Item 7. 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 annual report on Form 10-K, including the consolidated financial statements and related notes, and should be read in conjunction with the accompanying tables. 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. In addition, amounts and percentages in the tables below may reflect rounding adjustments and consequently totals may not appear to sum.
Overview
We are a leading alternative investment manager, diversified across specialized asset classes, with approximately $49.8 billion of AUM as of December 31, 2024. Bridge combines its nationwide operating platform with dedicated teams of investment professionals focused on various specialized and synergistic investment platforms, including real estate, credit, renewable energy and secondaries strategies. Our broad range of products and vertically integrated structure allow us to capture new market opportunities and serve investors with various investment objectives. 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 organically develop and strategically acquire an array of investment platforms focused on sectors of the U.S. real estate market and other alternative investments that we believe are the most attractive. We have extensive multi-channel distribution capabilities and currently manage capital on behalf of global institutions and individual investors across our investment strategies.
Business Segment
We operate as one business, a fully integrated alternative investment manager. The Company’s chief operating decision maker, which is the executive chairman, utilizes a consolidated approach to assess financial performance and allocate resources. As such, the Company operates as one business segment.
Recent Events
On February 23, 2025, we entered into the Merger Agreement, pursuant to which, and on the terms and subject to the conditions thereof, Merger Sub Inc. will be merged with and into us, and we will survive such merger as a wholly owned subsidiary of Apollo (the “Corporate Merger”), and Merger Sub LLC will be merged with and into the Operating Company with the Operating Company surviving such merger as the surviving limited liability company and a wholly-owned subsidiary of Apollo (the “LLC Merger” and, together with the Corporate Merger, the “Mergers”). Under the terms of the Merger Agreement, Apollo, through the Merger Subs, will acquire all of our outstanding stock (other than cancelled stock) and all of the Operating Company’s outstanding units (other than cancelled units) in an all-stock transaction with the total equity value of the transaction estimated to be approximately $1.5 billion. The Mergers are expected to close in the third quarter of 2025, subject to the satisfaction or waiver of all of the conditions to the Mergers.
For additional information related to the Merger Agreement, please refer to our Current Report on Form 8-K filed with the SEC on February 24, 2025 and Note 23, “Subsequent Events” to our consolidated financial statements included in this annual report on Form 10-K. For additional information regarding risks and uncertainties associated with the Mergers, see Part I, Item 1A – “Risk Factors” included in this annual report on Form 10-K. There is no guarantee that the Mergers will be consummated.
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. Ongoing economic headwinds continue to put downward pressure on occupancy rates, valuations, transaction volumes and the availability of financing in the commercial real estate sector, which represented 3% of our AUM as of December 31, 2024. We are no longer collecting fund management fees or fund administration fees on Bridge Office Fund LP (“BOF I”), which previously contributed $2.0 million to revenue on a quarterly basis. During the year ended December 31, 2024, we recognized a credit of $1.5 million related to BOF I, and certain joint venture management fees, which was attributed to fund management fees recognized during the first quarter of 2024, as well as $0.6 million credit for fund administration fees beginning in the third quarter of 2024. During the third quarter of 2024, we also began reserving fund management fees and fund administration fees for Office Fund II LP (“BOF II”) totaling $1.4 million. We also have a $15.0 million outstanding unsecured loan to a subsidiary of BOF I, as well as a $15.8 million outstanding unsecured loan to BOF II, both of which we have determined to be recoverable as of December 31, 2024. In addition, market dislocations, or could 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 relationships with both existing and new fund investors, many of whom place significant emphasis on an asset manager’s track record of fund performance and distributions. While we believe that our reputation for generating risk-adjusted returns is to our ability to continue to attract investors, we may face in raising capital for new investment strategies 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 and finance attractive investments and efficiently deploy the capital that we have raised. Capital deployed may vary significantly from period to period with the fluctuating availability of attractive opportunities, which are dependent on a number of factors, including debt financing, the general macroeconomic environment, market positioning, valuation, size, the liquidity of such investment opportunities, and the long-term nature of our investment strategies. Each of these factors impacts our ability to efficiently and effectively invest our pool of fund capital and maintain revenue growth over time. Increases in prevailing interest rates could affect not only our returns on debt and mortgage-backed securities, but also our ability to deploy capital for Bridge-sponsored funds due to the increased cost of, and ability to secure, borrowings. 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 could affect our ability to source investments with risk-adjusted returns.
• 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 achieving 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.
See “Item 1A. Risk Factors” included in this annual report on Form 10-K for a discussion of the risks applicable to our business.
Business Environment
Global markets have shifted dramatically over the last several years, experiencing significant volatility driven by increasing concerns over persistent inflation, high interest rates, slowing economic growth and geopolitical uncertainty. In 2022, inflation reached multi-decade highs in many major economies around the world, prompting central banks to pursue monetary policy tightening actions that created, and are likely to continue to create, headwinds to economic growth. However, in the latter part of 2023 the U.S. economy began to show signs of growth, with a strong labor market and deceleration of inflation. In response to these trends, the Federal Reserve paused interest rate increases in the fourth quarter of 2023. During 2024, inflation continued to decelerate and moderated at approximately 2.5%, which led to the Federal Reserve making its first rate cut in four years during its September 2024 meeting. It is expected that the Federal Reserve will make additional rate cuts in 2025.
Our future results may be adversely affected by challenges in fundraising activity, the pace of capital deployment and our ability to collect rental income when due. See “Risk Factors—Risks Related to Our Business—Difficult economic, market and political conditions may adversely affect our businesses, including by reducing the value or hampering the performance of the investments made by our funds or reducing the ability of our funds to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition” in “Part I. Item 1A. Risk Factors” of this annual report on Form 10-K.
Key Financial Measures
We manage our business using financial measures and key operating metrics that we believe reflect the productivity of our core investment activities. We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Additional information regarding our significant accounting policies can be found in Note 2, “Significant Accounting Policies,” to our consolidated financial statements included in this annual report on Form 10-K. Our key financial and operating measures are discussed below.
Revenues
Fund Management Fees . Our 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 December 31, 2024, our weighted-average management fee varies by fund and is based upon the size of the commitment; however, the low average for a single fund is 0.50% and the 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. Management fees for those types of assets are usually less than 1% and typically charged on invested capital or invested equity. For our sponsored closed-end funds, our capital raising period is traditionally 18 to 24 months. After the initial of a -end fund, we charge catch-up management fees to investors who subscribe in subsequent in amounts equal to the fees they would have paid if they had subscribed in the initial plus interest. Catch-up management fees are recognized in the period in which the investor subscribes to the fund. Fund management fees are presented net of placement agent fees, where we are acting as an agent in the arrangement.
Property Management and Leasing Fees . We have vertically integrated platforms where we manage a significant percentage of the real estate properties owned by our funds. As of December 31, 2024, we managed approximately 100% of the multifamily, single-family rental, workforce and affordable housing and net lease properties, 69% of the office properties, and 56% 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 3.0% for multifamily properties, 2% to 5% for workforce and affordable housing properties, 9.5% for single-family rental properties, 2% to 3% for office properties and 4% to 5% for seniors housing properties. 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. The offset is recorded in third-party operating expenses on the consolidated statements 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 charged 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 fee range for acquisition fees is generally 0.5% to 1.2% 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 is generally 0.3% to 0.9%.
Fund Administration Fees. The Company earns fees for providing fund administration services to its funds. Fund administration fees include a fixed annual amount plus a percentage of invested or deployed capital. Fund administration fees also include investor services fees, which are based on an annual fee per investor. Fees are earned as services are provided, and are recognized on a straight-line basis.
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.
Other Asset Management and Property Income . Other asset management and property income includes, among other things, interest on catch-up management fees, fees related to in-house legal and tax professional services, which are 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 of December 31, 2024, we had approximately $18.3 billion of carry-eligible fee-earning AUM across approximately 57 funds and other vehicles, 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 investors in our funds. 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 are recorded as deferred incentive fee revenue and are included in accrued performance allocations compensation in the 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. Performance-based fees earned by our general partners from open-end funds are generally based on the investment returns, subject to preferred returns and/or high-watermarks, for the applicable measurement period of the open-end fund. Performance-based fees are measured and eligible to be received on a recurring basis and are not dependent on realization events from the underlying investments.
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 (“ASC”) Topic 606 (“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, or in the case of our managed perpetual REITs, the current period NAV. We record the amount of carried interest allocated to us as of each period end as accrued performance allocations in the 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 obligations if amounts previously distributed to us would require repayment to a fund if such fund were to be 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.
Earnings (Losses) from Investments in Real Estate. The Company’s share of the investee’s income and expenses for the Company’s equity method investments (exclusive of carried interest) is included in investment income as earnings (losses) from investments in real estate.
Expenses
Employee Compensation and Benefits . Compensation includes salaries, bonuses (including discretionary awards), related benefits, share-based compensation, compensatory awards, 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 are eligible to receive Class A restricted common stock (“Restricted Stock”), Restricted Stock Units (“RSUs”), and profits interests awards. 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 awards are based upon our stock price on the 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 modification. We recognize compensation expense on a straight-line basis 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. Refer to Note 20, “Share-Based Compensation and Profits Interests,” to our consolidated financial statements included in this annual report on Form 10-K for additional information about equity awards.
Performance Allocations Compensation . Performance fee-related compensation deemed to be compensatory 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 60% 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 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 . Loss and loss adjustment expenses 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 . Third-party operating expenses represent 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, transaction costs, 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)
Realized and Unrealized Gains (Losses) . Realized and unrealized 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 gains (losses) result from changes in the fair value of the underlying investment as well as from the reversal of previously recognized unrealized gains (losses) at the time an investment is realized. Realized and unrealized gains (losses) are presented together as net realized and unrealized gains (losses) in the consolidated statements of operations. Finally, realized and unrealized gain (loss) associated with the financial instruments that we elect the fair value option is also included in net realized and unrealized ().
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.
Other Income (Expense) . Other income (expense) relates to non-operating and non-investment related expenses, which at times can include changes in our TRA liability.
Interest Expense . Interest expense includes interest related to our privately offered notes, or the Private Placement Notes, which have a weighted-average fixed coupon rate of 5.03%. The Credit Facility incurs interest based on a pricing grid, as determined by the Company’s leverage ratio, over Term Secured Overnight Financing Rate (“Term SOFR”) and an unused commitment fee of up to 0.25%, which is based on the daily unused portion of the Credit Facility. As of December 31, 2024, the interest rate on our Credit Facility was approximately 6.48%.
