All right. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. The taking of photographs and use of recording devices is also not allowed. If you have any questions, please reach out to Morgan Stanley sales representative. All right, with that out of the way, good morning everyone. Thanks for joining with us. Joining us here, day three of the Morgan Stanley Financials Conference. I'm Mike Cyprys, equity analyst covering brokers, asset managers and exchanges for Morgan Stanley Research. And for our next session, I'm excited to have with us Bob Morse, executive chairman of Bridge and Katie Elsnab, the Chief Financial Officer. Bridge is a leading vertically integrated private real estate investment manager with approximately $48 billion of assets under management. Bob, Katie, thank you so much for joining us here. Thanks for having us. Thanks for making the trip out here to New York as well. Let's start off big picture. It's been a couple of years since the IPO. You've expanded the platform with new real estate strategies. You've extended into secondaries with the Newbury acquisition. Maybe just talk a little bit about the vision that you have for Bridge as you look out over the next five to 10 years and the strategy ahead. Well, Mike, I think you know, stated simply, we think that Bridge is a differentiated alternative asset investment manager. We have specialized strategies that we're focused on the bulk of the bulk. But not all of those strategies are in real estate today. As you mentioned, we acquired a secondary platform last year and I think that platform has great promise. Our thesis is to find areas to invest where there are fundamental tailwinds behind them in real estate as well as in secondaries and provide that specialized exposure to our LP investors. One thing that we've done both prior to our IPO and subsequently is continue to expand what our competitive advantages are. For example, in real estate, we're, as appropriate, forward integrated into property management. Property management, in our view, is really important in today's market in order to extract value at the asset level in terms of what we do. And we're seeing that in the markets today. We entered 2024 and we're navigating through 2024 with a broader product suite than we had at the time of the IPO. We made some commitments at the time of the IPO about growing our AUM, we've achieved that, about growing our fee-related earnings, we've achieved that. About expanding our platform. We actually made two acquisitions. We made an acquisition of a leading single-family for-rent management company and integrated that into our overall residential rental profile and we made the Newbury acquisition. So I think going forward, we have a lot of organic growth factors that we can expand and we have, we undoubtedly may find some additional inorganic growth factors in which to expand as well. We love the environment that we see currently, particularly for real estate, because real estate prices have reset over the course of 2022, 2023, cap rates have gone from, you know, generally speaking, 3.5%-6% or so. We spent most of 2023 sitting on the sidelines. We called it patience, but it was really discipline, not trying to catch a falling knife. We've started to invest pretty meaningfully in 2024 at those higher cap rates. We think that those higher cap rates represent a cyclically attractive entry point for real estate. We liken it in many respects to the aftermath of the global financial crisis where asset prices had reset. At that point, replacement costs had continued to go up. We're buying today assets at a 30%-40% discount to replacement cost, same as in 2010, 2011, 2012, and that proved to be a really opportune time to invest. We think that the current, the current time represents a similar opportunity and our investors seem to agree with that. So a lot to dig into there. Maybe before we do, just if we look back to the IPO a couple of years ago, just curious how that has played out relative to your expectations and any lessons learned along the way that maybe inform your view and approach as we move forward? We pursued our IPO to accomplish a number of things. We wanted to raise capital to invest in our business. That was really pretty fundamental. The requirements, the regulatory requirements, the infrastructure requirements to service our biggest, most sophisticated investors have continued to increase. That capital has allowed us to do that. That capital has allowed us to grow. That capital has allowed us to align ourselves more fully with our investors through GP commitments. It's helped us to manage hiring and retention and some succession of some of the retiring partners who moved on to other retirement activities away from Bridge. You know, generally speaking, it has been successful in accomplishing those objectives. You know, we're still navigating through some of the requirements and challenges of being public. I'll give you one example of that. We invest a lot in organic growth objectives that we have in that since the IPO, we've stood up a logistics business that has great promise. We've stood up a net lease business, democratized vehicle that has great promise. We've initiated a solar renewable energy infrastructure fund. All of those use effectively fee-related earnings in order to fund those businesses internally. We estimate that in 2023 that reduced our