in exchange for one-to-one |
• |
The exchange by the Former Profits Interest Program Participants of their awards for |
• |
The issuance of |
• |
The use of the net proceeds from the IPO to purchase |
• |
The Operating Company used (or plans to use) the net proceeds from the sale of Class A Units to the Company (1) to pay $ |
• | 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; and |
• | Subsequently, on August 12, 2021, the underwriters exercised their over-allotment option to purchase an additional |
June 30, 2021 |
December 31, 2020 |
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(Unaudited) |
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Assets : |
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Current assets : |
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Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
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Marketable securities |
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Receivables from affiliates |
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Notes receivable from affiliates |
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Notes receivable from employees |
— | |||||||
Prepaid and other current assets |
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Total current assets |
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Investments (including accrued performance allocation of $ , respectively) |
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Long-term notes receivable from employees |
— | |||||||
Tenant improvements, furniture and equipment – Less accumulated depreciation of $, respectively |
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Intangible assets – Less accumulated amortization of $ |
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Goodwill |
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Other assets |
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Total assets |
$ |
$ |
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Liabilities and members’ equity : |
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Current liabilities: |
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Accrued performance allocations compensation |
$ | $ | ||||||
Accounts payable and accrued expenses |
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Accrued payroll and benefits |
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General partner notes payable at fair value |
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Insurance loss reserves |
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Self-insurance reserves and unearned premiums |
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Other current liabilities |
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Total current liabilities |
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Long-term notes payable, net |
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Other long-term liabilities |
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Total liabilities |
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Equity: |
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Net investment in common control group |
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Non-controlling interest |
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Accumulated other comprehensive income |
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Total equity |
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Total liabilities and members’ equity |
$ |
$ |
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2021 |
2020 |
2021 |
2020 |
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Revenues: |
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Fund management fees |
$ |
$ |
$ |
$ |
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Property management and leasing fees |
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Construction management fees |
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Development fees |
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Transaction fees |
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Insurance premiums |
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Other asset management and property income |
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Total revenues |
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Investment income: |
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Incentive fees |
— | — |
— |
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Performance allocations |
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Realized gains |
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Unrealized gains (losses) |
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Earnings (losses) from investments in real estate |
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Total investment income |
( |
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Expenses: |
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Employee compensation and benefits |
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Incentive fee compensation |
— | — |
— |
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Performance allocations compensation |
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Realized gains |
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Unrealized gains (losses ) |
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Loss and loss adjustment expenses |
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Third-party operating expenses |
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General and administrative expenses |
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Depreciation and amortization |
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Total expenses |
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Other income (expense) |
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Net realized and unrealized gains |
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Interest income |
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Interest expense |
( |
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Total other income (expense) |
( |
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( |
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Income before provision for income taxes |
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Income tax provision |
( |
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Net i ncome |
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Net income attributable to non-controlling interests |
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Net income attributable to the Company |