Income Tax Expense . Income tax expense consists of taxes paid or payable by us and our operating subsidiaries. We 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 historically been 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. subsidiaries operate as corporate entities in non-U.S. jurisdictions. Accordingly, in some cases, these entities are 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 consolidated statements of operations.
Net Income (Loss) Attributable to Non-Controlling Interests in Bridge Investment Group Holdings LLC. Net income (loss) 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.
Net Income (Loss) Attributable to Non-Controlling Interests in Bridge Investment Group Holdings Inc. Net income (loss) 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 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.
For additional discussion of components of our consolidated financial statements, refer to Note 2, “Significant Accounting Policies,” to our consolidated financial statements included in this annual report on Form 10-K.
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
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), plus (c) the fair value of the assets of any REITs managed by our affiliates, including Bridge Investment Group Industrial Real Estate Income Trust (“BIGi”). Our AUM is not reduced by 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, and differs from the manner in which our affiliates registered with the SEC report “Regulatory Assets Under Management” on Form ADV and Form PF. In addition, our calculation of AUM (but not fee-earning 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 following table presents a rollforward of our AUM for the years ended December 31, 2024, 2023, and 2022 (dollar amounts in millions):
Year Ended December 31,
AUM as of beginning of period
New capital / commitments raised (1)
Distributions / return of capital (2)
Change in fair value and acquisitions (3)
AUM as of end of period
Increase
Increase %
(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. New capital / commitments raised for the year ended December 31, 2023 includes $5.1 billion of AUM attributed to the Newbury Acquisition.
(2) Distributions / return of capital generally represents the proceeds realized 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.
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 following table presents a rollforward of our total fee-earning AUM for the years ended December 31, 2024, 2023, and 2022 (dollar amounts in millions):
Year Ended December 31,
Fee-earning AUM as of beginning of period
Increases (capital raised/deployment) (1)
Changes in fair market value
Decreases (liquidations/other) (2)
Fee-earning AUM as of end of period
Increase
Increase %
(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. Increases for the year ended December 31, 2023 includes $4.3 billion of fee-earning AUM attributed to the Newbury Acquisition.
(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.
Capital raising activities and deployment in our logistics, credit and workforce and affordable housing funds led fee-earning AUM to increase by approximately $2.0 billion from December 31, 2023 to December 31, 2024. However, these increases were partially offset by $1.5 billion of reductions in fee-earning AUM largely attributed to the conversion of Newbury Fund III’s management fee basis from committed capital to NAV, the timing of liquidations for Bridge Debt Strategies II, III and IV, as well asset realizations during 2024.
The following table summarizes the balances of fee-earning AUM by fund as of December 31, 2024, 2023, and 2022 (in millions):
As of December 31,
Fee-Earning AUM by Fund
Bridge Debt Strategies Fund IV
Bridge Multifamily Fund V
Newbury Equity Partners Fund V
Bridge Opportunity Zone Fund IV
Bridge Workforce Fund II
Newbury Equity Partners Fund IV
Bridge Multifamily Fund IV
Bridge Opportunity Zone Fund III
Bridge Debt Strategies Fund III
Bridge Seniors Housing Fund II
Bridge Seniors Housing Fund I
Bridge Opportunity Zone Fund V
Bridge Logistics U.S. Venture II
Bridge Debt Strategies Fund V
Bridge Workforce Fund I
Bridge Opportunity Zone Fund I
Newbury Equity Partners Fund III
Bridge Opportunity Zone Fund II
Bridge Debt Strategies IV JV Partners
Bridge Logistics U.S. Venture I
Bridge Net Lease Industrial Income Fund
Bridge Agency MBS Fund
Tamina Homes, Inc (1)
Bridge Debt Strategies Fund II
Bridge Opportunity Zone Fund VI
Bridge Single-Family Rental Fund IV
Newbury Equity Partners Fund VI
Bridge Workforce Fund III
Bridge Multifamily Continuation Fund
Bridge Office Fund II
Bridge Office III JV Partners
Bridge Debt Strategies III JV Partners
Bridge Seniors Housing Fund III
Bridge Office I JV Partners
Bridge Industrial Real Estate Income Trust
Bridge Single-Family Rental Fund III
Bridge Solar Energy Development Fund I
Bridge Debt Strategies II JV Partners
Bridge Office II JV Partners
Bridge Debt Strategies V JV Partners
Bridge Workforce II JV Partners
Bridge Solar I JV Partners
Bridge Office Fund I
Bridge Multifamily Fund III
Bridge Multifamily III JV Partners
Bridge Debt Strategies I JV Partners
Total Fee-Earning AUM
Average remaining fund life of closed-end funds, in years
(1) Tamina Homes, Inc. is a single-family rental fund managed by Bridge Single-Family Rental Fund Manager LLC, which is a subsidiary of the Company.
Undeployed Capital
As of December 31, 2024, we had $3.5 billion of undeployed capital available to be deployed for future investment or reinvestment. Of this amount, approximately $1.7 billion is currently fee-earning based on commitments and approximately $1.8 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 for our closed-end funds by platform are shown in the chart below (dollar amounts in millions):
Investment Performance Summary as of December 31, 2024
Closed-End Funds (1)
(Investment Period Beginning, Ending Date)
Cumulative Fund Committed Capital (2)
Unreturned Drawn Capital plus Accrued Pref (3)
Cumulative Investment Invested Capital (4)
Realized Investment Value (5)
Unrealized Investment Value (6)
Unrealized Investment MOIC (7)
Total Investment Fair Value (8)
Total Investment MOIC (9)
Investor Levered Net IRR (10)
Investor Unlevered Net IRR (11)
(in millions)
Equity Strategies Funds
Multifamily
Bridge Multifamily I
(Mar 2009, Mar 2013)
Bridge Multifamily II
(Apr 2012, Apr 2015)
Bridge Multifamily III
(Jan 2015, Jan 2018)
Bridge Multifamily IV
(Jun 2018, Jun 2021)
Bridge Multifamily V
(Jul 2021, to present)
Bridge MF Continuation Vehicle
Total Multifamily Funds
Workforce & Affordable Housing
Bridge Workforce Housing I
(Aug 2017, Aug 2020)
Bridge Workforce Housing II
(Aug 2020, Aug 2024)
Total Workforce & Affordable Housing Funds
Secondaries
Newbury Equity Partners I
(Sep 2006, Mar 2013)
Newbury Equity Partners II
(Oct 2009, Oct 2015)
Newbury Equity Partners III
(Jul 2013, Mar 2019)
Newbury Equity Partners IV
(May 2017, Feb 2023)
Newbury Equity Partners V
(Nov 2019, to present)
Total Secondaries Funds
Single-Family Rental
Bridge SFR Predecessor Fund I
(Jan 2013, Jan 2015)
Bridge SFR Predecessor Fund II
(Jan 2015, Jan 2017)
Bridge SFR Predecessor Fund III
(Aug 2019, Aug 2022)
Bridge Single-Family Rental IV
(Jan 2022, to present)
Total Single-Family Rental Funds
Investment Performance Summary as of December 31, 2024
Closed-End Funds (1)
(Investment Period Beginning, Ending Date)
Cumulative Fund Committed Capital (2)
Unreturned Drawn Capital plus Accrued Pref (3)
Cumulative Investment Invested Capital (4)
Realized Investment Value (5)
Unrealized Investment Value (6)
Unrealized Investment MOIC (7)
Total Investment Fair Value (8)
Total Investment MOIC (9)
Investor Levered Net IRR (10)
Investor Unlevered Net IRR (11)
(in millions)
Opportunity Zone
Opportunity Zone I
(Apr 2019, Dec 2019)
Opportunity Zone II
(Nov 2019, Jun 2020)
Total Opportunity Zone Fund
Office
Bridge Office I
(Jul 2017, Jul 2020)
Bridge Office II
(Dec 2019, Dec 2022)
Total Office Funds
Seniors Housing
Bridge Seniors I
(Jan 2014, Jan 2018)
Bridge Seniors II
(Mar 2017, Mar 2020)
Bridge Seniors III
(Nov 2020, Nov 2024)
Total Seniors Housing Funds
Logistics Value
Bridge Logistics Value I
(Nov 2021, Dec 2024)
Total Logistics Value Fund
Debt Strategies Funds
Bridge Debt I
(Sep 2014, Sep 2017)
Bridge Debt II
(July 2016, July 2019)
Bridge Debt III
(May 2018, May 2021)
Bridge Debt IV
(Nov 2020, Nov 2024)
Total Debt Strategies Funds
Footnotes:
The investment performance presented herein is intended to illustrate the performance of investments held by the funds and other vehicles we manage and the potential for which is relevant to the performance-based fees to Bridge. Other than the Investor Unlevered Net IRR and the Investor Levered Net IRR numbers presented herein, the cash flows in the investment performance do not reflect the cash flows used in presentations of fund performance due to the fund level expenses, reserves, and reinvested capital.
(1) Closed-End Funds represented herein does not include performance for (i) certain Opportunity Zone funds with investments which have not been marked-to-market, and (ii) funds that are currently raising capital, including our open-ended funds. Each fund identified contemplates all associated parallel and feeder limited partnerships in which investors subscribe and accordingly share common management. All intercompany accounts and transactions have been eliminated in the combined presentation. Values and performance presented herein are the combined investor returns gross of any applicable legal entity taxes.
(2) Cumulative Fund Committed Capital represents total capital commitments to the fund (excluding joint ventures or separately managed accounts).
(3) Unreturned Drawn Capital + Accrued Pref represents the amount the fund needs to distribute to its investors as a return of capital and a preferred return before the General Partner is entitled to receive performance fees or allocations from the fund.
(4) Cumulative Investment Invested Capital represents the total cost of investments since inception (including any recycling or refinancing of investments). This figure will differ from Cumulative Paid-In Capital, which represents the total contributions or drawn down commitments from all investors since inception.
(5) Realized Investment Value represents net cash proceeds received in connection with all investments, including distributions from investments and disposition proceeds.
