S-1/A 1 d136239ds1a.htm S-1/A S-1/A
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As filed with the Securities and Exchange Commission on July 7, 2021

Registration No. 333-257290

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 2

to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Bridge Investment Group Holdings Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   6282   86-2769085

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

111 East Sego Lily Drive, Suite 400

Salt Lake City, Utah 84070

Telephone: (801) 716-4500

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Matthew Grant

Partner, General Counsel

111 East Sego Lily Drive, Suite 400

Salt Lake City, Utah 84070

Telephone: (801) 716-4500

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Marc D. Jaffe, Esq.

Craig M. Garner, Esq.

Ryan K. deFord, Esq.

Kevin C. Reyes, Esq.

Latham & Watkins LLP

12670 High Bluff Drive

San Diego, California 92130

Telephone: (858) 523-5400

Fax: (858) 523-5450

 

Samir A. Gandhi, Esq.

Bartholomew A. Sheehan, Esq.

Sidley Austin LLP

787 Seventh Avenue

New York, New York 10019

Telephone: (212) 839-5300

Fax: (212) 839-5599

 

 

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box.  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
Emerging growth company       

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of Each Class of

Securities to be Registered

 

Amount

to be

Registered(1)

 

Proposed Maximum

Offering Price Per
Share(2)

 

Proposed

Maximum

Aggregate

Offering Price

 

Amount of

Registration Fee(3)

Class A common stock, $0.01 par value per share

  21,562,500   $17.00   $366,562,500   $39,992

 

 

(1)

Includes the offering price of shares of Class A common stock that may be sold if the option to purchase additional shares of Class A common stock granted by the Registrant to the underwriters is executed.

(2)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

(3)

The registrant previously paid a total of $10,910 in connection with the prior filing of the registration statement.

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

Subject to completion. Dated July 7, 2021.

18,750,000 Shares

Class A Common Stock

LOGO

Bridge Investment Group Holdings Inc.

 

 

This is an initial public offering of shares of Class A common stock of Bridge Investment Group Holdings Inc. We are selling 18,750,000 shares of Class A common stock.

Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initial public offering price per share of Class A common stock will be between $15.00 and $17.00. We have applied to list our Class A common stock on the New York Stock Exchange, or NYSE, under the symbol “BRDG.”

We will have two classes of common stock outstanding after this offering: Class A common stock and Class B common stock. Each share of our Class A common stock entitles its holder to one vote per share and each share of our Class B common stock entitles its holder to ten votes per share on all matters presented to our stockholders generally.

At our request, the underwriters have reserved up to 5% of the shares of Class A common stock to be issued by us and offered by this prospectus for sale, at the initial public offering price, to our directors, officers, employees, business associates and related persons through a directed share program. See “Underwriting” for more information.

We will be a holding company, and upon consummation of this offering, our principal asset will consist of Class A Units (as defined below) that we will acquire indirectly from the Former Equity Owners (as defined below), the Former Subsidiary Owners (as defined below), the Former Profits Interest Program Participants (as defined below) and directly from Bridge Investment Group Holdings LLC with the net proceeds from this offering. Bridge Investment Group Holdings LLC will use a portion of the net proceeds from this offering to redeem the Class A Units of certain of the Original Equity Owners (as defined below). Certain holders of Class A Units received in exchange for existing membership interests in Bridge Investment Group Holdings LLC, whom we refer to as “Former Equity Owners,” will exchange (or transfer through a merger) their direct or indirect ownership of Class A Units for shares of Class A common stock and certain other holders of Class A Units, whom we refer to as “Continuing Equity Owners,” will continue to own their Class A Units. Certain of the current owners of our active general partners, which we refer to as the “Former Subsidiary Owners” will contribute a portion of their interests in such entities to us in exchange for shares of Class A common stock, and we will further contribute such interests to Bridge Investment Group Holdings LLC in exchange for Class A Units. In addition, certain individuals who hold existing awards under Bridge Investment Group Holdings LLC’s profits interest award program, whom we refer to as the “Former Profits Interest Program Participants,” will exchange such awards for Class A Units and restricted shares of Class A common stock with similar vesting requirements.

Immediately following this offering, the holders of our Class A common stock issued in this offering collectively will hold 86.2% of the economic interests in us and 2.1% of the voting power in us, the Former Equity Owners, the Former Subsidiary Owners and the Former Profits Interest Program Participants, through their ownership of Class A common stock, collectively will hold 13.8% of the economic interests in us and 0.3% of the voting power in us, and the Continuing Equity Owners, through their ownership of all of the outstanding Class B common stock, collectively will hold no economic interest in us and the remaining 97.6% of the voting power in us. We will be the sole managing member of Bridge Investment Group Holdings LLC. We will operate and control all of the business and affairs of Bridge Investment Group Holdings LLC and its direct and indirect subsidiaries and, through Bridge Investment Group Holdings LLC and its direct and indirect subsidiaries, conduct our business.

Following this offering, we will be a “controlled company” within the meaning of the NYSE rules. See “Our Organizational Structure” and “Management—Controlled Company Exception.”

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, and will be subject to reduced disclosure and public reporting requirements. This prospectus complies with the requirements that apply to an issuer that is an emerging growth company.

 

 

Investing in our Class A common stock involves risks. See “Risk Factors” beginning on page 35 to read about factors you should consider before buying shares of our Class A common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

     Per
Share
     Total  

Initial public offering price

   $                  $              

Underwriting discounts and commissions(1)

   $        $    

Proceeds, before expenses, to Bridge Investment Group Holdings Inc.

   $        $    

 

(1)

We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See “Underwriting.”

The underwriters have the option to purchase up to an additional 2,812,500 shares of Class A common stock from us at the initial public offering price less the underwriting discounts and commissions within 30 days of the date of this prospectus.

The underwriters expect to deliver the shares of Class A common stock against payment in New York, New York on                , 2021.

 

 

 

Morgan Stanley   J.P. Morgan   Citigroup

Wells Fargo Securities                     UBS Investment Bank

AmeriVet Securities            C.L. King & Associates            Siebert Williams Shank

Prospectus dated                , 2021.


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LOGO

National Reach Across Specialized Asset Classes Multifamily Workforce & Affordable Housing Industrial Net Leave Office Seniors Housing Debt Strategies Development San Mateo, CA, Salt Lake City, UT New York, NY Atlanta, GA Orlando, FL Bridge Offices


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LOGO

Our Investment Platforms AUM ($ billion) Current Portfolio Debt Equity Multifamily Workforce & Affordable Housing Seniors Housing Office Development Industrial Net Leave Debt Strategies Agency MBS Total 5.5 2.2 4.5 2.6 2.1 — 7.6 1.4 25.9 ~24,300 units ~12,500 units ~11,600 units ~14.2 million square feet ~10,400 units of multifamily and 1 million square feet of office — ~1,750+ loans* — ~48,000 units, ~14.2 million square feet and ~1,750+ loans


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PROSPECTUS SUMMARY

     1  

RISK FACTORS

     35  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     65  

OUR ORGANIZATIONAL STRUCTURE

     66  

USE OF PROCEEDS

     71  

CAPITALIZATION

     72  

DIVIDEND POLICY

     74  

DILUTION

     75  

UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

     77  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     92  

BUSINESS

     130  

MANAGEMENT

     160  

EXECUTIVE COMPENSATION

     167  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     178  

PRINCIPAL STOCKHOLDERS

     189  

DESCRIPTION OF CAPITAL STOCK

     192  

DESCRIPTION OF INDEBTEDNESS

     198  

SHARES ELIGIBLE FOR FUTURE SALE

     199  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF CLASS A COMMON STOCK

     202  

UNDERWRITING

     206  

LEGAL MATTERS

     217  

EXPERTS

     217  

WHERE YOU CAN FIND MORE INFORMATION

     217  

INDEX TO FINANCIAL STATEMENTS

     F-1  

You should rely only on the information contained in this prospectus and any free writing prospectus prepared by or on behalf of us or to which we have referred you. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus or in any free writing prospectus that we file with the Securities and Exchange Commission. We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any related free writing prospectuses. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. You must not rely on unauthorized information or representations. This prospectus is an offer to sell only the shares offered by this prospectus, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date or such other dates specified herein regardless of the time of delivery of this prospectus or of any sale of our Class A common stock. Our business, financial condition, liquidity, results of operations and prospects may have changed since that date.