fee-related earnings by almost $12 million. So we want to make sure that we are able to effectively communicate how we're investing for future growth that's going to drive earnings and value going forward. Great. Why don't we shift and dig into the business a little bit here? A large part of your business is focused on housing. So why don't we talk about some of the fundamentals that you see across the multifamily space, broadly housing as well. You can broaden out there as well as some of the impact that you're seeing from new supply come online. How is that impacting rent growth across your portfolio? Maybe I can make some early comments and Katie can talk about the rent growth that we've achieved in the areas where we've invested. Fundamentally, the U.S. is short housing. There's an estimated four or five million units of shortage. The shortage is exacerbated in the areas in which we focus, which is mostly Class B multifamily serving the middle market of the U.S. and workforce multifamily serving the lower economic earners in the U.S. Most new construction is oriented towards the luxury side, Class A side of the market. So while it has an impact, it's an indirect impact on us and we're investing into that housing shortage. We buy, generally speaking, Class B value add, multifamily and workforce and affordable housing. We look for opportunities where we can meaningfully increase the value and the earnings potential of those assets. We imbue the assets with significant social and community programming aspects that help to maximize occupancy, minimize turnover, and maximize the rents that we can charge. And that we think is a fundamental theme that has a lot of legs going forward. We've been very disciplined in terms of where we invest, why we invest, where we invest, and take into account a lot of factors like corporate migration, job creation, individual migration, supply, demand of course, and other things. And that's translated into what for us has been some pretty healthy rent growth. Yeah, the Q1 revenue growth on a blended basis was 1% in total revenue growth quarter over quarter for our multifamily assets is 3.3%. And I think this is really a product of something that Bob hasn't touched on yet is the fact that we have made an investment into our property operations and that vertical integration integrated strategy is a key differentiator where we have the folks, we have boots on the ground, and we're focused on the assets operations as well as working with property management. And it's really driving alpha at the asset level where some of the peers don't have that same approach. And so it used to be the greatest way to drive alpha is with leverage. Well, leverage is neutral or at best these days. And so you're really seeing it through. The operations make the difference. Sorry, just want to make sure I heard that right. The 1% was the overall rent growth across the portfolio companies quarter-over-quarter, quarter-over-quarter. Oh, and 3% was year-on-year. Mmmh Okay, great. Maybe just staying with that for a moment on fund performance side or shifting over to that, shall I say, in the first quarter, your equity book was marked, I think about flat in the quarter. Maybe you could unpack some of the moving pieces around the valuation of the, of the portfolio where you're seeing some strength and where are there pockets of softness. So I think, I think in general, the marks are a product of two factors. Marks are a product of cap rates, which are of course estimated. And we think we've been appropriately conservative in terms of increasing cap rates as 2023 unfolded. And those cap rate increases in large part were offset by improvements at the asset level as we implemented the value add programs at each asset. We recognize compared to our public peers, that we've been a bit more conservative in our marks. We don't really think of it conservative. We think of it as accurate in terms of our marks. And we think that we're. Our firm view. We published a 2024 outlook for our firm called Navigating through the Turn is. Our view is that we're much closer to the bottom of a trough and ready to experience some upside as it relates to cap rate. cap rate movements going forward. Then continued downside side, as I mentioned, we feel that cap rates continue to expand through 2023. We felt that in the first quarter of 2024 with those expanded cap rates, it was a good time to start investing back into the markets. So how do you sort of think about and see the valuations as you kind of look out from here? What do you see driving that as you look out into the back half of this year? Marks were flat in the first quarter. Just, just any color here. As you look out, it depends on asset performance and it depends on cap rates. You know, for the last two hours, cap rates have gone down, right. Because Treasuries have gone down. But we do think at a 6% cap rate, which is, you know, on a generalized basis where we're seeing opportunities today, particularly on residential rental assets, we think that 6% represents some pretty good value in the marketplace today. We continue to see strong fundamentals. You mentioned before the amount of supply coming into the market. That's, we think, a phenomenon that will play itself out over the course of 2024 and you know, possibly into 2025. It's really hard to finance and fund and make the numbers work for new