(6) Unrealized Investment Value represents the estimated liquidation values that are generally based upon appraisals, contracts and internal estimates. There can be no assurance that Unrealized Investment Fair Value will be realized at valuations shown, and realized values will depend on numerous factors including, among others, future asset-level operating results, asset values and market conditions at the time of disposition, transaction costs, and the timing and manner of disposition, all of which may differ from the assumptions on which the Unrealized Investment Fair Value are based. Direct fund investments in real property are held at cost minus transaction expenses for the first six months.
(7) Unrealized Investment MOIC represents the Multiple on Invested Capital (“MOIC”) for Total Investment Fair Value associated with unrealized investments before management fees, fund level expenses and carried interest, divided by Cumulative Investment Invested Capital attributable to those unrealized investments.
(8) Total Investment Fair Value represents the sum of Realized Investment Value and Unrealized Investment Value, before management fees, expenses and carried interest.
(9) Total Investment MOIC represents MOIC for Total Investment Fair Value divided by Cumulative Investment Invested Capital.
(10) Investor Levered Net IRR is an annualized realized and unrealized internal rate of return to fee-paying fund investors, computed from inception based on the effective dates of cash inflows (capital contributions) and cash outflows (distributions) and the remaining fair value, net of the investors actual management fees, fund level expenses, and carried interest. Net return information reflects aggregated fund-level returns for fee-paying investors using actual management fees paid by the fund. The actual management fee rates from individual investors will be higher and lower than the actual aggregate fund level rate. This return may differ from actual investor level returns due to timing, variance in fees paid by investors, and other investor-specific investment costs such as taxes. Because IRRs are time-weighted calculations, for newer funds with short measurement periods, IRRs may be amplified by fund leverage and early fund expenses and may not be meaningful. For IRRs calculated with an initial date less than one year from the reporting date, the IRR presented is de-annualized, representing such period’s return.
(11) Investor Unlevered Net IRR is an annualized realized and unrealized internal rate of return to fee-paying fund investors, computed from inception based on the effective dates of cash inflows (capital contributions and drawdowns on fund lines of credit) and cash outflows (distributions and repayments on fund lines of credit) and the remaining fair value (after removing outstanding balances on fund lines of credit), net of the investors actual management fees, fund level expenses, and carried interest. Net return information reflects aggregated fund-level returns for fee-paying investors using actual management fees paid by the fund. The actual management fee rates from individual investors will be higher and lower than the actual aggregate fund level rate. Because IRRs are time-weighted calculations, for newer funds with short measurement periods, this IRR may be amplified by early fund expenses and may not be meaningful. For IRRs calculated with an initial date less than one year from the reporting date, the IRR presented is de-annualized, representing such period’s return.
(12) Any composite returns presented herein do not represent actual returns received by any one investor and are for illustrative purposes only. Composite performance is based on actual cash flows of the funds within a strategy over the applicable timeframes and are prepared using certain assumptions. Each fund has varied investment periods and investments were made during different market environments; past performance of prior funds within a strategy is not a guarantee of future results. Fund investors generally pay fees based on a defined percentage of total commitments during the investment period and invested capital thereafter, but some fund investors may pay fees based on invested capital for the life of the fund according to the applicable governing documents. Additional information on the calculation of this composite performance, including applicable assumptions and supporting data, can be made available promptly upon request.
*** Indicates a negative return that results in an IRR that is incalculable. The returns for Total Office Funds are not presented because Bridge Office I is incalculable.
The returns presented above are those of the primary funds in each platform and not those of the Company. The returns presented above do not include returns for joint ventures or separately managed accounts. An investment in our Class A common stock is not an investment in any of our funds. The historical returns attributable to our platforms are presented for illustrative purposes only and should not be considered as indicative of the future returns of our Class A common stock or any of our current or future funds. These returns are presented by platform and include multiple funds of varied vintage, including funds that are fully realized, and performance of a specific fund within a platform can vary materially from the return of the platform as a whole. The returns represent aggregate returns for the U.S. domiciled partnerships, and such aggregate returns may differ materially from the fund-level returns for each individual partnership co-investment vehicles or separately managed accounts or each non-U.S. partnership due to varied management fee structures, timing of investments, contributions and distributions and additional structuring costs and taxes.
There is no guarantee that any fund or other vehicle within a platform will achieve its investment objectives or achieve comparable investment returns.
Results of Operations
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Revenues
Year Ended December 31,
Amount
Change
Change
(in thousands)
Revenues:
Fund management fees
Property management and leasing fees
Construction management fees
Development fees
Transaction fees
Fund administration fees
Insurance premiums
Other asset management and property income
Total revenues
Fund Management Fees . Our fee-earning AUM increased by $0.6 billion, or 2.8%, primarily attributed to capital raising activities and deployment in our logistics, credit and workforce and affordable housing funds, which was partially offset by reductions in fee-earning AUM largely attributed to the conversion of Newbury Fund III’s management fee basis from committed capital to NAV, the timing of liquidations for Bridge Debt Strategies II, III and IV, as well asset realizations during 2024. Our weighted-average management fee, which varies largely due to the size of investor commitments, was 1.34% as of December 31, 2024 compared to 1.35% as of December 31, 2023.
Fund management fees increased by $15.4 million, or 7%, primarily attributed to the Newbury Acquisition, the timing of capital raising for funds launched in 2023 and 2024, and from deployment by Bridge Debt Strategies Fund IV, whose fees are primarily based on invested capital, and by Bridge Net Lease Industrial Income Fund, whose fees are based on NAV. These factors contributed an additional $20.3 million of fund management fees for the year ended December 31, 2024 compared to the year ended December 31, 2023. These increases were partially offset by decreases of $4.9 million largely due to the timing of reductions in fee-earning AUM from the conversion of certain funds’ management fee basis from committed to invested capital or NAV, the timing of catch up fees recognized between periods, and from reductions attributed to BOF I and certain of its related joint ventures due to unfavorable market conditions in the commercial office sector.
Property Management and Leasing Fees . Property management and leasing fees decreased by $5.1 million, or 7%, primarily due to a reduction in the number of commercial office and seniors housing properties managed. These decreases were partially offset by additional fees, which were primarily attributed to an increase in the number of multifamily, workforce and affordable housing and opportunity zone properties managed as well as leasing commissions recognized in 2024.
Construction Management Fees . Construction management fees decreased by $4.1 million, or 35%, primarily due to the timing of projects for commercial office, multifamily housing and workforce and affordable housing properties, which was attributed to the timing of real estate asset acquisitions during the past 12 months. For assets acquired with value-add opportunities, the majority of the exterior construction is completed within the first year after acquisition.
Development Fees . Development fees increased by $0.5 million, or 16%, primarily due to the timing of projects.
Transaction Fees . Transaction fees increased by $7.0 million, or 34%, primarily driven by a $6.7 million increase in due diligence fees driven by the deployment of capital in our development and multifamily equity funds during the year ended December 31, 2024. An additional increase of $0.3 million was attributed to debt origination fees largely due to multifamily housing properties.
Fund Administration Fees. Fund administration fees increased $0.4 million, or 2%, largely due to an increase in fee-earning AUM for certain of our credit, opportunity zone, workforce and affordable housing and secondaries funds compared to 2023, which was partially offset by credit losses written off or reserved related to BOF I and II recognized during 2024.
Insurance Premiums . Insurance premiums increased by $4.3 million, or 24%, largely due to an increase in property and general liability premiums.
Other Asset Management and Property Income . Other asset management and property income increased by $3.5 million, or 29%, primarily due to an increase in accounting, legal and tax services fees compared to 2023 as well as rebates received during 2024.
Investment income
Year Ended December 31,
Amount
Change
Change
(in thousands)
Investment income (loss):
Incentive fees
Performance allocations:
Realized
Unrealized
Earnings from investments in real estate
Total investment income (loss)
Performance Allocations. Net performance allocations increased by $138.4 million, or 105%. The following table reflects our carried interest and incentive fees by fund (in thousands):
Year Ended December 31, 2024
Year Ended December 31, 2023
Realized
Unrealized
Realized
Unrealized
BMF IV GP
BWH I GP
BDS II GP
BNLI GP
BSFR IV GP
BMF CV GP
BDS III GP
BOF II GP
BWH II GP
BLV I GP
BIGi Trust GP
NEP V GP (1)
BSH III GP
BMF III GP
BDS V GP
BLD GP
NEP VI GP
BAMBS GP
BDS IV GP
Total
(1) The performance allocation income for Newbury Partners Fund V represents the portion payable to former employees of Newbury Partners and therefore no portion of such amount will be retained by the Company.
For the years ended December 31, 2024 and 2023, the realized performance income allocations were primarily related to the timing of tax distributions in Bridge Debt Strategies Funds II, III and IV between periods as well as fee-related performance revenue earned in 2024 by our general partner in our open-end Bridge Net Lease Industrial Income Fund and Bridge Agency MBS Fund. In 2023, the realized performance income in Bridge Multifamily Fund III was related to dispositions, including the recapitalization of assets into a continuation vehicle.
The unrealized performance (loss) income allocation is recorded one quarter in arrears due to timing of the information provided by the funds and third-party entities unless information is available on a more timely basis, and as such the performance allocation loss for the years ended December 31, 2024 and 2023 reflects asset valuations as of September 30, 2024 and 2023, respectively. However, our unrealized performance (loss) income allocation attributed to our perpetual open-end REIT is based on the current period NAV. The change in unrealized performance allocations was largely due to the underlying market fundamentals between 2024 and 2023, which contributed to the depreciation of properties within our multifamily, single-family rental, and workforce and affordable housing funds, and includes the reversal of realized performance allocation income during the respective periods. Additionally, 2024 benefited from appreciation of investments within Newbury Fund VI, launched in 2023, and from the completion of development projects within a Bridge Logistics joint venture.
Earnings From Investments In Real Estate. Earnings from investments in real estate decreased by $0.8 million, or 100%, primarily due to timing of distributions from certain investments.
Expenses
Year Ended December 31,
Amount
Change
Change
(in thousands)
Expenses:
Employee compensation and benefits
Incentive fee compensation
Performance allocations compensation:
Realized
Unrealized
Loss and loss adjustment expenses
Third-party operating expenses
General and administrative expenses
Depreciation and amortization
Total expenses
Employee Compensation and Benefits . Employee compensation and benefits increased by $30.5 million, or 14%, largely due to a net increase of $23.1 million in salaries and benefits attributed to changes in headcount, inflation adjustments to compensation, and increased variable compensation. An additional increase of $7.4 million was attributed to Restricted Stock and RSU awards granted in January 2024 and the additional expense related to the 2023 profits interests awards that were granted in March 2023.