 

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For investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering or the possession or distribution of this prospectus or any free writing prospectus we may provide to you in connection with this offering in any jurisdiction where action for such purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of Class A common stock and the distribution of this prospectus outside the United States. See “Underwriting.”

 

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BASIS OF PRESENTATION

Organizational Structure

Bridge Investment Group LLC, or the Operating Company, a Utah limited liability company, was formed on December 2, 2011, to act as a holding company of certain affiliates that provide an array of real estate-related services. The Operating Company is the ultimate controlling entity, through its wholly owned subsidiary Bridge Fund Management Holdings LLC, of the following investment manager entities, which we refer to collectively as the Fund Managers: Bridge Multifamily Fund Manager LLC, Bridge Seniors Housing Fund Manager LLC, Bridge Debt Strategies Fund Manager LLC, Bridge Office Fund Manager LLC, Bridge Development Fund Manager LLC, Bridge Agency MBS Fund Manager LLC, Bridge Logistics Net Lease Fund Manager LLC and Bridge Logistics Properties Fund Manager LLC. The Fund Managers provide real estate and fund investment advisory services on a discretionary basis to multiple investment funds and other vehicles, including joint venture real estate projects, separately managed accounts and privately offered real estate-related limited partnerships, including any parallel investment vehicles and feeder funds, or, collectively, the funds. The Operating Company receives management fees from the funds through the Fund Managers. Each time that we establish a new fund, our owners also establish a new general partner for that fund. We refer to these general partners collectively as the Bridge GPs. The Bridge GPs are entitled to any incentive fees or carried interest, which we collectively refer to as performance fees, from the funds. The Operating Company and the Bridge GPs are under common control by the direct owners of the Operating Company and the Bridge GPs. We refer to the direct owners of the Operating Company as our Original Equity Owners. The Operating Company, together with its consolidated subsidiaries and the Bridge GPs, represent the predecessor entity of our business.

In connection with the closing of this offering, we will undertake certain organizational transactions to reorganize our corporate structure. Unless otherwise stated or the context otherwise requires, all information in this prospectus reflects the consummation of the organizational transactions described in the section titled “Our Organizational Structure,” including this offering, and the application of the proceeds therefrom, which we refer to collectively as the Transactions. See “Our Organizational Structure” for a diagram depicting our organizational structure after giving effect to the Transactions, including this offering.

Bridge Investment Group Holdings Inc., the issuer of the Class A common stock being offered hereby, will become the managing member of the Operating Company in connection with the Transactions. Prior to the offering, all of our business operations were conducted through the Operating Company that owns the controlling interest in multiple entities formed to provide real estate asset management services.

Certain Definitions

As used in this prospectus, unless the context otherwise requires, references to:

 

   

“we,” “us,” “our,” the “Company,” “Bridge,” “Bridge Investment Group” and similar references refer: (1) following the consummation of the Transactions, including this offering, to Bridge Investment Group Holdings Inc., and, unless otherwise stated, all of its subsidiaries, including the Operating Company and, unless otherwise stated, all of its subsidiaries, and (2) prior to the completion of the Transactions, including this offering, to the Operating Company and, unless otherwise stated, all of its subsidiaries and the Bridge GPs.

 

   

assets under management or 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). Our AUM is not reduced by any outstanding indebtedness or other accrued but unpaid liabilities of the assets we manage. 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. In addition, our calculation of

 

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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.

 

   

BIGRM” refers to Bridge Investment Group Risk Management, Inc. BIGRM is incorporated in the State of Utah and is licensed under the Utah State Captive Insurance Companies Act.

 

   

Blocker Company” refers to an entity that owns LLC Interests in Bridge Investment Group LLC prior to the Transactions and is taxable as a corporation for U.S. federal income tax purposes.

 

   

Blocker Shareholder” refers to the owner of the Blocker Company prior to the Transactions, who will exchange its interests in the Blocker Company for shares of our Class A common stock in connection with the consummation of the Transactions.

 

   

“Bridge GPs” refers to the following entities:

 

   

Bridge Office Fund GP LLC (“BOF I GP”)

 

   

Bridge Office Fund II GP LLC (“BOF II GP”)

 

   

Bridge Seniors Housing & Medical Properties Fund GP LLC (“BSH I GP”)

 

   

Bridge Seniors Housing & Medical Properties Fund II GP LLC (“BSH II GP”)

 

   

Bridge Seniors Housing Fund III GP LLC (“BSH III GP”)

 

   

Bridge Opportunity Zone Fund GP LLC (“BOZ I GP”)

 

   

Bridge Opportunity Zone Fund II GP LLC (“BOZ II GP”)

 

   

Bridge Opportunity Zone Fund III GP LLC (“BOZ III GP”)

 

   

Bridge Opportunity Zone Fund IV GP LLC (“BOZ IV GP”)

 

   

Bridge Multifamily Fund III GP LLC (“BMF III GP”)

 

   

Bridge Multifamily Fund IV GP LLC (“BMF IV GP”)

 

   

Bridge Workforce and Affordable Housing Fund GP LLC (“BWH I GP”)

 

   

Bridge Workforce and Affordable Housing Fund II GP LLC (“BWH II GP”)

 

   

Bridge Debt Strategies Fund GP LLC (“BDS I GP”)

 

   

Bridge Debt Strategies Fund II GP LLC (“BDS II GP”)

 

   

Bridge Debt Strategies Fund III GP LLC (“BDS III GP”)

 

   

Bridge Debt Strategies Fund IV GP LLC (“BDS IV GP”)

 

   

CAGR” refers to compound annual growth rate.

 

   

Class A Units” refers to the Class A common units of the Operating Company, including the Class A common units that we will purchase directly from the Operating Company and certain of the Original Equity Owners with the net proceeds from this offering.

 

   

Class B Units” refers to the Class B common units of the Operating Company. As part of the initial structuring of the Transactions, the Original Equity Owners will receive like amounts of Class A Units (which are entitled to a pro rata share of the economics of the Operating Company) and Class B Units (which are entitled to one vote and have no economic entitlement). The Original Equity Owners will immediately contribute such Class B common units to us in exchange for a like amount of shares of Class B common stock.

 

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Continuing Equity Owners” refers collectively to direct or indirect holders of Class A Units and our Class B common stock immediately following consummation of the Transactions who may, following the consummation of this offering, exchange at each of their respective options (subject in certain circumstances to time-based vesting requirements and certain other restrictions), in whole or in part from time to time, their Class A Units (along with an equal number of shares of Class B common stock (and such shares shall be immediately cancelled)) for, at our election (determined solely by our independent directors (within the meaning of the NYSE rules) who are disinterested), cash or newly issued shares of our Class A common stock as described in “Certain Relationships and Related Party Transactions—Operating Company LLC Agreement.”

 

   

fee-earning AUM” refers to the assets we manage from which we earn management fee revenue.

