Greetings. Welcome to the Federated Hermes FCP Acquisition Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Ray Hanley, President of Federated Investors Management Company. You may begin. Good morning. Thank you for joining us today. We're very excited to discuss the agreement for Federated Hermes to purchase a controlling interest in FCP Fund Manager. Leading today's call will be Chris Donahue, CEO and President of Federated Hermes, Esko Korhonen, Founder and Managing Partner of FCP Fund Manager, Tom Donahue, Chief Financial Officer of Federated Hermes, and joining us for the Q&A is Saker Nusseibeh, CEO of Federated Hermes Limited. During today's call, we may make forward-looking statements. We note that Federated Hermes' actual results may be materially different than the results implied by such statements. Please review the risk disclosures in our SEC filings. No assurance can be given as to future results, and Federated Hermes assumes no duty to update any of these forward-looking statements. Today's call may also include certain non-GAAP financial measures. Please see the analyst presentation for the transaction, which we will refer to during today's call and which is available on our website and in the 8-K that we filed yesterday for important information about these financial measures. Chris? Thank you, Ray. Good morning and indeed welcome. As announced yesterday, Federated Hermes has entered into a definitive agreement to purchase an 80% controlling interest in FCP Fund Manager LP, or as we're going to refer to it, FCP, a U.S.-based real estate investment manager. Post-closing, FCP's management team will retain an ownership position of 20%. We have been seeking the right firm to expand our private markets real estate business into the U.S., as we have said many times on these calls. In FCP, we have found a growth-oriented company with a differentiated approach, an excellent management team and workforce, and solid investment performance. Slide three of the presentation outlines the strategic rationale for the deal. FCP fits well with our stated growth ambitions to anchor our private markets investment footprint in the U.S. and to increase our investment offerings for our clients. We have a strong existing vertically integrated real estate platform in the U.K. that made its first investment in 1983. Expanding our real estate offerings to include an established U.S. platform, one that is a specialist in the multifamily housing asset class, is a natural extension. The acquisition will facilitate Federated Hermes' entrance into the U.S. real estate market at a time when the multifamily sector in the U.S. enjoys strong fundamentals and significant growth opportunities. We were attracted by FCP's national platform, their active, disciplined investment philosophy, and their extensive experience with investors in this space. FCP's culture and principles align well with Federated Hermes. FCP is focused on U.S. multifamily real estate with approximately $3.8 billion currently invested in strategies throughout the real estate capital structure. The FCP team has a strong local knowledge and capability in high-growth areas of the country. FCP brings more than 75 employees located in various U.S. offices, providing deep local coverage of 19 priority U.S. markets. We believe FCP will be an excellent complement to our U.K.-based real estate business. With more than 40 years' experience, the U.K.-based team has more than 55 professionals managing $5.5 billion of AUM as of the end of the third quarter. Our U.K.-based real estate team is responsible for some of the most successful and iconic developments in the United Kingdom across multiple sectors, such as Center City office, leading urban regeneration, innovation-focused life science and technology hubs, and multifamily residential assets. Importantly, while the U.S. and U.K. real estate teams will operate independently within the broader Federated Hermes private markets offering, we do anticipate benefits for our collective global clients by introducing additional expertise as we seek to develop product solutions for our client base at a time of increasing demand for the private markets asset class. Slide four shows the projected pro forma impact of the FCP addition to Federated Hermes private markets alternative platform. With the FCP addition, Federated Hermes will have a global real estate platform with over 130 professionals managing approximately $9.3 billion. FCP will continue to work to execute their growth strategy, led by its strong, experienced management team who have led the firm's growth through changing market conditions over 25 years. We will develop ways to enhance FCP's resources and capabilities, including opportunities to expand distribution through our client base. We expect to retain all FCP employees. On behalf of Federated Hermes board of directors, executive management team, and employees, I want to welcome FCP employees. We look forward to working with you to grow to new heights. I will now turn it over to FCP Founding Managing Partner, Esko Korhonen. Good morning. Thank you, Chris. First