Performance Allocations Compensation. Performance allocation compensation increased by $34.1 million, or 1,222%, primarily due to a $14.6 million increase in unrealized performance allocations compensation and an increase of $19.5 million related to realized performance allocation awards, which is directly correlated to the decrease in our performance allocation income (loss) during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Loss and Loss Adjustment Expenses . Loss and loss adjustment expenses increased by $10.7 million, or 91%, primarily due to losses associated with claims in our captive insurance company during 2024, which resulted in an increase in our incurred but not reported reserves. The remaining increase was attributed to rising costs (correlated with an increase in insurance premiums) and property losses, which are subject to stop loss amounts.
Third-party Operating Expenses. Third-party operating expenses decreased by $8.2 million, or 37%, primarily due to a reduction in the number of seniors housing properties managed as well as a reduction in leasing commissions attributed to the timing of leasing activity.
General and Administrative Expenses . General and administrative expenses decreased by $10.4 million, or 19%, primarily due to $3.6 million of non-recurring transaction costs incurred related to the Newbury Acquisition, a $3.0 million reduction in consolidated fund-level expenses, with the remaining decrease attributed to overall reduction in overhead expenses during 2024, as well as lease termination and severance costs incurred in 2023 that were non-recurring.
Depreciation and Amortization . Depreciation and amortization increased by $3.5 million, or 21%, primarily attributed to additional amortization for intangibles acquired as part of the Newbury Acquisition.
Other income (expense)
Year Ended December 31,
Amount
Change
Change
(in thousands)
Other (expense) income
Realized and unrealized gains (losses), net
Interest income
Other (expense) income, net
Interest expense
Total other (expense) income
Realized and Unrealized Gains (Losses), Net . Net realized and unrealized gains (losses) decreased by $3.3 million, or 52%, for the year ended December 31, 2024, which was primarily attributed to depreciation recognized on certain other investments, including those investments acquired as part of the Newbury Acquisition.
Interest Income . Interest income increased by $1.2 million, or 6%, largely due to the timing of distribution income for interests acquired in the Newbury Acquisition.
Other (Expense) Income, Net . Net other (expense) income decreased by $0.7 million, or 32%, which was attributed to changes in the TRA liability during 2024 compared to 2023.
Interest Expense . Interest expense decreased by $1.7 million, or 6%, which was largely attributed to a lower weighted-average outstanding balance on the Credit Facility in 2024 compared to 2023, which resulted in a reduction of $3.1 million in interest expense. This decrease was partially offset by additional interest expense in 2024 related to the timing of the 2023 Private Placement Notes, which funded in March 2023.
Income tax expense
Income tax expense decreased by $4.6 million, or 76%, which was primarily attributed to changes in the effective tax rate due to changes in the TRA for the year ended December 31, 2024 compared to 2023.
For the year ended December 31, 2024, our effective tax was 8.22% compared to (7.53)% for the year ended December 31, 2023. The negative effective tax rate during 2023 was largely due to investment losses in the period and as a result of our organizational structure as a holding company, whose principal asset is a controlling financial interest in the Operating Company. The Operating Company and its subsidiaries, other than BIGRM and BPM, are limited liability companies or limited partnerships and, as such, are not subject to income taxes. The individual owners of the Operating Company and its subsidiaries are required to report their distributive share of realized income, gains, losses, deductions, or credits on their individual income tax returns.
Net (Loss) Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings LLC. Net (loss) income attributable to non-controlling interests in Bridge Investment Group Holdings LLC comprises non-controlling interests related to the Operating Company’s subsidiaries and to our profits interests programs. The following table summarizes the allocation of net (loss) income to the non-controlling interests in the Operating Company (in thousands):
Year Ended December 31,
Non-controlling interests related to General Partners — realized
Non-controlling interests related to General Partners — unrealized
Non-controlling interests related to Fund Managers
Non-controlling interests related to 2019 profits interests awards
Non-controlling interests related to 2020 profits interests awards
Non-controlling interests related to 2021 profits interests awards
Non-controlling interests related to 2023 profits interests awards
Net loss attributable to non-controlling interests in Bridge Investment Group Holdings LLC
Net (Loss) Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings Inc. Net loss attributable to non-controlling interests in Bridge Investment Group Holdings Inc. was $25.3 million and net income attributable to non-controlling interests in Bridge Investment Group Holdings Inc. was $(0.7) million during the years ended December 31, 2024 and 2023, respectively.
On January 1, 2023, certain of the Company’s 2020 profits interests awards were collapsed into 801,927 shares of our Class A common stock and 2,025,953 Class A Units. On July 1, 2023, certain of the Company’s 2021 profits interests awards were collapsed into 489,407 shares of our Class A common stock and 2,429,453 Class A Units. The 2020 and 2021 profits interests were collapsed based on their then-current fair values and the relative value of the Company, based on Distributable Earnings (as defined subsequently) attributable to the Operating Company, Distributable Earnings of the applicable subsidiary where such profits interests are currently held, and the market price of our Class A common stock, in each case as of the date of the collapse. This resulted in a decrease in net income attributable to non-controlling interests for the applicable periods; however, there was also a corresponding increase in the aggregate number of outstanding Class A Units at the Operating Company and shares of our Class A common stock.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Revenues
Year Ended December 31,
Amount
Change
Change
(in thousands)
Revenues:
Fund management fees
Property management and leasing fees
Construction management fees
Development fees
Transaction fees
Fund administration fees
Insurance premiums
Other asset management and property income
Total revenues
Fund Management Fees . Our fee-earning AUM increased by $0.1 billion, or 0.7%, exclusive of the Newbury Acquisition, from December 31, 2022 to December 31, 2023. Our weighted-average management fee, which varies largely due to the size of investor commitments, was 1.35% as of December 31, 2023 compared to 1.50% as of December 31, 2022. The decrease in the weighted-average management fee from December 31, 2022 was partially attributed to the Newbury Acquisition as these secondary funds generally have a lower weighted-average management fee range than other Bridge-sponsored funds.
Fund management fees increased by $9.0 million, or 4%, primarily attributed to the Newbury Acquisition, deployment by Bridge Debt Strategies Fund IV, whose fees are primarily based on invested capital, and the timing of capital raising for funds launched in 2022 and 2023. These factors contributed an additional $51.3 million of fund management fees for the year ended December 31, 2023 compared to the year ended December 31, 2022. These increases were partially offset by decreases of $35.7 million largely due to the timing of one-time catch-up fees, reductions in fee-earning AUM attributed to asset realizations and from the conversion of certain funds management fee basis from committed to invested capital, and the recognition of $6.6 million of credit loss reserves attributed to unfavorable market conditions in BOF I, and certain related joint ventures, during 2023.
Included in fund management fees are one-time catch-up fees of $2.8 million for the year ended December 31, 2023, which were primarily related to Bridge Multifamily Fund V and Bridge Opportunity Zone Fund V, compared to one-time catch-up fees of $28.6 million for the year ended December 31, 2022, which were primarily attributed to the timing of capital raising for Bridge Multifamily Fund V, Bridge Workforce and Affordable Housing Fund II, and Bridge Debt Strategies Fund IV. The following chart presents the composition of our fund management fees for the year ended December 31, 2023 and 2022 (dollar amounts in millions) (1) :
(1) Fund management fees for the year ended December 31, 2022 excludes fees for funds launched subsequent to such date.
Property Management and Leasing Fees . Property management and leasing fees increased by $1.5 million, or 2%, primarily due to an approximate 8% increase in the number of properties managed, which was primarily workforce and affordable housing properties.
Construction Management Fees . Construction management fees increased by $0.6 million, or 6%, primarily due to commercial office, seniors housing, and logistics properties completing more value-add construction.
Development Fees . Development fees decreased by $1.8 million, or 38%, primarily due to the timing of projects.
Transaction Fees . Transaction fees decreased by $35.7 million, or 64%, primarily driven by a $30.5 million decrease in due diligence fees attributed to a slowdown in the deployment of capital primarily related to our equity funds during the year ended December 31, 2023 driven by general macroeconomic trends. The remaining $5.2 million decrease was related to a reduction of debt origination fees, which was driven by lower deployment of capital in our equity funds.
Fund Administration Fees. Fund administration fees increased $2.5 million, or 16%, primarily due to the increase in fee-earning AUM.
Insurance Premiums . Insurance premiums increased by $5.2 million, or 41%, largely due to the increase in AUM and higher property and general liability premiums.
Other Asset Management and Property Income . Other asset management and property income increased by $0.3 million, or 3%, primarily due to an increase in ancillary fees during 2023, which were partially offset by a reduction in additional management fees related to the final closing of Bridge Workforce Fund II in 2022 that were non-recurring.
Investment Income
Year Ended December 31,
Amount
Change
Change
(in thousands)
Investment income (loss):
Incentive fees
Performance allocations:
Realized
Unrealized
Earnings from investments in real estate
Total investment income (loss)
Performance Allocations. Net performance allocations decreased by $316.1 million, or 171%. The following table reflects our carried interest and incentive fees by fund (in thousands):
Year Ended December 31, 2023
Year Ended December 31, 2022
Realized
Unrealized
Realized
Unrealized
BMF III GP
BMF IV GP
BWH I GP
BDS III GP
BOF II GP
BWH II GP
BDS II GP
BSFR IV GP
BLV I GP
BOF I GP
BAMBS GP
BSH III GP
NEP V GP (1)
BNLI GP
BMF CV GP
BDS IV GP
Total
(1) The performance allocation income for Newbury Partners Fund V represents the portion payable to former employees of Newbury Partners and therefore no portion of such amount will be retained by the Company.
For the years ended December 31, 2023 and 2022, the realized performance allocations were primarily related to timing of dispositions in Bridge Multifamily Fund III, including the recapitalization of assets into a continuation vehicle in July 2023, and the timing of tax distributions in Bridge Debt Strategies Funds II, III and IV between periods.