 

   

Former Equity Owners” refer to those Original Equity Owners who will transfer their Class A Units for shares of our Class A common stock in connection with the consummation of this offering.

 

   

Former Profits Interest Program Participants” refer to individuals holding existing awards under Bridge Investment Group LLC’s profits interest award program who will exchange such awards for Class A Units and restricted shares of Class A common stock with similar vesting requirements.

 

   

Former Subsidiary Owners” refer to certain current owners of our active general partners who will contribute a portion of their interests in such entities to us in exchange for shares of Class A common stock, and we will further contribute such interests to the Operating Company in exchange for Class A Units.

 

   

LLC Interests refers to the Class A Units and the Class B Units.

 

   

Operating Company,” “Bridge Investment Group LLC” and “Bridge Investment Group Holdings LLC” refer to Bridge Investment Group LLC, a Utah limited liability company, which we anticipate will be converted to a limited liability company organized under the laws of the State of Delaware and re-named “Bridge Investment Group Holdings LLC” effective on or prior to the consummation of this offering.

 

   

Operating Company LLC Agreement” refers to Bridge Investment Group Holdings LLC’s amended and restated limited liability company agreement, which will become effective on or prior to the consummation of this offering.

 

   

Operating Subsidiaries” refers to the Bridge GPs and the consolidated entities included in the Operating Company.

 

   

Original Equity Owners” refers to the owners of LLC Interests in the Operating Company, collectively, prior to the Transactions.

 

   

Predecessor” refers to the combined entities of the Operating Company, the Fund Managers and the Bridge GPs.

 

   

Transactions” refer to the organizational transactions and this offering, and the application of the net proceeds therefrom.

Bridge Investment Group Holdings Inc. will be a holding company and the sole managing member of the Operating Company, and upon consummation of the Transactions, its principal asset will consist of Class A Units.

Presentation of Financial Information

The Operating Company together with the Bridge GPs are collectively the predecessor of the issuer, Bridge Investment Group Holdings Inc., for financial reporting purposes. Bridge Investment Group Holdings Inc. will be the issuer and the financial reporting entity following this offering. Accordingly, this prospectus contains the historical financial statements of the following entities:

 

   

Bridge Investment Group Holdings Inc. Other than the inception balance sheet, dated as of April 2, 2021, the historical financial information of Bridge Investment Group Holdings Inc. has not been included in this

 

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prospectus as it is a newly incorporated entity as of March 18, 2021, has no business transactions or activities to date and had no assets or liabilities during the periods presented in this prospectus.

 

   

Predecessor. Because Bridge Investment Group Holdings Inc. will have no interest in any operations other than those of the Operating Company and its direct and indirect subsidiaries and the Bridge GPs, the historical combined financial information for the years ended December 31, 2020 and 2019 and the three months ended March 31, 2021 and 2020 included in this prospectus is that of the Operating Company and its direct and indirect subsidiaries, and the Bridge GPs.

 

   

Bridge Multifamily III Funds. Bridge Multifamily III Funds are a group of related investment funds to which we provide investment management services and receive base management fees and are eligible to receive performance compensation. The Bridge GPs account for the investment in the Bridge Multifamily III Funds under the equity method of accounting and due to the size of our investment, we are required to provide their separate annual financial statements.

The unaudited pro forma financial information of Bridge Investment Group Holdings Inc. presented in this prospectus has been derived from the application of pro forma adjustments to the historical combined financial statements of the Operating Company and its direct and indirect subsidiaries and the Bridge GPs included elsewhere in this prospectus. These pro forma adjustments give effect to the Transactions as described in “Our Organizational Structure,” including the consummation of this offering, as if all such transactions had occurred on January 1, 2020 in the case of the unaudited pro forma combined statements of operations data, and as of March 31, 2021 in the case of the unaudited pro forma condensed combined balance sheet data. See “Unaudited Pro Forma Condensed Financial Information” for a complete description of the adjustments and assumptions underlying the pro forma financial information included in this prospectus.

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Percentage amounts included in this prospectus have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this prospectus may vary from those obtained by performing the same calculations using the figures in our consolidated financial statements included elsewhere in this prospectus. Certain other amounts that appear in this prospectus may not sum due to rounding.

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 generally accepted accounting principles in the United States, or 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 seperately 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 prospectus. 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. See “Prospectus Summary—Summary Historical and Pro Forma Condensed Combined Financial and Other Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

 

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TRADEMARKS

This prospectus includes our trademarks and trade names which are protected under applicable intellectual property laws and are our property. This prospectus also contains trademarks, trade names and service marks of other companies, which are the property of their respective owners. Solely for convenience, trademarks, trade names and service marks referred to in this prospectus may appear without the ®, or SM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent permitted under applicable law, our rights or the right of the applicable licensor to these trademarks, trade names and service marks. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us, by these other parties.

MARKET AND INDUSTRY DATA

Unless otherwise indicated, information contained in this prospectus concerning our industry, competitive position and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data, and our experience in, and knowledge of, such industry and markets, which we believe to be reasonable. In addition, projections, assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

 

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PROSPECTUS SUMMARY

This summary highlights selected information included elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our Class A common stock. You should read the entire prospectus carefully, including the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Some of the statements in this prospectus constitute forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

Overview

We are a leading, vertically integrated real estate investment manager, diversified across specialized asset classes, with approximately $26 billion of AUM as of March 31, 2021. 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 develop an array of investment platforms focused on sectors of the U.S. real estate market that we believe are the most attractive. We have extensive multi-channel distribution capabilities and currently manage capital on behalf of more than a hundred global institutions and more than 6,500 individual investors across more than 25 investment vehicles.

As of December 31, 2020, we had approximately $25 billion of AUM, including approximately $10 billion of fee-earning AUM, reflecting a AUM CAGR of 40.9% since 2016. From 2018 to 2020, our total revenues increased 78%, from $130 million to $232 million and our net income increased 89%, from $88 million to $166 million. See “Summary Historical and Pro Forma Condensed Combined Financial and Other Data.”

 

LOGO

We employ a specialized, vertically integrated model spanning nine investment platforms across real estate equity and debt strategies. Our vertically integrated approach includes investment professionals as well as employees who perform active asset management, property management, leasing, and construction management functions. By directly operating the properties that we acquire or develop, we are able to find opportunities to generate significant alpha at the asset level, creating a key competitive advantage to drive returns for our fund investors. This high-touch owner-operator approach, which we have refined over decades, provides a difficult to


 

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replicate, data-driven investment strategy. With respect to our equity investment strategies, we aim for high visibility into precisely how we will execute on and operate a given asset at the time of acquisition. In our Debt Strategies platform, we leverage that same execution-focused discipline to validate and underwrite credit investments, frequently collaborating with our local market teams in the investment phase.

We currently operate across 40 states, and we focus our investment activity in the U.S. markets that we believe exhibit the strongest growth potential, as determined by rigorous data-driven analytics conducted by our dedicated research team. We have a leading presence in many attractive subsectors of U.S. real estate in both primary and secondary markets. Our investment teams consist of specialized, experienced professionals who bring deep sector knowledge across economic cycles. Investment team collaboration combined with our on-the-ground resources and local market teams provides us with extensive and unique deal flow across our target markets. Our intensive underwriting and investment processes benefit from this collaborative effort to support rigorous physical, financial and analytical due diligence.

 

LOGO

 

*

Note: Respective metrics as of March 31, 2021. Portfolio loans include loans in securitizations.