of all, on behalf of the partners, managers, and employees of FCP, we are very excited by our alliance with Federated Hermes organization and the opportunities for growth that we expect to develop. As noted on slide five, FCP is a multifamily real estate investment manager founded in 1999. We are headquartered in Chevy Chase, Maryland, with regional offices in New York, Raleigh, Miami, Dallas, and Denver, each a growth area for multifamily developments. FCP has raised over $6.3 billion in equity capital and has invested in or financed more than $14.6 billion in gross asset value since its founding. We invest throughout the capital stack and have more than 130,000 multifamily units that we have owned, operated, financed, or advised since 1999. We've developed an investor base rooted in long-term relationships with institutional limited partners across pension funds, sovereign wealth funds, endowments, foundations, high net worth funded funds, and others. Looking at slide six, our founding partners, who will remain leaders of the firm, have 30-plus years working together across market cycles. We also position the firm for future growth with five next-generation partners with more than 14 years of experience with FCP. On a brief note, just to give you a little bit of a bio on Lacy Rice, Alex Marshall, and myself, the founding partners, Lacy and I met over 30 years ago, while we were at the Carlyle Group and part of their real estate team there. Alex joined us very shortly thereafter, where in his previous experience had been at JPMorgan and Clarion. Moving on, slide seven highlights some of FCP's key attributes. Among these is our differentiated investment approach that targets U.S. markets experiencing outside growth, particularly in the Sunbelt. The U.S. faces a persistent structural housing shortage and market dislocation exacerbated by interest rates, repricing, and over-leveraged borrowers. FCP leverages local market expertise to source off-market opportunities characterized by cyclically high yields and discounts to replacement costs. Our investment focus is multifamily residential, with a particular emphasis on acquiring Class B and C moderate-income housing, acquiring, developing, and redeveloping Class A multifamily properties, and opportunistically participating in special situations, including mixed-use and commercial. Slide eight presents our AUM by investment vehicle, featuring a series of flagship value-add funds and multifamily-focused credit separately managed accounts. We have also launched a housing preservation open-end fund this year. We have a hands-on investing approach, utilizing cutting-edge technologies and proprietary data analytics to lower costs, select markets, and drive income. In addition, we provide a suite of resident-focused services that are meant to enhance the living experience in our communities, improve property operations, and drive performance while maintaining leadership on environmental sustainability. Why Federated Hermes? As Chris said, we believe that the culture and principles of each firm are aligned. We were attracted to Federated Hermes' position as a global leader in active investing across multiple asset classes. We appreciate its well-established private markets platform, primarily operated outside of the U.S. Our alliance provides FCP an opportunity to strengthen our institutional platform, enhance our growth trajectory, and provide expanded resources for our clients and stakeholders as the anchor for Federated Hermes' entry into U.S. real estate private markets. For FCP, the completion of this transaction with Federated Hermes will mean we will remain highly focused on our clients and our core strengths, investing across the U.S. multifamily asset class, leveraging our deep local market knowledge, and utilizing our proprietary data and analytics and technology. Our team will continue to operate as we do today, maintaining our culture and commitment to excellence. We will explore opportunities, our capital formation capabilities through access to Federated Hermes' global distribution channels. Further, we will benefit from the complementary experience and knowledge of Federated Hermes U.K. real estate business, particularly in the living asset class sector, as both U.S. and U.K. teams develop and grow. Our founding partners and next-generation leaders will continue to guide FCP, ensuring continuity and stability for our clients and employees. We believe that our alliance will give us the opportunity to enhance growth by raising the profile of FCP's brand, both in the U.S. and internationally, to capture new investors and recapture previous investors to boost new vintages of FCP equity and debt offerings. We expect to launch new investment offerings based on FCP's broad capabilities in multifamily debt and equity investments, beginning with the next iterations of FCP's equity and debt offerings in the living sector. Additionally, Federated Hermes will leverage its extensive global network of distribution relationships, including U.S. institutional consultant relations teams, to deepen FCP's relationships further. We