The unrealized performance (loss) income allocation is recorded one quarter in arrears due to timing of the information provided by the funds and third-party entities unless information is available on a more timely basis, and as such the performance allocation (loss) income for the years ended December 31, 2023 and 2022 reflects asset valuations as of September 30, 2023 and 2022, respectively. For the year ended December 31, 2023, the decrease in unrealized performance allocations was largely due to the recapitalization of assets from Bridge Multifamily Fund III into a continuation vehicle that closed in July 2023, market depreciation from properties within our multifamily, workforce and affordable housing funds, commercial office and credit funds, and includes the reversal of realized performance allocation income during the period. For the year ended December 31, 2022, the unrealized performance allocations were largely due to market appreciation, including from Bridge Net Lease Income Fund and Bridge Logistics U.S. Venture I that launched in 2021, and Bridge Single-Family Rental Fund IV that launched in 2022. These increases were partially offset by the reversal of realized performance allocations income attributed to dispositions in Multifamily Fund III and tax distributions in Debt Strategies Funds II and III.
Earnings From Investments In Real Estate. Earnings from investments in real estate decreased by $1.4 million, or 65%, primarily due to timing of distributions from certain investments.
Year Ended December 31,
Amount
Change
Change
(in thousands)
Expenses:
Employee compensation and benefits
Incentive fee compensation
Performance allocations compensation:
Realized
Unrealized
Loss and loss adjustment expenses
Third-party operating expenses
General and administrative expenses
Depreciation and amortization
Total expenses
Employee Compensation and Benefits . Employee compensation and benefits increased by $24.2 million, or 12%, largely due to a net increase of $15.6 million in salaries and benefits attributed to higher headcount driven by the increase in our AUM and the number of Bridge-sponsored funds, which was partially offset by a reduction in bonus expense. An additional increase of $8.7 million was attributed to Restricted Stock and RSU awards granted in January 2023 and the additional expense related to the 2022 profits interests awards that were granted in the third quarter of 2022 and the 2023 profits interests awards that were granted in the first quarter of 2023.
Performance Allocations Compensation. Performance allocations compensation decreased by $32.1 million, or 110%, primarily due to a $35.4 million decrease in unrealized performance allocations compensation and an increase of $3.4 million related to realized performance allocations awards, which is directly correlated to the decrease in our performance allocation (loss) income during the year ended December 31, 2023 compared to the performance allocation income during the year ended December 31, 2022.
Loss and Loss Adjustment Expenses . Loss and loss adjustment expenses increased by $5.3 million, or 82%, primarily related to losses incurred or paid related to rising costs and the property losses which are subject to stop loss amounts during the year ended December 31, 2023 compared to the year ended December 31, 2022, and is correlated with an increase in insurance premiums.
Third-party Operating Expenses. Third-party operating expenses decreased by $3.7 million, or 14%, primarily due to a reduction in operating expenses related to the number of seniors housing properties managed, coupled with a decrease in leasing commissions.
General and Administrative Expenses . General and administrative expenses increased by $13.1 million, or 32%, primarily due to $3.6 million of transaction costs incurred related to the Newbury Acquisition, $4.0 million of consolidated fund-level expenses, and $2.1 million of credit losses related to BOF I recognized during the fourth quarter of 2023, with the remaining net increase of $3.5 million largely attributed to lease termination costs for one of our corporate offices, severance costs related to a reduction in force, and other expenses correlated with the increase in AUM and the number of properties managed.
Depreciation and Amortization . Depreciation and amortization increased by $13.4 million, or 457%, primarily attributed to additional amortization for intangibles acquired as part of the Newbury Acquisition.
Other Income (Expense)
Year Ended December 31,
Amount
Change
Change
(in thousands)
Other income (expense)
Investment income
Interest income
Other income (expense), net
Interest expense
Total other income
Realized and Unrealized Gains (Losses), Net . Net realized and unrealized gains (losses) decreased by $10.6 million, or 251%, for the year ended December 31, 2023, largely due to unrealized losses on other investments, including those acquired in the Newbury Acquisition, during 2023 compared to unrealized appreciation recognized on other investments during 2022 and a realized loss of $1.9 million related to the redemption of our investment in the Bridge Agency MBS Fund in July 2023, and includes the reversal of the unrealized losses related to the investment.
Interest Income . Interest income increased by $10.5 million, or 134%, largely due to the timing of distribution income for interests acquired in the Newbury Acquisition, the timing of short-term borrowings by Bridge-sponsored funds, as well as an increase in the interest rate earned on the weighted-average outstanding cash and cash equivalents between periods.
Other (Expense) Income, Net . Net other (expense) income decreased by $3.4 million, or 270%, which was attributed to changes in the TRA liability during 2023 compared to 2022.
Interest Expense . Interest expense increased by $16.2 million, or 131%, primarily due to the $150.0 million of 2022 Private Placement Notes that funded in July 2022, which have a weighted-average interest rate of 5.05%, $150.0 million of 2023 Private Placement Notes that funded in March 2023, which have a weighted-average interest rate of 6.01%, and the outstanding balance on the Credit Facility during 2023.
Income tax expense
Income tax expense decreased by $16.1 million, or 72%, primarily due to a net loss for the year ended December 31, 2023 compared to net income for the year ended December 31, 2022, which was largely attributed to investment (loss) income recognized during the respective periods.
For the year ended December 31, 2023, our effective tax was (7.53)% compared to 7.53% for the year ended December 31, 2022. The negative effective tax rate during 2023 was largely due to investment losses in the period and as a result of our organizational structure as a holding company, whose principal asset is a controlling financial interest in the Operating Company. The Operating Company and its subsidiaries, other than BIGRM and BPM, are limited liability companies or limited partnerships and, as such, are not subject to income taxes. The individual owners of the Operating Company and its subsidiaries are required to report their distributive share of realized income, gains, losses, deductions, or credits on their individual income tax returns.
Net (Loss) Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings LLC. Net (loss) income attributable to non-controlling interests in Bridge Investment Group Holdings LLC comprises non-controlling interests related to the Operating Company’s subsidiaries and to our profits interests programs. The following table summarizes the allocation of net (loss) income to the non-controlling interests in the Operating Company (in thousands):
Year Ended December 31,
(in thousands)
Non-controlling interests related to General Partners — realized
Non-controlling interests related to General Partners — unrealized
Non-controlling interests related to Fund Managers
Non-controlling interests related to 2019 profits interests awards
Non-controlling interests related to 2020 profits interests awards
Non-controlling interests related to 2021 profits interests awards
Net (loss) income attributable to non-controlling interests in Bridge Investment Group Holdings LLC
Net (Loss) Income Attributable to Non-Controlling Interests in Bridge Investment Group Holdings Inc. Net loss attributable to non-controlling interests in Bridge Investment Group Holdings Inc. was $0.7 million and net income attributable to non-controlling interests in Bridge Investment Group Holdings Inc. was $157.0 million during the years ended December 31, 2023 and 2022, respectively.
On January 1, 2023, certain of the Company’s 2020 profits interests awards were collapsed into 801,927 shares of our Class A common stock and 2,025,953 Class A Units. On July 1, 2023, certain of the Company’s 2021 profits interests awards were collapsed into 489,407 shares of our Class A common stock and 2,429,453 Class A Units. The 2020 and 2021 profits interests were collapsed based on their then-current fair values and the relative value of the Company, based on Distributable Earnings (as defined subsequently) attributable to the Operating Company, Distributable Earnings of the applicable subsidiary where such profits interests are currently held, and the market price of our Class A common stock, in each case as of the date of the collapse. This resulted in a decrease in net income attributable to non-controlling interests for the applicable periods; however, there was also a corresponding increase in the aggregate number of outstanding Class A Units at the Operating Company and shares of our Class A common stock.
Non-GAAP financial measures
We use non-GAAP financial measures, such as Distributable Earnings, Fee Related Earnings, Fee Related Revenues and Fee Related Expenses, to supplement financial information presented in accordance with GAAP. We believe that excluding certain items from our GAAP results allows management to better understand our consolidated financial performance from period to period and better project our future consolidated financial performance as forecasts are developed at a level of detail different from that used to prepare GAAP-based financial measures. Fee Related Revenues and Fee Related Expenses are presented separately in our calculation of non-GAAP measures in order to better illustrate the profitability of our Fee Related Earnings. Moreover, we believe these non-GAAP financial measures provide our stakeholders with useful information to help them evaluate our operating results by facilitating an enhanced understanding of our operating performance and enabling them to make more meaningful period to period comparisons.
There are limitations to the use of the non-GAAP financial measures presented in this report. For example, our non-GAAP financial measures may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes.
The non-GAAP financial measures are not meant to be considered as indicators of performance in isolation from or as a substitute for measures prepared in accordance with GAAP, and should be read only in conjunction with financial information presented on a GAAP basis. Reconciliations of each of Distributable Earnings, Fee Related Earnings, Fee Related Revenues and Fee Related Expenses to its most directly comparable GAAP financial measure are presented below. We encourage you to review the reconciliations in conjunction with the presentation of the non-GAAP financial measures for each of the periods presented. In future fiscal periods, we may exclude such items and may incur income and expenses similar to these excluded items.
Distributable Earnings . Distributable Earnings is a key performance measure used in our industry and is evaluated regularly by management in making resource deployment and compensation decisions, and in assessing our performance. We believe that reporting Distributable Earnings is helpful to understanding our business and that investors should review the same supplemental financial measure that management uses to analyze our performance.
Distributable Earnings differs from net income before the provision for income taxes, computed in accordance with GAAP in that it does not include depreciation and amortization, income (loss) from consolidated Bridge-sponsored funds, unrealized performance allocations and related compensation expense, unrealized gains (losses), share-based compensation, cash net income attributable to non-controlling interests, charges (credits) related to corporate actions and non-recurring items. Such items, where applicable, include: charges associated with acquisitions or strategic investments, changes in the TRA liability, corporate conversion costs, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions, impairment charges associated with lease right-of-use assets, gains and losses from the retirement of debt, charges associated with contract terminations and employee severance. Distributable Earnings is not a measure of performance calculated in accordance with GAAP. Although we believe the inclusion or exclusion of these items provides investors with a meaningful indication of our core operating performance, the use of Distributable Earnings without consideration of the related GAAP measures is not adequate due to the adjustments described herein. This measure supplements and should be considered in addition to and not in lieu of the results of operations discussed further under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” prepared in accordance with GAAP. Our calculations of Distributable Earnings 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.