We are focused on a differentiated and socially responsible approach to investing and operating our assets. Our onsite presence at our properties allows us to create positive, constructive relationships with residents and tenants, and to differentiate Bridge real estate assets from other properties. By making improvements that residents and tenants value, often with an emphasis on social and community programming, Bridge prides itself on community revitalization. Further, we seek to make improvements that limit our impact on the environment. For example, we are developing an innovative solar power program that we plan to launch across all equity verticals in 2021, beginning with certain office and multifamily assets. Community, sustainability and resource reduction are incorporated into our decisions. As an operator, we seek to offer residents and tenants far more than just “four walls and a roof.” We have committed to adopting the United Nations Principles for Responsible Investment by incorporating environmental, social and governance issues into our investment analysis and decision-making processes. We believe this will improve long-term, risk-adjusted returns for our fund investors and deliver to our tenants and residents what they need and want.

Our distribution efforts span both retail and institutional channels and are led by our senior management, investment professionals and a dedicated team of global investor service professionals. We established our retail distribution channel through our first wirehouse distribution relationship in 2012, and we believe our tenured presence with distribution partners, including wirehouse banks and Registered Investment Advisers, or RIAs, affords us the opportunity to continue growing our AUM from retail investors. Our institutional fundraising and


 

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fund investor service efforts are high-touch, and we manage capital on behalf many of the world’s leading global allocators of private market capital. Because of our multiple platforms and strategies, we are frequently in front of our fund investors to maintain and expand these relationships, and we communicate in a detailed and transparent way with our investors. The combination of strong investment returns and regular, intensive communications has created strong loyalty and repeat investments from leading institutional investors. Our focus on performance, detailed and transparent communication, and responsiveness are among the factors that differentiate our investor relations approach.

Our investment teams are supported by a centralized corporate infrastructure providing debt capital markets, risk management, client solutions and back office support functions. The substantial recent investments we have made in our corporate infrastructure to service all Bridge investment teams enables us to scale our platform to accommodate significant future platform growth. The bulk of our corporate infrastructure is located in Salt Lake City, Utah, which offers a high-quality labor pool at a lower cost than many larger metropolitan areas.

We have a long history of disciplined and strategic corporate growth, and we have successfully expanded into multiple new investment verticals since our initial investment fund via organic growth initiatives, strategic personnel hiring, and corporate acquisitions, while remaining focused on driving value at the underlying investment level. We believe we have a sustained opportunity to continue to apply our investment principles into additional sectors, strategies and markets.

 

LOGO

We have an experienced management team with proven performance history and long-term tenure and outlook. Our leaders have deep knowledge of the local markets in which we invest coupled with extensive real asset and capital markets expertise. We have consistently practiced intensive, formal management training to optimize the performance of our professionals and employ rigorous performance reviews to support career development and advancement. We conduct regular succession planning and generally employ a “Co-Chief Investment Officer” structure or have a Deputy Chief Investment Officer for each investment vehicle. We strive to be a best-in-class employer of choice and seek to provide competitive career opportunities and benefits to our employees. We have


 

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been able to attract and retain high-quality personnel, at both the entry level and the mid-and senior levels. We consistently reexamine and seek to optimize the Bridge culture of mutual shared success and teamwork and commit meaningful resources to knowledge sharing across verticals.

As of March 31, 2021, we had approximately 1,650 employees, including approximately 100 investment professionals and approximately 450 employees supporting our investment, investor service and corporate activities. Our remaining approximately 1,100 employees operate our properties and are generally expensed via our managed investment vehicles as property level operating expenses for the assets owned by our managed investment vehicles. Additionally, we have approximately 2,300 professionals employed through a professional employment organization at sites managed by Bridge Senior Living, all of whom are expensed via our managed investment vehicles.

Our History

Our founders began investing in multifamily real estate in 1991. In 2000, this predecessor group adopted our current vertically integrated strategy with the addition of a multifamily property management affiliate, now known as Bridge Property Management, and continued to build a strong reputation with institutional capital allocators as a regional real estate sponsor. In 2009, this predecessor group partnered with other members of our current executive management to launch our first discretionary investment fund, Bridge Multifamily Fund I, and with the success of that fund these predecessor groups combined to form our Operating Company in 2011 and launched Bridge Multifamily Fund II at the beginning of 2012. We and our founders have successfully managed commercial real estate investments with resiliency and adept actions through multiple cycles and financial market challenges. Through 2020, we sponsored a total of 19 funds (with four more funds launched or expected to launch in 2021), as well as a variety of separate accounts, co-investment vehicles and managed joint-venture investment entities across our nine investment platforms. We have built on this successful history by leveraging our best-in-class operational infrastructure and capital raising abilities to grow from a single investment strategy to a diversified group of specialized investment platforms both through building specialized teams with new hires and through acquiring emerging companies.

 

LOGO

Today, we provide investors with a diverse range of real estate investment products managed by our dedicated, specialized and synergistic investment teams. Our broad range of products allows us to capture new market opportunities and serve investors with various investment objectives. Since the beginning of 2009, we have raised approximately $15 billion of equity commitments across our funds and investment vehicles and, as of March 31, 2021, we had approximately $26 billion of AUM across our funds and other vehicles.


 

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Our Fund Investors

Our global fund investor base is balanced across individual investors, which includes high-net-worth fund investors, fund investors who invest through a wirehouse relationship or through an RIA, family offices, and institutional investors, which include public and private organizations who manage capital as fiduciaries on behalf of their investors or beneficiaries (e.g., public and private pension funds, sovereign wealth funds, insurance companies, endowments, foundations, and funds of funds). We view this balance in our fund investor base as a meaningful differentiator, and one that has enabled us to consistently grow our increasing breadth of managed vehicles and strategies. On the individual investor side, we have more than 6,500 fund investors globally, comprising approximately 57% of our committed capital as of December 31, 2020. On the institutional side, we have approximately 115 fund investors spanning four continents, and comprising approximately 43% of our committed capital as of December 31, 2020. We view these two distinct components of our fund investor base to be highly complementary and believe they provide us with significant opportunities for continued growth, stability, and diversification among our fund investor base. Our Client Solutions Group manages relationships with our distribution partners and our institutional fund investors in a high-touch capacity.

The following charts illustrate the diversification of our fund investor base by fund investor type and geography as measured by committed capital as of December 31, 2020:

 

LOGO

Market Opportunity

We believe our position as a leading real estate investment manager and expertise in investing in multiple real estate sectors positions us to capitalize on favorable market trends, such as:

Growth in Institutional Wealth Driving Increasing Demand for Real Estate Investment Opportunity

We operate in the large and growing real estate investment management industry, which we believe represents one of the most attractive segments within the broader asset management industry. According to PricewaterhouseCoopers’ 2020 report, Asset and wealth management revolution: The power to shape the future, or the PwC 2020 Report, total global AUM is expected to grow from approximately $111.2 trillion in 2020 to approximately $145.4 trillion in 2025 in all asset classes, implying a CAGR of approximately 5.5%. Investments in alternative assets are projected to grow even more significantly, from $10.7 trillion to $17.2 trillion over the same timeframe, representing a CAGR of 9.8%, according to Preqin Ltd. The below chart illustrates the historical and projected growth of alternative assets, including real estate and private debt.

Within alternatives, real estate represents one of the largest asset classes in North America. According to the National Association of Real Estate Investment Trusts, the total size of the commercial real estate market was estimated to be $16 trillion in 2018.


 

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In 2020, asset allocations by all institutions to real estate rose for the seventh consecutive year, according to Hodes Weill. A ten basis point increase from 2019 to 2020, when compared against approximately $100 trillion of global AUM, implies the potential for an additional $80 billion to $120 billion of capital allocations to real estate in the coming years, per the Hodes Weill report. We believe investors view allocations to private real estate investments as essential for obtaining diversified exposure to income and growth.