developments these days. So, that we think has positive implications for future new supply. And fundamentally, the U.S. continues to be short housing with a growing population and a really strong economy. So we feel that the fundamentals are solidly in place for some outperformance going forward. Great. And maybe just given these dynamics shifting over to the deployment front, talk about where you're seeing some of the most compelling opportunities to put capital to work. In the first quarter, I think you deployed around $300 million of capital that was down meaningfully relative to a year ago. Some might suggest this might be a very strong vintage or opportunity here. But what will it take to see a meaningful step, function change in deployment activity? If you think about things from the perspective of a seller at the end of the year, beginning of, at the end of 2023, beginning of 2024, the general consensus was the Fed was going to cut rates 6 times, 8 times, whatever. And so if you're a seller, you wanted to wait until you had a couple rate cuts under your belt in order to market your asset and, and get a, get a, what you thought was a fair price. That perspective evolved pretty significantly over the course of, of the first quarter of 2024. And we think that that induced a number of folks who were sitting on the sidelines to in fact start to market their assets. And we were able to deploy some capital at good rates. We're seeing still compressed deal activity, but it's expanded from what it was at the end of the year and we think it'll continue to grow over the course of 2024. We've always been selective in terms of what we've acquired. We look at a lot of things. We make some judgments about what to acquire and we're seeing more opportunity to deploy capital today than we've seen in quite some time. Transaction levels aren't back to where they were at the peak, but they're moving in the right direction at this point. I think is the way to say things. We've been investing selectively in the D.C. Virginia area. We bought a small portfolio in Boston that closed in the first quarter of this year. It is all on multifamily side. We've been investing in Northern and Central Florida, across selected areas in Texas and Las Vegas and Arizona and the West Coast. So very, very selective in strong economies where supply, demand balances, we think in our favor and there's overall growth. I think a good data point too that we disclosed in our earnings call was the fact that, you know, as of May, let's say sixth, we had $800 million of multifamily gross asset value under contract or under our exclusive control and you know, $250 million of logistics. So that's a significant enhancement from the Q1 deployment. So we are starting to see that. Deployment activity improve And that's comparable to the apples to apples to the 300. So 300 is what you do. $300 is the equity value. The equity value. You know, 700 growth. So the $7 higher. The billion is higher than the $700 but and still climbing. That's just what you have in the pipeline, not what you've done necessarily. Some of it's just under, in our control. Got it. What do you think that the time frame is for that to put that transaction there? I think we certainly expect some, some will close during Q2 and some will flow into Q3. Okay, any particular areas you're avoiding in terms of deployment? Any areas a little less attractive here? We like residential rental, broadly defined. We think that there continue to be value add opportunities in logistics. We have a really long pipeline of potential transactions on the net lease side as well. So in those areas we're actively on the hunt for transactions. We don't have a huge exposure to office. You know, you can't pick up a paper without reading about some distress in office from, you know, some unfortunate situation. At some point that tide might turn, but we think that there's more, there's more pain to be suffered there before things really turn. Is there at any point any interest where you would step in to office just given the dislocation? I don't think you can ever say never. But you have to be, as in everything, you have to be very cautious about understanding what the fundamental attractiveness of a particular asset is. In the 1% or so of AUM that we have in office. Our office assets are for the most part located in fast-growing cities and we've worked hard to create the right tenant amenities that will attract tenants. We had, we had in Atlanta 2 empty office buildings and that should be a big flashing red light having 2 empty office buildings. We wrote the biggest lease in Atlanta to a particular corporate tenant and now those buildings prospectively are 100% occupied with a 10-year credit tenant. So that was a big accomplishment that we made in that particular, particular asset. I mention that because, you know, there, of course, are opportunities, and whenever you can buy at a good basis, you have to think about things in that respect. The broader opportunity we think in today's market is, though, in—for us—in residential rental and in logistics on the, on the equity side. And our debt business continues to chug along really, really well as well. It's a great era with high rates and good spreads and tight covenants to lend against multifamily assets. Also, maybe we could talk a little bit about financing markets. We started to see recovery