Fee Related Earnings . Fee Related Earnings is a supplemental performance measure used to assess our ability to generate profits from fee-based revenues that are measured and received on a recurring basis. Fee Related Earnings differs from net income (loss) before provision for income taxes, computed in accordance with GAAP in that it adjusts for the items included in the calculation of Distributable Earnings, and also adjusts Distributable Earnings to exclude realized performance allocations income and related compensation expense, net insurance income, earnings from investments, net interest (interest income less interest expense), net realized gain (loss), income (loss) from consolidated fund investments, and, if applicable, certain general and net administrative expenses when the timing of any future payment is uncertain. Fee Related Earnings is not a measure of performance calculated in accordance with GAAP. The use of Fee Related Earnings without consideration of the related GAAP measures is not adequate due to the adjustments described herein. Our calculations of Fee Related Earnings 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. During 2024, we revised our definition of Fee Related Earnings to account for the impact of fee related performance revenue related to our open-end funds, which have become more meaningful to our results of operations. However, this does not impact historical performance measures as no such fees have yet been realized, and therefore the revised definition will only effect Fee Related Earnings on a prospective basis.
Fee Related Revenues . Fee Related Revenues is a component of Fee Related Earnings. Fee Related Revenues includes fund management fees, transaction fees net of any third-party operating expenses, fee related performance revenue net of fee related performance compensation, net earnings from Bridge property operators, development fees, fund administration fees, and other asset management and property income.
Fee related performance revenue comprises performance-based fees earned by our general partners from open-end funds. These fees are generally based on the investment returns, subject to preferred returns and/or high-watermarks, for the applicable measurement period of the open-end fund. Fee related performance revenues are measured and eligible to be received on a recurring basis and are not dependent on realization events from the underlying investments.
Net earnings from Bridge property operators is calculated as a summation of property management, leasing fees and construction management fees less third-party operating expenses and property operating expenses. Property operating expenses is calculated as a summation of employee compensation and benefits, general and administrative expenses and interest expense at our property operators. We believe our vertical integration enhances returns to our shareholders and fund investors, and we view the net earnings from Bridge property operators as part of our fee related revenue as these services are provided to essentially all of the real estate properties in our equity funds. Net earnings from Bridge property operators is a metric that is included in management’s review of our business. Please refer to the reconciliation below to the comparable line items on the consolidated statements of operations. Fee Related Revenues differs from revenue computed in accordance with GAAP in that it excludes insurance premiums and income (loss) from consolidated fund investments. Additionally, Fee Related Revenues is reduced by the costs associated with our property operations, which are managed internally in order to enhance returns to the Limited Partners in our funds.
Fee Related Expenses . Fee Related Expenses is a component of Fee Related Earnings. Fee Related Expenses differs from expenses computed in accordance with GAAP in that it does not include incentive fee compensation, performance allocations compensation, share-based compensation, loss and loss adjustment expenses associated with our insurance business, depreciation and amortization, or charges (credits) related to corporate actions and non-recurring items, expenses from consolidated fund investments, and expenses attributable to non-controlling interests in consolidated entities. Additionally, Fee Related Expenses is reduced by the costs associated with our property operations, which are managed internally in order to enhance returns to the Limited Partners in our funds. Fee Related Expenses are used in management’s review of the business. Please refer to the reconciliation below to the comparable line items on the consolidated statements of operations.
Fee Related Revenues and Fee Related Expenses are presented separately in our calculation of non-GAAP measures in order to better illustrate the profitability of our Fee Related Earnings.
Income (loss) before provision for income taxes is the GAAP financial measure most comparable to Distributable Earnings and Fee Related Earnings. The following table sets forth a reconciliation of net income (loss) to Distributable Earnings attributable to the Operating Company and to Total Fee Related Earnings attributable to the Operating Company for the years ended December 31, 2024, 2023, and 2022 (in thousands):
Year Ended December 31,
Net income (loss)
Income tax expense
Income (loss) before provision for income taxes
Depreciation and amortization
Impact of fund consolidation
Less: Unrealized performance allocations
Plus: Unrealized performance allocations compensation
Less: Unrealized (gains) losses, net
Plus: Other (income) expenses, net
Plus: Share-based compensation
Plus: Transaction and non-recurring costs (1)
Less: Cash income attributable to non-controlling interests in subsidiaries
Less: Net realized performance allocations attributable to non-controlling interests
Distributable Earnings attributable to the Operating Company
Realized performance allocations and incentive fees
Realized performance allocations and incentive fees compensation
Net realized performance allocations to non-controlling interests
Net insurance (income) loss
(Earnings) losses from investments in real estate
Net investment and interest (income) expense and realized (gain) loss
Plus: Fee related income attributable to non-controlling interests in subsidiaries
Total Fee Related Earnings
Total Fee Related Earnings attributable to non-controlling interests
Total Fee Related Earnings attributable to the Operating Company
(1) Transaction costs and non-recurring expenses represent transaction costs related to the Newbury Acquisition, severance and additional credit loss reserves written off related to BOF I as well as lease termination costs recognized in 2023 related to one of our corporate offices.
The following table sets forth our total Fee Related Earnings and Distributable Earnings for the years ended December 31, 2024, 2023, and 2022 (in thousands):
Year Ended December 31,
Fund-level fee revenues
Fund management fees
Fee related performance revenue
Transaction fees
Total net fund-level fee revenues
Net earnings from Bridge property operators
Development fees
Fund administration fees
Other asset management and property income
Fee Related Revenues
Cash-based employee compensation and benefits
Net administrative expenses
Fee Related Expenses
Total Fee Related Earnings
Total Fee Related Earnings attributable to non-controlling interests
Total Fee Related Earnings to the Operating Company
Realized performance allocations and incentive fees
Realized performance allocations and incentive fees compensation
Net realized performance allocations attributable to non-controlling interests
Net insurance income
Earnings from investments in real estate
Net investment and interest income (expense) and realized gain (loss)
Distributable Earnings attributable to the Operating Company
The following table sets forth the components of the employee compensation and benefits, general and administrative expenses, and total other income (expense) line items on our consolidated statements of operations. Other income (expense) is disclosed in our non-GAAP measures based upon the nature of the income. Realized amounts are disclosed separately in order to determine Distributable Earnings. Other income from Bridge property operators is included in net earnings from Bridge property operators. The following table sets forth these components for the years ended December 31, 2024, 2023, and 2022 (in thousands):
Year Ended December 31,
Fund management fees
Impact of fund consolidation
Total fund management fees
Cash-based employee compensation and benefits
Compensation expense of Bridge property operators
Share-based compensation
Employee compensation and benefits
Administrative expenses, net of Bridge property operators
Administrative expenses of Bridge property operators
Transaction and non-recurring costs
Impact of fund consolidation
General and administrative expenses
Unrealized (losses) gains
Other expenses from Bridge property operators
Other income (expense), net
Net investment and interest income (expense) and realized gain (loss)
Impact of fund consolidation
Non-FRE income attributable to non-controlling interest in subsidiaries
Total other expense
Fee Related and Distributable Earnings Related Earnings to the Operating Company
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Total Fee Related Earnings to the Operating Company increased by $6.0 million, or 5%, for the year ended December 31, 2024, compared to the year ended December 31, 2023, while Distributable Earnings to the Operating Company decreased by $6.1 million, or 4%, during the same period due to the following:
• Total fee related revenues increased by $29.2 million, or 10%, principally due to:
◦ Fund management fees increased by $15.0 million, or 6%, primarily due to the timing of capital raising between 2024 and 2023 and the Newbury Acquisition;
◦ Fee related performance revenue of $6.2 million, which was largely attributed to the timing of performance fees earned from our open-end funds, including Bridge Net Lease Industrial Income Fund and Bridge Agency MBS Fund; and
◦ Transaction fees increased by $7.0 million, or 34%, due to the increased volume of real estate transactions driven by the deployment of capital in our development and multifamily equity funds during 2024;
• Net earnings from Bridge property operators decreased by $3.1 million, or 28%, driven by a reduction in the number of internally managed seniors housing and commercial office properties as of December 31, 2023 to December 31, 2024.
• Other asset management and property income increased by $3.4 million, or 29%, which was attributed to additional accounting, legal and tax services fees as well as rebates received during 2024.
• Fee Related Expenses increased by $21.6 million, or 13%, principally due to:
◦ Cash-based employee compensation and benefits increased by $22.8 million, or 16%, primarily due to an increase in salaries and benefits attributed to changes in headcount, inflation adjustments to compensation, and increased variable compensation;
◦ These increases were offset by a decrease in net administrative expenses of $1.1 million, or 4%, primarily due to a reduction in consolidated fund-level expenses and one-time expenses.
• Net of related compensation, realized performance allocations and incentive fees decreased by $11.4 million, or 34%, compared to 2023, primarily due to the timing of realizations in Bridge Debt Strategies Funds II, III and IV as well as fee related performance compensation paid in the third quarter of 2024 for our open-end Bridge Net Lease Industrial Income Fund compared to the realized compensation for Bridge Multifamily Fund III in 2023.
• Net investment and interest (income) expense and realized (gain) loss increased $2.2 million, or 14%, largely due additional interest income attributed to the timing of distribution income for interests acquired in the Newbury Acquisition, which was partially offset by an increase in interest expense attributed to the 2023 Private Placement Notes.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Total Fee Related Earnings to the Operating Company decreased by $27.8 million, or 18%, for the year ended December 31, 2023, compared to the year ended December 31, 2022, while Distributable Earnings to the Operating Company decreased by $53.4 million, or 28%, during the same period due to the following:
• Total fee related revenues decreased by $24.6 million, or 8%, principally due to:
◦ Transaction fees decreased by $35.7 million, or 64%, due to reduced volume of real estate transactions attributed to the current macroeconomic environment, including increased interest rates and limited availability of debt financing;
◦ The decrease in transaction fees was partially offset by a net increase in fund management fees of $9.2 million, or 4%, largely due to contributions from the Newbury Acquisition and due to the timing of capital raising between 2023 and 2022. These increases in fund management fees were partially offset by decreases attributed to the timing of one-time catch-up fees, reductions in fee-earning AUM attributed to asset realizations and from the conversion of certain funds management fee basis from committed to invested capital, and the recognition of credit loss reserves attributed to unfavorable market conditions in BOF I during 2023.