 

LOGO

 

*

Sources: Preqin Ltd., Global Real Estate Report (2020); Hodes Weill & Associates, data includes all types and sizes of institutions.

We believe that institutions continue to target higher allocations to real estate over time. Nearly 30% of institutions are expecting to increase allocations to real estate in 2021, with 95% of institutions expecting to increase or keep allocations unchanged, per Hodes Weill.

Real Estate Investments Offer Opportunity for Yield in a Low Rate Environment

We believe yield-oriented strategies, such as certain real estate equity and debt investment strategies, have the potential to generate significant current income and attract investor capital because of their defensive characteristics that may provide returns with less volatility and lower loss ratios than can be achieved via investments in markets outside real estate. In addition to seeking attractive absolute and relative returns, we believe institutional investors have been increasing their allocations to the real estate asset class to attain stable income, low volatility and diversification relative to traditional public market investments.


 

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LOGO

 

 

*

Sources: Bloomberg (April 2, 2021), using year-end sum of net dividend per share amounts that have gone ex-dividend over the prior four years, divided by the stock price. U.S. Small and Mid Cap REITS: Invesco KBW Premium Yield EQ ETF. High Yield Corporates: iShares iBoxx High Yield Corporate Bond ETF. Emerging Markets Debt: Invesco Emerging Markets Sovereign Debt ETF. Global REITs: iShares Global REIT ETF. S&P/LSTA U.S. Leveraged Loans: Invesco Senior Loan ETF. Investment Grade Corporates: iShares iBoxx $ Investment Grade Corporate Bond ETF. Global Infrastructure: iShares Global Infrastructure ETF. S&P/LTSA. U.S. Aggregate Bonds: iShares Core U.S. Aggregate Bond ETF (tracks the Bloomberg Barclays U.S. Aggregate Bond Index).

Our Performance

We have a demonstrated record of producing attractive returns for our fund investors across our platforms. Our historical investment returns have been recognized by third parties such as Preqin Ltd., which ranked each of our last three multifamily funds and our workforce and affordable housing funds in the top quartile for their vintage. Our historical investment returns for our closed-end funds by platform are shown in the chart below.

Performance Summary as of March 31, 2021

 

($ in millions)  
                Total Investments  
Closed-End Funds by Platform (1)   Fund
Committed
Capital (2)
    Unreturned
Drawn
Capital +
Accrued
Pref (3)
    Cumulative
Invested
Capital (4)
    Realized
Proceeds
(5)
    Remaining
Fair Value
(RFV) (6)
    Unrealized
MOIC (7)
    Total
Fair
Value
(TFV) (8)
    TFV
MOIC
(9)
    Gross
IRR
(10)
    Net
IRR
(11)
 

Multifamily Funds

  $ 3,221     $ 1,204     $ 2,603     $ 2,680     $ 2,125       1.69x     $ 4,806       1.85x       27.1     20.3

Workforce and Affordable Housing Fund I

    619       568       516       50       708       1.47x       758       1.47x       26.4     19.0

Office Fund I

    573       592       521       90       598       1.32x       688       1.32x       12.8     8.7

Seniors Funds

    1,399       1,483       1,312       348       1,349       1.29x       1,697       1.29x       8.4     5.3

Debt Strategies Funds

    2,757       2,266       4,182       2,733       2,282       1.21x       5,015       1.20x       12.2     9.5
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Closed-End Funds

    8,569       6,112       9,134       5,902       7,062       1.36x       12,964       1.42x       19.0     13.6

 

(1)

Does not include performance for (i) Opportunity Zone funds, as such funds are invested in active development projects and have minimal stabilized assets, or (ii) funds that are currently raising capital, including our open-ended funds.

(2)

Fund Committed Capital represents total capital commitments to the fund, excluding joint ventures or separately managed accounts.

(3)

Unreturned Drawn Capital and Accrued Pref represents the amount the fund needs to distribute to its investors as a return of capital and a preferred return before it is entitled to receive performance fees or allocations from the fund.


 

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(4)

Cumulative Invested Capital represents the total cost of investments since inception (including any recycling or refinancing of investments).

(5)

Realized Proceeds represents net cash proceeds received in connection with all investments, including distributions from investments and disposition proceeds.

(6)

Remaining Fair Value (“RFV”) is the estimated liquidation values of remaining fund investments that are generally based upon appraisals, contracts and internal estimates. There can be no assurance that Remaining 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 Remaining Fair Value are based. Direct fund investments in real property are held at cost minus transaction expenses for the first six months from investment.

(7)

Unrealized MOIC represents the Multiple of Invested Capital (“MOIC”) for RFV before management fees, expenses and carried interest, divided by the remaining invested capital attributable to those unrealized investments.

(8)

Total Fair Value (“TFV”) represents the sum of Realized Proceeds and Remaining Fair Value, before management fees, expenses and carried interest.

(9)

TFV MOIC represents MOIC for Total Fair Value before management fees, expenses and carried interest, divided by Cumulative Invested Capital.

(10)

Gross IRR is an annualized realized and unrealized fund-level return to fund investors of all investments, gross of management fees and carried interest.

(11)

Net IRR is an annualized realized and unrealized return to fund investors, net of management fees, expenses and carried interest. Net return information reflects average fund level returns, which 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.

The returns presented above are those of the primary funds in each platform and not those of the Company. 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.

Competitive Strengths

We believe the following competitive strengths will allow us to continue to capitalize on industry trends and position us for further growth:

Vertically Integrated Business Model Drives Competitive Advantages and Attractive Investment Returns. Our vertically integrated business model facilitates our comprehensive top-down investment strategy supported by our deep expertise and robust asset level underwriting. We seek to add value to assets and create asset level alpha through intensive asset and property management strategies such as capital investment, leasing, centralized procurement, operations and maintenance, and creative asset level financing/capitalization. Moreover, we have demonstrated that our knowledge and data aggregation from these intensive asset and property management activities can also be utilized in the context of capital allocation funds, such as our Opportunity Zone funds, to assist our hand-selected operating partners by providing access to selected information.

We believe that the hands-on experience of our vertically integrated teams, together with our top-down market analysis, leads to strong underwriting and returns for the investors in our funds. Our vertical integration also enables us to increase the efficiency of our assets by reducing fees paid to third parties for services such as property management and brokerage, thereby increasing cash flow to our funds.


 

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Diversified and Synergistic Business Model Spanning Nine Investment Platforms. Our nine investment platforms are highly synergistic, working together to provide us a competitive advantage through differentiated underwriting capabilities, enhanced collaboration to increase deal flow via locally based teams across a broad set of markets. Our investment platforms are incentivized to develop and share best practices and are enhanced by our fully scaled corporate infrastructure, with full integration and in-house capabilities across debt capital markets, risk management, procurement and capital markets, which provide a competitive advantage and enhance the economic proposition for investors.

We believe this model benefits all our investment platforms. For example, our multifamily property managers conduct physical due diligence on assets relating to potential loan investments by our Debt Strategies platform, and we often underwrite office assets in markets where we have significant on-the-ground multifamily experience.

Bridge’s diverse array of investment platforms creates stability and minimizes risk for our franchise, limiting the key-person risk attributable to any one individual or team and generating income from a wide variety of investments. In addition, we have multiple drivers of AUM growth through our specialized investment platforms and investment vehicles including managed funds, separate accounts and co-investments.