here. I know a lot of people point to CMBS market in terms of healing there. Just curious how you are seeing that across the markets where you are active and how widespread is a sort of improvement in financing markets? The financing markets have improved. You know, the different elements of financing markets have waxed and waned a little bit. Finding commercial bank oriented real estate financing is very tough. Whether it be lending against existing assets or development capital construction loans for new assets. The rise of private debt funds has ameliorated some of that. In multifamily in particular, the agencies remain very active and enthusiastic, particularly on the workforce side. Generally speaking, leverage levels have come down a little bit, which is positive. We as a company and as a strategy have never really relied overly on financial engineering to drive returns. Our returns have been driven in large part by our property management capabilities and the ability, as Katie said, to create alpha at the asset level. Whereas pre-2021 we might have been borrowing to 65%-70%, we've ticked that down a little bit. We're borrowing now probably to 55%-60% in terms of our financial structure. That's paid good dividends to us because it's allowed us to navigate through higher rates with perhaps less pain than many maybe should. Shifting gears over to fundraising. 2024 is an active fundraising campaign year for you. At Bridge you've termed the Four Horsemen. That is your debt strategies, your workforce and affordable housing, logistics, value add and secondaries. The Four Horsemen strategies you have with these campaigns. Just maybe you can update us on how they're progressing. What are you hearing from LPs and how do you see the cadence of fundraising playing out here? Across the year. We've invested very significantly in our distribution team and they are working night and day at this point. We have, you know, our first quarter fundraising was pretty low. I think that's indicative of a changing environment for fundraising at this point. Since that time, over the course of 2024, we've had well over 1,000 calls and meetings with investors. We've traveled to Asia, we've traveled to the Middle East, we've traveled to Europe, we've traveled all around the U.S and our sense is that the perspective on real estate is shifting and has shifted from negative to neutral. Neutral to positive at this point. We, you know, we do note that investors believe that real estate prices have reset and there's a cyclically attractive opportunity today. And we think that our strategies have resonance with existing investors. Our strategies have resonance with potentially new investors as well. It's a lot of work. We had a call last night with a prospective new Asian investor about contemplating a $100 million commitment to our workforce and affordable housing strategy. You know, that's not a done deal by any means, but it was a great meeting. And, and it's indicative of the interest, particularly outside the U.S. that investors have in the U.S. market. U.S. growth, U.S. real estate as a favorable asset class. So tangible shift in sentiment has to be reflected in capital raising accomplishments which hopefully will come over the course of the balance of the year. In terms of the cadence, do you feel this is more of a second half or fourth quarter or even early 2025 story? How are you thinking about that cadence? Investors have their schedules of investment committees and capital deployment, and we're a part of that process. So it's hard to be precise. It's hopefully second half. You know, hopefully not just second half, but into 2025 as well. Great. Maybe sticking with that for a moment. One of the major areas of fundraising or growth that many look to across the industry now is the private wealth channel, where you have historically had great success penetrating. I think about half the capital that you raise comes out of that channel, but it's with institutional product. But now you're expanding to target a wider set of retail customers with democratized products. So maybe just talk a little bit about what that product pipeline looks like. You just launched the Net Lease Industrial Income strategy. Talk about the traction you're seeing there. Historically, we've done a lot of business with some very renowned financial institutions, institutions I think led by this firm called Morgan Stanley. That has been an important source of capital for us. The market continues to evolve. Democratized product expansion from the so-called qualified purchaser to the accredited investor is a trend that continues. There's a great deal of new product development that has happened to amplify the appeal of democratized product, including real estate product to the accredited investor and the overall retail investor. We've launched our first product which is a specialized logistics, industrial and manufacturing net lease income product. We built a really strong seed portfolio of about $800 million of asset value. We've connected all the pipes, if you will, that allow it to be sold on a retail basis. And we've amplified our sales force to start that distribution. It's very early days. We've been in the market for, you know, a little less than two months. I think at this point the early traction that we're getting is really good. The metrics around the fund are very attractive. We