• Net earnings from Bridge property operators increased by $0.6 million, or 6%, driven by an increase in the number of workforce and affordable housing and multifamily units managed from December 31, 2022 to December 31, 2023.
• Fee Related Expenses increased by $10.9 million, or 7%, principally due to:
◦ Cash-based employee compensation and benefits increased by $13.4 million, or 11%, primarily due to increased headcount driven by the increase in our fee-earning AUM, which was partially offset by a reduction in 2023 bonuses;
◦ These increases were offset by a decrease in net administrative expenses of $2.5 million, or 9%, primarily due to an increase in general and administrative and property management operating expenses in 2023 compared to 2022, which was offset by the consolidation of fund-level and one-time expenses.
• Net of related compensation, realized performance allocations and incentive fees decreased by $31.5 million, or 49%, compared to 2022, due to the timing of realizations in Bridge Multifamily Fund III and Bridge Debt Strategies Funds II, III and IV.
• Net investment and interest (income) expense and realized (gain) loss increased $11.7 million, or 263%, largely due to an increase in interest expense attributed to the 2023 Private Placement Notes and the outstanding balance of the Credit Facility during 2023, partially offset by additional interest income attributed to the timing of distribution income for interests acquired in the Newbury Acquisition.
Liquidity and Capital Resources
Our liquidity needs primarily include working capital and debt service requirements. We believe that our current sources of liquidity, which include cash generated by our operating activities, and cash and funds available under our credit sources, will be sufficient to meet our projected operating and debt service requirements for at least the next 12 months. To the extent that our current liquidity is insufficient to fund future activities, we may need to raise additional funds. In the future, we may raise additional capital through the sale of equity securities or through debt financing arrangements. If we raise additional funds by issuing equity securities, the ownership of our existing stockholders will be diluted. The incurrence of additional debt financing would result in debt service obligations, and any future instruments governing such debt could provide for operating and financial covenants that could restrict our operations. We operate in a rapidly evolving and unpredictable business environment that may change the timing or amount of expected future cash receipts and expenditures. Accordingly, there can be no assurance that we may not be required to raise additional funds through the sale of equity or debt securities or from credit facilities. Additional capital, if needed, may not be available on satisfactory terms, or at all.
As of December 31, 2024 and 2023, we had total assets of $1,247.4 million and $1,288.8 million, respectively, which included $90.6 million and $57.7 million of cash and cash equivalents, respectively, and total liabilities of $741.5 million and $743.5 million, respectively. There were no borrowings outstanding under the Credit Facility as of December 31, 2024, with $150.0 million of available capacity. We generate cash primarily from fund management fees, property and construction management fees, leasing fees, development fees, transaction fees, and fund administration fees. We have historically managed our liquidity and capital resource needs through (a) cash generated from our operating activities and (b) borrowings under credit agreements and other borrowing arrangements.
Ongoing sources of cash include (a) fund management fees, fund administration fees, property management and leasing fees, which are collected monthly or quarterly, (b) transaction fee income, and (c) borrowings under our Credit Facility. In the future, we will also evaluate opportunities, based on market conditions, to access the capital markets. We use cash flow from operations to pay compensation and related expenses, general and administrative expenses, income taxes, debt service, capital expenditures and to make distributions to our equity holders.
We do not have any off-balance sheet arrangements that would expose us to any liability or require us to fund losses or guarantee target returns to investors in our funds that are not reflected in our consolidated financial statements. Refer to Note 17, “Commitments and Contingencies” and Note 18, “Variable Interest Entities” to our consolidated financial statements included in this annual report on Form 10-K for additional information on commitments and contingencies and variable interest entities, respectively.
The following table presents a summary of our cash flows for the years ended December 31, 2024, 2023, and 2022 (in thousands):
Year Ended December 31,
Net cash provided by operating activities
Net cash provided by (used in) investing activities
Net cash (used in) provided by financing activities
Net increase (decrease) in cash, cash equivalents, and restricted cash
Operating Activities
Cash provided by operating activities was primarily driven by our earnings in the respective periods after adjusting for significant non-cash activity, including non-cash performance allocations and incentive fees, the related non-cash performance allocations and incentive fee related compensation expense, non-cash investment income, non-cash share-based compensation, depreciation, amortization and impairments, and the effect of changes in working capital and other activities. Operating cash inflows primarily included the receipt of management fees, property management and leasing fees, and realized performance allocations and incentive fees, while operating cash outflows primarily include payments for operating expenses, including compensation and general and administrative expenses.
For the year ended December 31, 2024 — cash provided by operating activities was $145.2 million, primarily consisting of net income of $16.7 million and adjustments for non-cash items of $131.0 million, which was partially offset by cash used by operating assets and liabilities of $2.5 million. Adjustments for non-cash items primarily consisted of $42.4 million unrealized performance allocations, $47.5 million of share-based compensation, depreciation and amortization of $19.9 million, $11.5 million of equity in income from equity method investments, and $4.1 million of unrealized accrued performance allocations compensation.
For the year ended December 31, 2023 — cash provided by operating activities was $174.8 million, primarily consisting of adjustments for non-cash items of $241.4 million and cash provided by operating assets and liabilities of $20.8 million offset by a net loss of $87.4 million. Adjustments for non-cash items primarily consisted of $172.7 million unrealized performance allocations, $40.8 million of share-based compensation, depreciation and amortization of $16.4 million, $10.8 million of equity in income from equity method investments, which were partially offset by $10.6 million of unrealized accrued performance allocations compensation.
For the year ended December 31, 2022 — net cash provided by operating activities was $228.4 million, primarily consisting of net income of $272.4 million offset by adjustments for non-cash items of $46.4 million and cash provided by operating assets and liabilities of $2.4 million. Adjustments for non-cash items primarily consisted of $115.2 million unrealized performance allocations and $2.0 million of equity in income from equity method investments, which was offset by $32.1 million of share-based compensation, $24.9 million of unrealized accrued performance allocations compensation and a $12.8 million change in the deferred income taxes.
Investing Activities
Our investing activities primarily consist of lending to affiliate entities and investing activities related to our other investments.
For the year ended December 31, 2024 — cash provided by investing activities of $10.7 million primarily consisted of $311.8 million in collections of notes receivable and proceeds from the sale of investments of $17.2 million and marketable securities of $18.1 million, which was partially offset by issuances of notes receivables of $310.2 million related to our lending activities to affiliated entities and $29.3 million used for the purchase of investments.
For the year ended December 31, 2023 — cash used in investing activities of $343.2 million primarily consisted of $319.4 million used for the Newbury Acquisition, issuances of notes receivables of $245.8 million related to our lending activities to affiliated entities, and $68.5 million for purchases of investments, which was partially offset by $264.7 million in collections of notes receivable and proceeds from the sale of investments of $20.5 million.
For the year ended December 31, 2022 — net cash used in investing activities of $21.9 million primarily consisted of $548.8 million in collections of notes receivable related to our lending activities to affiliate entities, which was offset by issuances of notes receivables of $472.4 million, $83.3 million for purchases of investments, and $15.1 million used for the GBC Acquisition.
Financing Activities
Our financing activities primarily consist of distributions to our shareholders and non-controlling interests as well as borrowings associated with our private placement notes and the Credit Facility, and at times proceeds from issuances of our common stock.
For the year ended December 31, 2024 — cash used in financing activities of $120.7 million was largely due to payments of $369.0 million on the Credit Facility, $83.1 million of distributions paid to non-controlling interests and $17.5 million of dividends paid to our Class A common stockholders. These decreases in cash were partially offset by $335.0 million in proceeds from our Credit Facility and $14.8 million of capital contributions from non-controlling interests.
For the year ended December 31, 2023 — cash provided by financing activities of $42.4 million was largely due to $436.0 million in proceeds from our Credit Facility, $150.0 million in proceeds received from our 2023 Private Placement Notes, and $17.9 million of capital contributions from non-controlling interests. These cash flows were offset by payments of $402.0 million on the Credit Facility, $133.8 million of distributions paid to non-controlling interests, $21.9 million of dividends paid to our Class A common stockholders, and the payment of deferred financing costs related to the 2023 Private Placement Notes.
For the year ended December 31, 2022 — net cash used in financing activities of $97.1 million was largely due to $213.7 million of distributions paid to non-controlling interests and $30.2 million of dividends paid to our Class A common stockholders, and the payment of deferred financing costs related to the new Credit Facility entered into in June 2022 and the 2022 Private Placement Notes. These cash outflows were offset by $150.0 million in proceeds received from our 2022 Private Placement Notes.
Corporate Credit Facilities
On June 3, 2022, the Operating Company entered into a credit agreement (the “Credit Agreement”) with CIBC, Inc. and Zions Bancorporation, N.A. d/b/a Zions First National Bank as Joint Lead Arrangers, which allows for revolving commitments (the “Credit Facility”).
On January 31, 2023, the Operating Company entered into an amendment to the Credit Agreement, pursuant to which (i) the Operating Company exercised its option to increase the total revolving commitments under the Credit Facility to $225.0 million, (ii) the variable interest rates under the applicable pricing grid were each increased by 15 basis points and (iii) the quarterly unused commitment fee was increased to 0.25%.
On February 28, 2024, the Operating Company entered into an amendment to the Credit Agreement with CIBC, Zions and Manufacturers and Traders Trust Company, as Joint Lead Arrangers, which included a reduction in the total aggregate commitments under the Credit Facility from $225.0 million to $150.0 million, with the ability to increase aggregate commitments up to an additional $75.0 million, and extended the maturity date from June 3, 2024 to June 3, 2026.
Borrowings under the Credit Agreement bear interest based on a pricing grid with a range of a 2.65% to 3.15% over Term SOFR as determined by the Operating Company’s leverage ratio, or upon achievement of an investment grade rating, interest is then based on a range of 1.90% to 2.40% over Term SOFR. The Credit Facility is also subject to a quarterly unused commitment fee of up to 0.25%, which is based on the daily unused portion of the Credit Facility. Borrowings under the Credit Facility may be repaid at any time during the term of the Credit Agreement, but the Credit Facility requires paydown at least once annually or if the aggregate commitment exceed certain thresholds for an extended period of time.