National Reach with Local Expertise. We believe that our extensive nationwide footprint of locally based teams allows us to uncover attractive opportunities on a bottom-up basis in our target markets, providing us enhanced deal flow and contributing to our ability to underwrite deals in specific sub-markets due to our locally sourced knowledge. In addition, our relationships with national brokerage houses across markets and sectors and our relationships with other large institutional property owners allow us to stay abreast of market trends and execute transactions. Our deep local sub-market presence and strong reputation for closing transactions allow us to maintain a robust pipeline of transactions and deal flow.

Proven Record of Fundraising Success with a Loyal Investor Base. We benefit from a diverse investor base with a large number of investors, many of whom have invested in several of our managed vehicles. 59% of Bridge fund investors have invested in two or more funds, and 40% of our institutional investors have invested in three or more funds. Our experienced Client Solutions Group raises capital and maintains deep relationships with key institutional segments (e.g., sovereign wealth funds, pension funds and insurance companies) as a complement to our extensive wealth management relationships, which span most of the largest wirehouses in the United States. Our Client Solutions Group has a proven history of raising capital and driving growth across new products, platforms and investment teams having raised an average of $2.4 billion of equity capital per year from 2016 through 2020.

High Proportion of Recurring Fees and “Sticky” Contractual Revenue Streams from Long-Duration Capital. We have worked diligently to grow our base of recurring revenue and raise long-duration capital. We have successfully executed this endeavor through a number of closed-end funds, in which investors withdraw capital only at the end of the fund term, which generally ranges from six to ten years. All but one of our current funds are closed-end funds, with average lifespans at inception of eight years or more, in which investors’ contributions are locked in throughout the life of the fund.


 

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LOGO

Our closed-end funds are generally structured to charge fees on committed capital during the initial capital raising and investment period (typically the first three years) and to charge fees on invested capital thereafter. As a result, our fees are inherently “sticky,” as they are initially based upon the commitments our investors have made to our funds and are therefore unlikely to vary meaningfully from year-to-year following a large capital raise.

In most of our equity funds we also generate property management fees, construction management and development fees, mortgage brokerage fees, due diligence fees, and certain other ancillary revenue. These fee streams are contractual and are in many cases tied to the duration of the managed vehicles, providing additional stability and visibility to our revenues and earnings. Following a capital raise, we have a high degree of visibility into the growth of these contractual fee streams. We believe these fees are mutually beneficially to us and our fund investors because we provide these ancillary services at or below market rates and drive better execution by using our size, scale and expertise for our fund investors’ benefit.

Long-tenured Senior Management Team with High Alignment and Support of Deep and Talented Employee Pool. We are a people business and focus on consistently recruiting highly qualified people and empowering them to reach their full potential. We are led by 30 active partners, many of whom have worked together for decades. Our owners, employees and affiliates have made, in the aggregate since the inception of Bridge Multifamily Fund I in 2009, capital commitments of over $350 million to our managed funds as of March 31, 2021, helping ensure an alignment of interests with our fund investors. Approximately 75 of our active employees have ownership interests in the company, collectively owning approximately 85% of Bridge on a fully diluted basis prior to this offering, and more than 95 employees are entitled to participate in our performance allocations in one or more of our strategies. With this offering, we plan to further expand the number of employees with an ownership interest in our business.

Our nationwide team possesses extensive real estate, investment, operational, capital markets and transactional expertise that cumulatively drives alpha generation at the asset level. We have grown from an employee base of under 1,000 in 2015 to approximately 1,650 current employees (including approximately 1,100 employees who operate our properties but not including employees of professional employer organizations at certain properties) and have developed a strong internal culture and external brand reputation. Our culture of excellence, accountability, teamwork and collaboration allows employees to thrive in every aspect of their professional lives. We are committed to promoting an environment that fosters each employee’s professional growth and investing in each of our employees through target professional advancement (including tuition reimbursement), mentorship and leadership development. We believe in connecting the right people with the right opportunities to help them drive their careers at Bridge.


 

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We believe our ability to maintain a consistent common culture and vision while having specialized teams around the country focused on specific real estate segments is a point of differentiation. We have developed practices which we believe are unique and contribute to our consistent performance. One such example is our annual Bridge Knowledge Share event, where we bring investment professionals from each investment platform together at our headquarters to collaborate and share best practices, as well as to develop relationships and contacts, which has led to organic collaboration among teams.

Growth Strategy

We have successfully grown via both organic and inorganic expansion throughout our history. As we continue to expand our business, we intend to create value for our shareholders by seeking to:

Continue to Strengthen and Expand Our Fund Investor Network

We believe our existing fund investors and distribution channels are continuing to allocate assets to real estate strategies, while seeking experienced, sector-specific asset managers to execute their real estate investment strategy. Throughout our history, we have invested in and grown both our in-house and third-party distribution networks. Accordingly, we intend to grow our business by expanding our relationships with existing fund investors and by attracting new fund investors who value our established operating platform, sharpshooter investment strategies, and performance history.

Expand Our Product Offerings Across the Risk-Return Spectrum

We believe our vertically integrated platform will allow us to add complementary investment products intended to meet differing risk profiles and current yield and return objectives, for existing and new fund investors. At the same time, we believe that our significant access to potential investment opportunities, integrated market research, and financing and operational capabilities will enable us to efficiently source and manage attractive investments that meet a broader range of investment objectives and strategies. We believe that expansion of both investment style and geography provides an opportunity for meaningful growth within our existing strategies. Within or adjacent to our current investment strategies, for example, we added on to our existing value-add Multifamily strategy by launching our Workforce and Affordable Housing strategy with a different risk-return profile for our fund investors.

We expect, over time, to complement our portfolio of long-term, value-add focused equity vehicles with equity investment opportunities that target Core-Plus returns. This new strategy is expected to invest across several existing Bridge strategies with a different risk-return profile than those existing strategies and will focus on Core-Plus properties in highly liquid metropolitan statistical areas, or MSAs, that feature strong macro-economic prospects. We anticipate that our Core-Plus strategy will target modestly lower returns than our existing value-add equity strategies.

Launch New Product Offerings and Strategies Across Real Estate and Adjacent Sectors and Pursue Expanded Investment Geography

A key element of our growth has been our ability to apply our deep expertise in real estate to grow complementary investment strategies in additional real estate and real estate-adjacent sectors that offer attractive fundamentals. We have expanded our product offerings to provide an increasing array of opportunities for investors and a balanced business model that we believe benefits all of our stakeholders. For example, in 2020, we launched our Agency Mortgage Backed Securities, or Agency MBS, platform in our first open-end structure. We expect to continue to develop new strategies and products across property types and fund structures. To date in the first half of 2021, we hired several experienced investment executives to lead two separate differentiated


 

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logistics platforms comprised of (1) our Logistics Net Lease platform focused on long-term net leased assets that are mission critical to logistics networks and occupied by long-term tenants with strong credit profiles, and (2) our Logistics Properties platform focused on value-add and Core-Plus acquisitions of logistics assets as well as ground-up development opportunities predominantly in infill, last-mile driven markets in attractive MSAs. We also anticipate opportunities to expand our investment geography within our existing investment strategies. We believe there are additional expansion opportunities adjacent to our existing strategies that we are uniquely suited to pursue, including those that do not involve traditional real estate assets. For example, we may consider expansion into areas such as infrastructure, particularly real estate-related infrastructure assets such as data centers. Expansions outside of our current real estate focus would be driven by a synergistic fit with strong investment teams that could benefit from our platform and capital raising abilities to drive growth.