don't have legacy assets. The assets that we have are generating a really strong current yield. The vehicle itself is very high performance performing and the outlook for the sector is really performing as well. So we have a lot of enthusiasm for that. There are some headwinds, there's a lot of unfilled redemptions for some competing products and they're real estate products as well. So we share the last name of real estate. But the Bridge way of doing things is to try to create a differentiated product with a differentiated profile. If we talk about that frequently enough and loudly enough, usually we get some traction there, and that's what we're hoping for here. We certainly view it as an exciting opportunity to increase our fee earning AUM and further drive the fund management fees. How do you see your product different from some of the others that are out there in the space? It's specialized in a high growth asset class we think yields more because of the assets that we own. We think that the ability to add some value to the assets is there as well. We think that we've been very disciplined in what we bought and at what prices that we bought it. Great. Maybe just staying with the private wealth topic for a moment, maybe just talk about your approach distribution of these democratized products. How are you evolving the resources against this opportunity set and to what extent might strategic actions help accelerate the move into private wealth? The distribution channels for a democratized product are several fold. It includes the wealth management platforms like Morgan Stanley and others. It includes distribution to the RIA channel, sometimes directly, sometimes through intermediaries like iCapital and CAIS and others. It includes some direct placement as well. So it's a big labor intensive process and we're investing to make sure that we can have access to all those channels. Great. And maybe just a question on the margin profile for you Katie. As the new funds that you're raising begin to charge fees, how should we think about incremental margins and what this could mean for the fee related earnings ratio which has fallen down to about 42% I guess. What's the path back to the 50% when you guys have operated historically? Sure. And you know one of the things that we've always tried to message is that there is going to be variable margins. You know margins are largely driven by catch-up management fees and transaction and transaction fees. And so we've always guided, look for 50% but we have seen them as high as 60% Q3 of 2021 with the addition of this product. This is going to help create more of a stable margin over time as we continue to grow our fee-earning AUM, transaction fees are going to become a smaller and smaller percentage of our total revenue which will help us to create more stable margins. The path back sounds like it would be a recovery in transaction fees. Correct. Would be helpful there. Okay. Maybe shifting over to secondaries business. You guys acquired Newbury a couple years ago. They're out raising their flagship fund. Maybe you could just update us just in terms of the fund per quarter performance there, how you see their funds progressing here as well as in any sort of updates on the raising of their flagship strategy here. So we closed on Newbury March 31, 2023. So just a little more than a year ago at this point. And we were attracted to Newbury because they had a long stable, successful track record of raising and deploying capital and generating, you know, solid mid- to high-teens returns for their investors there. We did an extensive analysis of the secondaries market before making that acquisition. The things that we felt distinguished Newbury was their focus on LP-led secondaries where you can really curate what you buy and get differentiation, their focus on middle market buyout firms because the highest performing middle market buyout firms are extraordinarily difficult to get access to on a primary basis. So we felt that that provided a real sense of appeal to the investor and the fact that they had successfully prosecuted five funds and were ready to launch their sixth fund with the same team, same strategy. We felt that, we felt and they felt that as part of Bridge we would be a stronger firm and they would be a stronger firm. We've had a meaningful integration since then. Half their focus folks sit in our office down the street here in Manhattan. They were reverse commuting to Stamford. We've introduced the secondary strategy to a lot of our legacy investors. We've begun the process of introducing Bridge to some of their legacy investors. That's less advanced and we've been able to port over a lot of the Bridge infrastructure to help make sure that collectively we're helping to service their existing funds well. So it's been a pretty positive experience. The secondaries market has continued to grow. We think that the appeal of their secondary LP-led secondary strategy is enduring. They've had really high re-up rate for their existing investors and the reason is because of the solid performance that they've had. What's been encouraging for us is how many of our investors seem to be interested in that strategy as well. Great. I'm afraid we'll have to leave it there. We're out of time. Bob, Katie, thank you so much for taking the time today. Thank you. Thank you. And thanks to everybody.