also see the opportunity to develop new product capabilities to service wealth clients and retirement assets. With that, I will turn it over to Tom. Thanks, Esko. Looking at the transaction detail on slide nine, we will be acquiring 80% interest in FCP for up to $331 million in aggregate purchase price, subject to potential post-closing purchase price adjustments. The aggregate purchase price includes $215.8 million in cash consideration and $23.2 million in FHI Class B common stock that will be paid and issued at closing, as well as opportunities to earn contingent consideration of up to an aggregate of $92 million over multiple years based on achieving certain financial thresholds. The FHI Class B common stock will be issued in a private offering to certain of FCP selling owners, subject to a 2-year lockup period. We expect to fund the cash portion of the aggregate purchase price for the acquisition with cash from our balance sheet. The total purchase price represents a valuation of 13.7x 2025 projected EBITDA of approximately $30 million, less the 20% minority interest of about $6 million. The upfront consideration represents approximately 9.9x 2025 projected EBITDA, less the 20% minority interest. We expect an IRR of about 13.1% on the transaction. After the close, FCP management will hold 20% of FCP. Through put-call options, there are opportunities to acquire the remaining FCP shares beginning after the fifth anniversary of the closing. Through the deal structure, including the employees' equity stake and other incentive programs, we believe we have an excellent alignment of interest among FCP employees, their clients, and Federated Hermes. Performance fees and carried interest from FCP's completed deals will go to existing carried interest holders. Federated Hermes will receive a portion of any of these fees for future funds. We estimate on a preliminary basis that the transaction will result in about $0.04 of EPS accretion in 2026, excluding transaction expenses, assuming a closing at the end of Q1, and $0.13 in 2027. We have recognized about $2 million in transaction costs through September 30, 2025, and expect to incur an additional approximately $5 million in Q4 and approximately $4 million in Q1 of next year. We entered into exclusive negotiations with FCP in August. As a result, we suspended our share repurchase program for the full third quarter with no shares purchased in the open market. In closing, we've spent considerable time working with Esko, Lacy, Alex, and the entire management team at FCP, and we have found a great cultural fit, as you've heard Chris and Esko say. We are very excited about our future together. Holly, we would like to open up the call for questions now. Certainly. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is from Kenneth Lee with JPMorgan. Hi. Good morning. This is Michael Cho in for Ken this morning. Congrats on the deal and thanks for taking my questions. Chris and Esko, you touched on a few different areas of overlap between Federated and FCP. I was hoping you could flesh out some of those comments around, you know, where you think Federated can really deliver the most incremental value relative to a standalone FCP. How do you envision the progression or the pace of progression when we think about new products and distribution within U.S. real estate? Thank you. Okay. Thank you, Michael. Say hello to Ken. We're one week early for him. I would sort of question the word overlap. Yes, we both are in the real estate business. We've given you the numbers. The beauty of this organization that Esko has created is that it is independent, will function as what we have called historically an area of excellence in the U.S. The kinds of working together that we see are expertise, where we can bring things like our experience in doing King's Cross or Paradise Circus in Birmingham through various people showing how these things work and what success can look like there. We have created things that have thousands of homes in England, in Kings Cross, and we've managed 1,700 apartments over in London. That is one area of similarity. The way that we can enhance value is by supporting FCP and what it does in putting out new products. We can also support them by introducing them to our distribution force, which is very, very good. We don't sell real estate here in the U.S., so that's not something that's going to happen tomorrow. Over time, as we enhance our private markets distribution efforts, this will go with it and is an essential key to making that happen. I think Esko has some comments on this as well, and I think he can illuminate it by talking about some of the geographies that they are most enthusiastic about in the U.S. with their investments. Thanks, Chris. With regard to your last point, as mentioned, we are active in 19- 20 markets. They're primarily focused on the high-growth markets in this country. We have owned operated assets in all of those markets. However, I will suggest there may be times where we don't actively own assets in a particular market, but we continue to focus. We have people and resources