Expand Our Distribution Capabilities Domestically and Internationally

According to the PwC 2020 Report, the combined investable assets of high-net-worth individuals are expected to reach approximately $202.9 trillion by 2025. However, many high-net-worth individual investors continue to have difficulty accessing private real estate investment opportunities because of a lack of available products that satisfy regulatory and structural requirements related to liquidity, transparency and administration. Our investment platform is designed to expand access to the private real estate markets for both institutional and individual fund investors.

We believe that geographically and economically diverse investors require a highly bespoke approach and demand high levels of transparency and reporting. We believe that we will be able to leverage our existing investment and operational capabilities while establishing a local presence in key geographies and expand our fund investor base globally.

We expect our fund investor base to become increasingly international and expect that a growing portion of the capital we raise in 2021 will come from Asia and Europe, the Middle East and Africa as we continue to expand our presence in these markets. In 2020, we opened an office in Seoul, Korea and expanded our strategies to include registration of certain strategies as alternative investment funds in Luxembourg. In 2021, we anticipate opening an office in Luxembourg to expand our coverage of Europe, the Middle East and Africa (EMEA) markets, and we expect to begin the registration process to become a registered alternative investment fund manager, or AIFM. We believe we are well positioned to deepen our private fund investors and institutional fund investors in these markets, among others.

Leverage Our Scale to Enhance Operating Margins

We have made significant investments in our platform infrastructure since inception. We believe that we are positioned to improve our operating margins as a result of our scalable platform and infrastructure, which we believe is capable of supporting significant growth in our capabilities and fund investor base.

Pursue Accretive Acquisitions to Complement Our Platform

We may complement our organic growth with selective strategic and tactical acquisitions. We intend to remain highly disciplined in our business development strategy to ensure that we are allocating management time and our capital in the areas that we believe will be most productive. We plan to focus on opportunities that expand our scale in existing markets, access new markets, add complementary capabilities, or enhance distribution.


 

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Recent Developments

Preliminary Results for the Three Months Ended June 30, 2021

Our results for the three months ended June 30, 2021 are not yet available. Below we have presented preliminary estimates of certain of our operating metrics and key performance indicators for the three months ended June 30, 2021, based solely on preliminary information currently available to management. We have not yet completed our closing procedures for the three months ended June 30, 2021. The preliminary estimates of certain of our operating metrics set forth below have been prepared by, and are the responsibility of, management and are based on a number of assumptions. Our independent registered public accounting firm has not audited, reviewed, compiled, or performed any procedures with respect to our results for the three months ended June 30, 2021 and 2020 and do not express any opinion or any other form of assurance with respect to such data. Our actual results may differ materially from these estimates due to the completion of our financial closing procedures, final adjustments and other developments that may arise between now and the time the operating metrics for our interim period are finalized. You should not place undue reliance on these preliminary estimates. In addition, the preliminary estimated operating metrics set forth below are not necessarily indicative of results we may achieve in any future period. See “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Cautionary Note Regarding Forward-Looking Statements” for additional information regarding factors that could result in differences between the preliminary estimated ranges of certain of our operating metrics that are presented below and the actual operating metrics we will report.

Capital Raising

During the three and six months ended June 30, 2021, our new capital commitments raised was $1.04 billion and $1.21 billion, respectively, as compared to $128.8 million and $504.7 million for the three and six months ended June 30, 2020, respectively.

Capital Deployment and Undeployed Capital

During the three and six months ended June 30, 2021, we estimate that our capital deployment was $958.0 million and $1.10 billion, respectively, as compared to $621.2 million and $1.23 billion for the three and six months ended June 30, 2020, respectively.

As of June 30, 2021, we estimate that we had $1.7 billion of undeployed capital available to be deployed for future investment or reinvestment. Of this $1.7 billion, we estimate that $1.1 billion is currently fee paying based on commitments and $0.6 billion will be fee paying if and when it is deployed.

Assets Under Management and Fee-Earning AUM

The following table presents certain key operating performance metrics as of the dates indicated:

 

     June 30, 2021      December 31,
2020
 
     Low      High      Actual  
($ in millions)                     

Assets under management (AUM)

   $ 25,500      $ 26,500      $ 25,214  

Fee-earning AUM

   $ 10,500      $ 11,100      $ 10,214  

Summary Risk Factors

Investing in our Class A common stock involves substantial risk. Our ability to execute our strategy is also subject to certain risks. The risks described under the heading “Risk Factors” included elsewhere in this


 

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prospectus may cause us not to realize the full benefits of our strengths or may cause us to be unable to successfully execute all or part of our strategy. Some of the most significant challenges and risks we face include the following:

 

   

The historical performance of our investments may not be indicative of the future results of our investments;

 

   

The substantial growth of our business in recent years may be difficult to sustain in the future;

 

   

Valuation methodologies for certain assets can be subject to significant subjectivity, and may not be the same when realized;

 

   

Our revenues are subject to the risks inherent in the ownership and operation of real estate and the construction and development of real estate;

 

   

The success of our business depends on the identification and availability of suitable investment opportunities for our funds;

 

   

Difficult economic, market and political conditions may adversely affect our businesses;

 

   

Our ability to retain our senior leadership team and attract additional qualified investment professionals is critical to our success;

 

   

We intend to expand our business and may enter into new investment asset classes, new lines of business and/or new markets;

 

   

Defaults by investors in our funds could adversely affect that fund’s operations and performance;

 

   

The COVID-19 pandemic has caused severe disruptions in the U.S. and global economy and may affect the investment returns of our funds;

 

   

Fund investors may be unwilling to commit new capital to our funds;

 

   

The due diligence process that we undertake in connection with investments may not reveal all facts that may be relevant in connection with an investment;

 

   

The investment management business is intensely competitive;

 

   

Increased government regulation, compliance failures and changes in law or regulation could adversely affect us and the operation of our funds;

 

   

Our principal asset after the completion of this offering will be our interest in the Operating Company, and, as a result, we will depend on distributions from the Operating Company to pay our taxes and expenses and to pay dividends to holders of our Class A common stock;

 

   

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition;

 

   

The Continuing Equity Owners will continue to have significant influence over us after this offering, including control over decisions that require the approval of stockholders; and

 

   

No market currently exists for our Class A common stock, and an active, liquid trading market for our Class A common stock may not develop.

Before you invest in our Class A common stock, you should carefully consider all the information in this prospectus, including matters set forth under the heading “Risk Factors.”

Summary of the Transactions

Bridge Investment Group Holdings Inc., a Delaware corporation, was formed on March 18, 2021 and is the issuer of the Class A common stock in this offering. Prior to the Transactions, all of our business operations have been


 

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conducted through the Operating Company and its direct and indirect subsidiaries, as well as the commonly controlled Bridge GPs. The Operating Company is the only holder of a nominal amount of common stock of Bridge Investment Group Holdings Inc. which will be cancelled for no consideration in connection with the Transactions. We will consummate the following organizational transactions in connection with this offering:

 

   

we will acquire, by means of one or more mergers, the Blocker Company, which we refer to as the Blocker Merger, and will issue to the Blocker Shareholder 266,809 shares of our Class A common stock as consideration in the Blocker Merger;

 

   

the minority investors that own a portion of the fund manager entities for our Seniors Housing and Office funds will contribute their entire interest in these fund managers to (i) the Operating Company in exchange for 5,835,715 Class A Units, and (ii) us in exchange for 143,500 shares of Class A common stock, which we will further contribute to Bridge Investment Group Holdings LLC in exchange for 143,500 Class A Units;

 