$ |
$ |
$ |
$ |
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2021 |
2020 |
2021 |
2020 |
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Net income |
$ |
$ |
$ |
$ |
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Other comprehensive income - foreign currency translation adjustments |
— | — | ||||||||||||||
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Comprehensive income |
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Less: comprehensive income attributable to non-controlling interests |
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Comprehensive income attributable to the Company |
$ |
$ |
$ |
$ |
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Net investment in common control group |
Noncontrolling interests |
Accumulated other comprehensive income |
Total | |||||||||||||
Balance at March 31, 2021 |
$ | $ | $ | $ | ||||||||||||
Net income for the period |
— | |||||||||||||||
Foreign currency translation adjustment |
— | — | ||||||||||||||
Capital contributions |
— | — | ||||||||||||||
Return of capital |
( |
) | — | — | ( |
) | ||||||||||
Share-based compensation |
— | |||||||||||||||
Distributions to members |
( |
) | ( |
) | — | ( |
) | |||||||||
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Balance at June 30, 2021 |
$ | $ | $ | $ | ||||||||||||
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Balance at March 31, 2020 |
$ | $ | $ | — | $ | |||||||||||
Net income for the period |
— | |||||||||||||||
Share-based compensation |
— | |||||||||||||||
Distributions to members |
( |
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) | — | ( |
) | |||||||||
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Balance at June 30, 2020 |
$ | $ | $ | — | $ | |||||||||||
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Balance at December 31, 2020 |
$ | $ | $ | $ | ||||||||||||
Net income for the period |
— | |||||||||||||||
Foreign currency translation adjustment |
— | — | ||||||||||||||
Capital contributions |
— | |||||||||||||||
Share-based compensation |
— | |||||||||||||||
Repurchase of membership interests |
( |
) | ( |
) | — | ( |
) | |||||||||
Distributions to members |
( |
) | ( |
) | — | ( |
) | |||||||||
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Balance at June 30, 2021 |
$ | $ | $ | $ | ||||||||||||
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Balance at December 31, 2019 |
$ | $ | $ | — | $ | |||||||||||
Net income for the period |
— | |||||||||||||||
Capital contributions |
— | — | ||||||||||||||
Share-based compensation |
— | |||||||||||||||
Repurchase of membership interests |
( |
) | — | — | ( |
) | ||||||||||
Distributions to members |
( |
) | ( |
) | — | ( |
) | |||||||||
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Balance at June 30, 2020 |
$ | $ | $ | — | $ | |||||||||||
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Six Months Ended June 30 , |
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2021 | 2020 | |||||||
Cash flows from operating activities: |
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Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Amortization of deferred financing costs and debt discount and premium |
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Share-based compensation |
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Equity in income of investments |
( |
) | ( |
) | ||||
Changes in unrealized gain on General Partner Notes Payable |
( |
) | ( |
) | ||||
Amortization of lease incentives |
( |
) | ( |
) | ||||
Changes in unrealized performance allocations |
( |
) | ||||||
Changes in operating assets and liabilities: |
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Receivables from affiliates |
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Prepaid and other current assets |
( |
) | ( |
) | ||||
Other assets |
( |
) | ||||||
Account payable and accrued expenses |
( |
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Accrued payroll and benefits |
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Other current liabilities |
( |
) | ||||||
Insurance loss reserves |
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Self-insurance reserves and unearned premiums |
( |
) | ( |
) | ||||
Accrued performance allocations compensation |
( |
) | ||||||
Deferred Rent |
( |
) | ||||||
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchase of investments |
( |
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) | ||||
Proceeds from sale of investments |
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Issuance of notes receivable |
( |
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Proceeds from epayment of notes receivabler |
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Purchase of tenant improvements and office equipment |
( |
) | — | |||||
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Net cash provided by (used in) investing activities |
( |
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Cash flows from financing activities: |
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Capital contributions |
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Distributions to members |
( |
) | ( |
) | ||||
Distributions to non-controlling interest |
( |
) | ( |
) | ||||
Repurchase of membership interests |
( |
) | ( |
) | ||||
Payments of deferred financing costs |
— | ( |
) | |||||
Repayment of notes payable |
— | ( |
) | |||||
Repayments of General Partner N otes P |
( |
) | — | |||||
Proceeds from line of credit |
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Payments of line of credit |
( |
) | ( |
) | ||||
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Net cash used in financing activities |
( |
) | ( |
) | ||||
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Net decrease in cash, cash equivalents, and restricted cash |
( |
) | ( |
) | ||||
Cash, cash equivalents and restricted cash – beginning of period |
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Cash, cash equivalents and restricted cash – end of period |
$ | $ | ||||||
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Supplemental disclosure of cash flow information: |
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Cash paid for income taxes |
$ | $ | ||||||
Cash paid for interest |
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Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
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Cash, cash equivalents, and restricted cash |
$ | $ | ||||||
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1. |
ORGANIZATION |
2. |
SIGNIFICANT ACCOUNTING POLICIES |
• | 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. |
3. |
REVENUE |