that are focused on investments because none of our markets move directly in a correlated manner. We're always looking for those kinds of opportunities. I would also echo what Chris talked about with regard to combining our sort of distribution channels and access to global capital, which I think is increasingly important and something that I think that together we will be stronger than apart. With regard to new products, as mentioned, one, our focus really has been in the living sector. That includes multifamily, but it may include other sectors. By way of example, it could be student housing, it could be seniors' housing, both of which we've done in the past, not in a big way, but are sectors that could be attractive that we could open up. I think the other piece would be investment vehicles, i.e., whether it's obviously our closed-end funds, we've got separately managed accounts, our open-end fund, and other vehicles of that type that would be attractive to different types of capital and different costs of capital as well. As mentioned, we invest up and down the capital stack, meaning equity and debt, and those obviously require capital with different expectations as far as returns. I think that, again, this enhanced distribution channel will really impact that in a good way. One other thing I'd add is that when we talk about adding it to the distribution of FHI, we think it can operate as a gateway or access to the wealth and high net worth channels that have been very, very successful at FHI. This, of course, is in the U.S., which is why we keep talking about, "Oh, this will be attractive to our clients and our investors as well. This is Tom. One more thing. In our discussions with Esko, Lacy, and Alex, we have talked about the capital that Federated Hermes generates. While we've talked on this call many times that our order of interest is acquisitions and, of course, then dividends and the regular capital things, we spent some decent amount of time talking to them about using the capital at Federated Hermes for new products, new ideas there. We have excitement there, and I think they have even more excitement about that. That's great. I appreciate all the color there. If I could just quickly follow up on fundraising, it looks like FCP's flagship product is out in the market maybe every 2-3 years. I recognize that the 2023 vintage is investing now. Any thoughts around fundraising around the flagship product expectations, maybe going into 2026? Any way to kind of size or frame the relative size or growth as we think about fundraising ahead? Thanks. Esko, they want to talk to you. Okay. We just had the final close on our last flagship fund in December of last year. We're actively investing that. Per our agreement with our limited partners, we can start marketing and talking about the next fund once we are 70% invested or committed. Our expectation is that that will happen sometime during the end of next year, the beginning of 2027. That would be when we would start looking to raise our next flagship value-add fund. That fund, the last fund, was about $1.1 billion. Frankly, it has the opportunity to even grow with Co-Invest, which is another element that we're using here. Over time, that would be something that we think could even be larger. I think that when we look out at the market and sort of what we're seeing both generally in fundraising as well as just the interest in the living sector, our expectation is that we'll be able to hopefully grow the next fund, Fund VII, in a meaningful way. Does that answer your question? No, that makes sense. I appreciate it. Thank you. Your next question is from Patrick Davitt with Autonomous Research. Hey, good morning, everyone. Morning. I guess first, I think the performance data you give is since 2008, but you've been operating since 1999. Any color you could give on how the portfolio performed through the GFC would be helpful. Thanks. It's interesting. Yeah. We had what we call our legacy portfolio, and that was really started in 1999 and went until about 2006, 2007. Those were one-off transactions. The reason for that was that we realized we needed to have our own track record under the FCP banner, as well as we wanted to take that time to build our operating platform because we knew both those factors would be important to institutional investors. We started contemplating raising a discretionary closed-end fund in 2006, 2007. We all know sort of what happened as we went into the GFC. We had closed that fund in February of 2008. In many ways, you look back at that, it was a tough time, but it was a great time to have dry powder. We were buying into distress at that period of time because of the impact of the GFC. Interestingly, we had raised the fund in February of 2008. I remember standing in front of our first ever annual general partner meeting with our investors and had to say, "You know, the bad news is we haven't actually committed any of your capital. The good news is we haven't committed any of your capital." We were patient as there was still a falling knife in that environment. We incubated a number of