Under the terms of the Credit Agreement, certain of the Operating Company’s assets serve as pledged collateral. In addition, the Credit Agreement contains covenants that, among other things, limit the Operating Company’s ability to: incur indebtedness; create, incur or allow liens; merge with other companies; pay dividends or make distributions; engage in new or different lines of business; and engage in transactions with affiliates. The Credit Agreement also contains financial covenants requiring the Operating Company to maintain (1) a debt to EBITDA ratio of no more than 3.75x, (2) minimum liquidity of $15.0 million and (3) minimum quarterly EBITDA of $15 million and minimum EBITDA for the trailing four fiscal quarters of $80.0 million.
The interest rate in effect for the Credit Facility as of December 31, 2024 was approximately 6.48%. As of December 31, 2024, there was no outstanding balance on the Credit Facility.
Subsequent to December 31, 2024, the Company had net draws of $16.0 million on its Credit Facility. As of March 7, 2025, the Company had $134.0 million of remaining availability.
Private Placement Notes
On July 22, 2020, the Operating Company entered into a $150.0 million note purchase agreement, pursuant to which the Operating Company issued two tranches of notes in a private placement offering. The transaction consisted of $75.0 million of 3.90% notes with a five-year term maturing on July 22, 2025, and $75.0 million of 4.15% notes with a seven-year term maturing on July 22, 2027 (the “2020 Private Placement Notes”).
On June 3, 2022, the Operating Company entered into a $150.0 million note purchase agreement pursuant to which the Operating Company issued two tranches of notes in a private placement offering. The transaction consisted of $75.0 million of 5.00% notes with a ten-year term maturing on July 12, 2032, and $75.0 million of 5.10% notes with a twelve-year term maturing on July 12, 2034 (the “2022 Private Placement Notes”).
On February 13, 2023, the Operating Company entered into a $150.0 million note purchase agreement pursuant to which the Operating Company issued two tranches of notes in a private placement offering. The transaction consisted of $120.0 million of 5.99% notes with a seven-year term maturing on March 29, 2030, and $30.0 million of 6.10% notes with a ten-year term maturing on March 29, 2033 (the “2023 Private Placement Notes” and together with the 2020 and 2022 Private Placement Notes, the “Private Placement Notes”). The 2023 Private Placement Notes closed in connection with the closing of the Newbury Acquisition.
Under the terms of the Private Placement Notes, certain of the Operating Company’s assets are pledged as collateral. The Private Placement Notes contain covenants that, among other things, limit the Operating Company’s ability to: incur indebtedness; create, incur or allow liens; merge with other companies; engage in new or different lines of business; and engage in transactions with affiliates. The Private Placement Notes also contain financial covenants requiring the Operating Company to maintain (1) a debt to EBITDA ratio of no more than 3.75x, (2) minimum liquidity of $15.0 million and (3) minimum quarterly EBITDA of $15.0 million and minimum EBITDA for the trailing four fiscal quarters of $80.0 million.
Debt Covenants
As of December 31, 2024 and 2023, the Company was in full compliance with all debt covenants.
Contractual Obligations and Commitments
Our principal contractual obligations and commitments consist of obligations under our Private Placement Notes, capital commitments, and lease obligations. The amount of the obligations presented in the table summarizes our commitments to settle contractual obligations in cash as of the time periods presented. The following table summarizes our contractual obligations as of December 31, 2024:
Payments Due by Time Period
(in thousands)
Total
One year
or less
Over one
year
through
three years
Over three
years
through
five years
Over
five
years
Indeterminable
maturity
Operating lease obligations
Long-term debt obligations (1)
Interest on debt obligations (2)
Revolving line of credit (3)
Standby letters of credits
Capital commitments (4)
Total contractual obligations
(1) Estimated principal payments on our debt obligations reflect amounts that would be paid over the term of the Private Placement Notes assuming the debt is held until final maturity.
(2) Estimated interest payments on our debt obligations reflect amounts that would be paid over the term of the Private Placement Notes based on the contractual interest rates and assuming the debt is held until final maturity.
(3) As of December 31, 2024, there was no outstanding balance on the revolving line of credit with full availability of $150.0 million.
(4) Capital commitments represent our GP commitments in addition to obligations as a limited partner to fund certain property technology investments. These amounts are generally due on demand, and accordingly, have been presented as indeterminable. Capital commitments are expected to be called over a period of several years.
The payments that we may be required to make under the TRA are expected to be substantial. Because the timing of amounts to be paid under the TRA cannot be determined as they are dependent on future taxable income, this contractual commitment has not been presented in the table above.
In addition to the commitments specifically noted previously, we enter into a number of contractual commitments in the ordinary course of business. These include software licensing and maintenance, telecommunications services, facilities maintenance and equipment servicing, supplies purchasing, and other goods and services used in the operation of our business. Some of these contracts are renewable or cancellable at least annually, and in certain cases, to secure favorable pricing concessions, we have committed to contracts that may extend to several years.
Critical Accounting Estimates
The preparation of our consolidated financial statements in accordance with GAAP requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent liabilities. We base our judgments on our historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making estimates about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We believe the following critical accounting policies could potentially produce materially different results if we were to change the underlying assumptions, estimates or judgments. Refer to Note 2, “Significant Accounting Policies” to our consolidated financial statements included in this annual report on Form 10-K for a summary of our significant accounting policies.
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. The application of the consolidation guidance requires significant judgement, which includes an assessment of (1) whether the Company holds a variable interest in an entity, (2) whether the entity is a VIE, and (3) whether the Company’s involvement would make it the primary beneficiary.
In evaluating whether the Company holds a variable interest, we make judgements as to whether the fees (including management fees, incentive fees and performance allocations) that we earn are commensurate with the level of effort required for those fees and if the fees are at market rates. In making these judgments, we consider, among other things, the extent of third party investment in the entity and the terms of any other interests we hold in the VIE.
The determination of whether an entity is a VIE, and whether the Company is the primary beneficiary, involves significant judgments in determining 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. As part of this assessment, the Company 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.
Entities that do not qualify as VIEs are generally assessed for consolidation as voting interest entities. Under the voting interest entity model, the Company consolidates those entities it controls through a majority voting interest.
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.
The determination that the Company holds a controlling financial interest in a Bridge-sponsored fund or investment vehicle significantly changes the presentation of our consolidated financial statements. In our consolidated balance sheets, we present 100% of the assets and liabilities of consolidated VIEs along with a non-controlling interest which represents the portion of the consolidated vehicle’s interests held by third parties. However, assets of our consolidated VIEs can only be used to settle obligations of the consolidated VIE and are not available for general use by the Company.
Fair Value
GAAP establishes a hierarchical 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 availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors including, for example, the type of instrument, whether the instrument has recently been issued, whether the instrument is traded on an active exchange or in the secondary market, and current market conditions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for financial instruments categorized in Level III. The variability and availability of the observable inputs affected by the factors described above may result in transfers between Levels I, II, and III.
Performance Allocations
The Company accounts for accrued performance obligations (commonly referred to as 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 an up to three-month lag. The Company recognizes performance allocations as a separate revenue line item in the consolidated statements of operations with uncollected carried interest as of the reporting date reported within accrued performance allocations in the consolidated balance sheets. As of December 31, 2024 and 2023, the Company had accrued performance allocations of $339.6 million and $382.0 million, respectively.
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, 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.
Fair value varies between reporting periods, therefore 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. The Company ceases to record negative performance allocations once previously accrued performance allocations for such fund have been fully reversed. The Company 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. Because of the inherent uncertainty in measuring the fair value of investments in the absence of observable market prices, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is reasonably possible that the difference could be material.
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.
As of December 31, 2024 and 2023, 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 $203.2 million and $197.8 million, respectively, of which $159.5 million and $155.4 million, respectively, 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 December 31, 2024, there would be no contingent repayment obligation or liability.
Incentive Fees and Performance Allocations Compensation
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.
A portion of the performance allocations earned is awarded to employees. The Company evaluates performance allocations to determine if they are compensatory awards or equity-classified awards based on the underlying terms of the award agreements on the grant date.
Performance allocations 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.
Income Taxes
Prior to the IPO, other than our subsidiaries BIGRM and Bridge PM, Inc., the Operating Company and its subsidiaries were limited liability companies or limited partnerships and, as such, were not subject to income taxes and the individual owners of the Operating Company and its subsidiaries were required to report their distributive share of the Operating Company’s realized income, gains, losses, deductions, or credits on their individual income tax returns. In preparation for the IPO, the Company was incorporated as a corporation for U.S. federal income tax purposes, and is subject to U.S. federal and state income taxes on its share of taxable income generated by the Operating Company.
Taxes are accounted for using the asset and liability method of accounting, which is based on estimates and assumptions that involve significant judgements. 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 consolidated financial statements. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as general, administrative and other expenses in the consolidated statements of operations.
Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions, including evaluating uncertainties under GAAP. We review our tax positions quarterly and adjust our tax balances as new legislation is passed or new information becomes available.
Tax Receivable Agreements
The TRA with the Operating Company and each of the Continuing Equity Owners 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 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 our 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 TRA, including as the result of incremental value to the Company from strategic acquisitions. The Company will retain the benefit of the remaining 15% of these net cash tax savings under the TRA. The Company has accrued a contingent liability representing 85% of the incremental net cash tax savings for the Company due to the exchanging Original Equity Owners.
If the Mergers are consummated, the Second A&R TRA by and between the Company, Operating Company, Apollo and Continuing Equity Owners will become effective, which provides, among other things, that, (i) the Continuing Equity Owners will forego the acceleration of certain payments that would otherwise have been payable under the TRA to the Continuing Equity Owners by the Company as a result of the Mergers, (ii) following the consummation of the Mergers, the utilization of the tax attributes covered by the Second A&R TRA and corresponding payments to which the Continuing Equity Owners are entitled will be made by reference to Apollo’s consolidated group’s tax liability, and (iii) no accelerated payments will be due in connection with any future change of control of Apollo or any material breach by Apollo of the Second A&R TRA.
Recent Accounting Pronouncements
For a discussion of new accounting pronouncements recently adopted and not yet adopted, refer to Note 2, “Significant Accounting Policies” to our consolidated financial statements included in this annual report on Form 10-K.
JOBS Act
As an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), we can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. We intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of Sarbanes-Oxley. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the IPO, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Class A common stock held by non-affiliates exceeded $700 million as of the last business day of the second fiscal quarter of such year, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