deals, and then we sort of struck as we went into 2009 and 2010. That fund performed exceptionally well as a result. Got it. Okay. Thanks. My follow-up is on the fund structures. Is it a traditional kind of closed-end, you know, 10-year life fee structure? Anything unusual about the structure of the funds? No. It's exactly as you say. It's a closed-end fund. We have 3 years in which to commit the capital, i.e., invest it. Then we have 7 years in which to operate and harvest. Typically, we have two 1-year extensions at the end that we could exercise if needed. Other than that, it's structured like most other closed-end funds. Thank you. Your next question for today is from Kenneth Lee with RBC Capital Markets. Hey, good morning. Thanks for taking my question and congrats again on the deal. I'm wondering if you could talk a little bit more about the earnout provisions, specific targets or goals, and whether the payout is in cash or equity. Thanks. Yep. Ken, the payout is in cash. There are two different structures. One is based on revenue growth, and the other one is a 3-year type payment. The other one is based on how much money gets raised in Fund VII, and their payment's based on pro rata type payments. Importantly, we want to pay it. Yeah. Every time that there's a payment, we are happier and we would be thrilled. Esko and the team would be thrilled, and we would be thrilled, and our shareholders would be thrilled if we pay the whole thing, i.e., we're all in line. Great. That's great. One brief follow-up here. In terms of the key employee five-year agreements, any particular details around that, any sorts of lockup details? That's really easy because Esko, Lacy, and Alex are the main players on that. You know they still own a good share of the 20% and you know also will share in carry. It all aligns properly. The second wave of next generation of managers are all tied in with carry. We also have a restricted stock plan that will come about over a 3-5 year period to keep everybody interested and aligned. Gotcha. Very helpful there. Thanks again. Your next question is from Bill Katz with TD Cowen. Okay. Thank you very much for taking the questions. Apologize for my hoarse voice and congrats on the deal. Maybe the first question is you mentioned some baseline accretion for 2026 and 2027. Can you unpack some of the assumptions underneath that in terms of what kind of growth you're anticipating and/or how you're thinking about capital return? Is there any impact on your existing buyback? That's my first question. Yeah. On our buyback, we expect to still continue on doing share buyback. I wanted to mention in there that we took a pause on that because we had material inside information, so we didn't think it was appropriate to buy shares. We would expect to restart that up. In terms of the accretion, we did our models and we took Esko and team's forecast and we analyzed that and we had an advisor scrutinize all of their assumptions. We put together what we think was our base case. That's what we've used to develop those models. Okay, thank you. Do you think we're going to hit them, Bill? Okay. I didn't mean to interrupt. Just as a follow-up, maybe a two-part or somewhat unrelated. As part of your press release, you announced that your [9, 30] alternative AUM, or $19 billion, that is down, that looks down, excuse me, you know, somewhat meaningfully from the June update. Can you maybe unpack maybe what's happening there? Then as part of this transaction, was this just a bilateral negotiation or was this more of an open bid opportunity? Thank you. On the first question on the AUM, I'll let Saker talk about the HPUT transaction. Saker. Thank you, Chris. I apologize if the voice keeps cutting off. I don't know what's wrong with this connection today. We had a fund that was here from way back called FHPUT, which was a closed-end fund specifically designed for DC, defined contribution clients. As the market for defined contribution in the U.K. essentially is winding down so that there are very few of these funds left, we and the fund made the decision that this is better looked after by one of the last remaining people who look after DC funds. We entered into an agreement with shareholder support to move that fund to them, which was all published in the newspapers. Of course, we also were paid a fee as a result of that, which is the fees due to us. This was part of our pivot, if you like, away from a market that we see no growth in to concentrate our resources on markets where we do see growth in, which is the flagship of which is a business called MEPC, which is a developer that Chris mentions a lot and which continues to achieve developments that hit the price and performance targets. We want to continue to expand that and with more specialists, if you like, property management here in the U.K., including the learning that we can get by talking to our new colleagues about multifamily properties. What was the AUM? What was the AUM on What was the AUM on HPUT? Sorry, Chris, you dropped off. What was the asset value, the AUM of HPUT? $1.2 billion. Thank you. There were additional distributions that were made to a client that was looking to manage their real estate exposure. We had some property sales and refinancing that resulted in additional distributions that would be more in the normal course of that type of business. Did you have a second question, Bill, wrapped in there that we're not getting? Yes, I apologize. Thank you for taking all the questions. Was this transaction just bilateral or was this more of an open opportunity, just more of a bid process? Thank you. You mean FCP? Yeah. Oh, yeah. FCP. They used Berkshire and had a process, and we were the winners of the process. Esko, you can talk about that if you want to. We had hired Berkshire, and we knew that this was the direction that we wanted to go as a firm for all the aforementioned reasons that we've talked about. They took us out. We had a number of preliminary calls, then we had what I would call intermediate calls where people really started to dig in. Ultimately, it was winnowed down to roughly a group of four that were a fit for us. From that, Federated Hermes was victorious. We were very happy about that because, again, of all the alignment that we see with the firm. We did have multiple offers, but this really was the one that stood out. Bill, I will mention that from my perch on the tree, this was always the right deal. A similar kind of thing we had with Hermes, where we talked to them in 2012 and it took 6 years of due dili to do that. This was done much faster, but it was the same kind of approach. Once you see the cultural alignment that now you get to live with this into the future, the beauty of it certainly comes to the fore. Thank you very much. Your next question for today is from John Dunn with Evercore ISI. Thank you. I just wanted to maybe get your take or perspective as far as where you think we are in the demand cycle for private real estate. Esko? I think that it continues to be strong. There was an increase in capital raised, although obviously with the dislocation in the macro and in the capital markets, it was less growth than maybe experienced in previous years, but still positive. I think that, you know, institutions are still looking for this. Globally, people are very interested in U.S. real estate. I think that, as mentioned, Chris mentioned, one of the things that I think will be extremely important is accessing that $12 trillion of, you know, retail capital. As that is becoming more and more focused, frankly, in our industry, I think that offers up a huge opportunity to access that capital, which I think will grow over time into these kinds of real estate vehicles. We're extremely excited about it. Clearly, there is somewhat of a consolidation going on in our business, and this transaction, I think, represents some of that and these kinds of alignments. I think all that does is strengthen our ability together to continue to raise capital. Gotcha. You mentioned that obviously you weren't selling private real estate in the U.S. As far as building out that effort, are there resources you already have that you can transition to that? What new stuff would you have to add, and how long do you think it's going to take to get ramped up? You heard Esko talk about the timing of the next fund. We have a little bit of time here, but that's not how we feel about it. We feel that we need to be on it right away. In Esko's shop, they're already in the process of looking to add some distribution resources. Our internal teams here are coming to us. By the end of October was the request for their plan and strategy for how we really develop this into a much bigger business. Watch this. I'll give you a little add. This week, we're celebrating the 70th anniversary of FHI. Started in 1955 by three salesmen who were selling mutual funds and nobody knew what they were. Over the time frame, all new stuff came up all the time. One of the founding fathers, my dad's comments was when someone would ask him, "How do you motivate people?" He would say, "You have new things, new things to do, new opportunities. If you're in the financial services business, they're always there." That's how we look at this opportunity. Yes, our system. Great. Great. Thank you very much. Congratulations on that. Thank you. Anyway, we love new stuff and we'll figure it out. Your next question is from Patrick Davitt with Autonomous Research. Hey, thanks for the follow-up. A couple of housekeeping items. You mentioned in the deck that $2 million of the costs from the deal have already been incurred. Is that going to be in your 3Q reported earnings? Yes. Yes. Saker mentioned a fee from the HPUT transaction. Is that, could you frame the scale of that in earnings? I think it's $4.6 million. You cut out. It's $4.6 million. Okay. The comp ratio on that? There is no comp, that's just the fee to us. It's going to flow through? Okay, thank you. We have reached the end of the question-and-answer session, and I will now turn the call over to Ray for closing remarks. Thank you, Holly. That concludes our call, and we thank you for joining us today. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.