   

certain of the current owners of the active general partners in our Seniors Housing, Office, Multifamily, Workforce and Affordable Housing, Opportunity Zone and Debt Strategies funds, which include the Continuing Equity Owners, will contribute controlling interests in the Bridge GPs, with the exception of BDS I GP, to (i) the Operating Company, in exchange for 13,166,426 Class A Units, and (ii) us in exchange for 395,816 shares of Class A common stock (which includes 1,794 shares of Class A common stock issued to the Blocker Shareholder as consideration in the Blocker Merger), which we will further contribute to Bridge Investment Group Holdings LLC in exchange for 395,816 Class A Units;

 

   

we will amend and restate the existing limited liability company agreement of the Operating Company to, among other things, (1) convert the Operating Company to a limited liability company organized under the laws of the State of Delaware, (2) change the name of the Operating Company from “Bridge Investment Group LLC” to “Bridge Investment Group Holdings LLC,” (3) convert all existing ownership interests in the Operating Company into 97,321,818 Class A Units and a like amount of Class B Units and (4) appoint Bridge Investment Group Holdings Inc. as the sole managing member of the Operating Company upon its acquisition of LLC Interests in connection with this offering;

 

   

we will amend and restate Bridge Investment Group Holdings Inc.’s certificate of incorporation to, among other things, provide for (1) the recapitalization of our outstanding shares of existing common stock into one share of our Class A common stock, (2) the authorization of additional shares of our Class A common stock, with each share of our Class A common stock entitling its holder to one vote per share on all matters presented to our stockholders generally and (3) the authorization of shares of our Class B common stock, with each share of our Class B common stock entitling its holder to ten votes per share on all matters presented to our stockholders generally, and that shares of our Class B common stock may only be held by the Continuing Equity Owners and their respective permitted transferees as described in “Description of Capital Stock—Common Stock—Class B Common Stock”;

 

   

the Original Equity Owners will contribute the Class B Units to us in exchange for 97,321,818 shares of Class B common stock (which is equal to the number of Class A Units held directly or indirectly by such Continuing Equity Owners immediately following the Transactions);

 

   

the Former Equity Owners will contribute their indirect ownership of Class A Units to us in exchange for 2,180,738 shares of Class A common stock (which includes 265,015 shares of Class A common stock issued to the Blocker Shareholder as consideration in the Blocker Merger) on a one-to-one basis;

 

   

the Former Profits Interest Program Participants will exchange their awards for 4,781,623 Class A Units and 282,758 shares of Class A common stock with similar vesting requirements (in each case, based on the midpoint of the estimated initial offering price range for our Class A common stock set forth on the cover page of this prospectus);

 

   

we will issue 18,750,000 shares of our Class A common stock to the purchasers in this offering (or 21,562,500 shares if the underwriters exercise in full their option to purchase additional shares of our Class A common stock) in exchange for net proceeds of approximately $274.3 million (or approximately


 

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$316.2 million if the underwriters exercise in full their option to purchase additional shares of our Class A common stock) based upon an assumed initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus), less the underwriting discounts and commissions and estimated offering expenses payable by us;

 

   

we will use the net proceeds from this offering to purchase 18,750,000 newly issued Class A Units (or 21,562,500 Class A Units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) directly from the Operating Company at a price per Class A Unit equal to the initial public offering price per share of Class A common stock in this offering, less the underwriting discounts and commissions and estimated offering expenses payable by us;

 

   

the Operating Company intends to use the net proceeds from the sale of Class A Units to Bridge Investment Group Holdings Inc. (1) to pay $137.1 million (or approximately $171.0 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock) in cash to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners and (2) for general corporate purposes to support the growth of our business, in each case, as described under “Use of Proceeds”; and

 

   

Bridge Investment Group Holdings Inc. will enter into (1) a stockholders agreement, which we refer to as the Stockholders Agreement, with certain of the Continuing Equity Owners (including each of our executive officers), (2) a registration rights agreement, which we refer to as the Registration Rights Agreement, with certain of the Continuing Equity Owners (including each of our executive officers) and (3) a tax receivable agreement, which we refer to as the Tax Receivable Agreement, or TRA, with the Operating Company and the Continuing Equity Owners. For a description of the terms of the Stockholders Agreement, the Registration Rights Agreement and the Tax Receivable Agreement, see “Certain Relationships and Related Party Transactions.”

We collectively refer to the foregoing organizational transactions and this offering as the Transactions.

Immediately following the consummation of the Transactions (including this offering):

 

   

Bridge Investment Group Holdings Inc. will be a holding company and its principal asset will consist of Class A Units it purchases from the Operating Company and certain of the Original Equity Owners (including the Blocker Shareholder) with the net proceeds from this offering;

 

   

Bridge Investment Group Holdings Inc. will be the sole managing member of the Operating Company and will control the business and affairs of the Operating Company and its direct and indirect subsidiaries;

 

   

Bridge Investment Group Holdings Inc. will own, directly or indirectly, 21,752,812 Class A Units of the Operating Company, representing approximately 19.8% of the economic interest in the Operating Company (or 24,565,312 Class A Units, representing approximately 22.3% of the economic interest in the Operating Company if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

 

   

Bridge Investment Group Holdings Inc. will own, directly or indirectly, approximately 40% of the economic interest in the active general partners of our Seniors Housing, Office, Multifamily, Workforce and Affordable Housing, and Opportunity Zone funds and approximately 24% of the economic interest in the active general partners of our Debt Strategies funds (excluding BDS I GP);

 

   

the Continuing Equity Owners will own (1) 87,946,818 Class A Units of the Operating Company, representing approximately 80.2% of the economic interest in the Operating Company (or 85,678,469 Class A Units, representing approximately 77.7% of the economic interest in the Operating Company if the underwriters exercise in full their option to purchase additional shares of Class A common stock) and (2) 87,946,818 shares of Class B common stock of Bridge Investment Group Holdings Inc., representing approximately 97.6% of the combined voting power of all of Bridge Investment Group Holdings Inc.’s common stock (or 85,678,469 shares of Class B common stock of Bridge Investment Group Holdings Inc., representing approximately 97.2% of the combined voting power if the underwriters exercise in full their option to purchase additional shares of Class A common stock); and


 

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the purchasers in this offering will own (1) 18,750,000 shares of Class A common stock of Bridge Investment Group Holdings Inc. (or 21,562,500 shares of Class A common stock of Bridge Investment Group Holdings Inc. if the underwriters exercise in full their option to purchase additional shares of Class A common stock), representing approximately 2.1% of the combined voting power of all of Bridge Investment Group Holdings Inc.’s common stock and approximately 86.2% of the economic interest in Bridge Investment Group Holdings Inc. (or approximately 2.4% of the combined voting power and approximately 87.8% of the economic interest if the underwriters exercise in full their option to purchase additional shares of Class A common stock), and (2) through Bridge Investment Group Holdings Inc.’s ownership of Class A Units, indirectly will hold approximately 17.1% of the economic interest in the Operating Company (or approximately 19.6% of the economic interest in the Operating Company if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

As the sole managing member of the Operating Company, Bridge Investment Group Holdings Inc. will operate and control all of the business and affairs of the Operating Company and, through the Operating Company and its direct and indirect subsidiaries, conduct our business. Following the Transactions, including this offering, we will control the management of the Operating Company as its sole managing member. As a result, Bridge Investment Group Holdings Inc. will consolidate the Operating Company and record a significant non-controlling interest for the economic interest in the Operating Company held directly or indirectly by the Continuing Equity Owners and certain individuals engaged in our business, to the extent such owners have not contributed such interests to us in exchange for Class A Units.

Unless otherwise indicated, this prospectus assumes the shares of Class A common stock are offered at $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus). Although the combined number of Class A Units outstanding after the offering will remain fixed regardless of the initial public offering price in this offering, pursuant to the terms of the existing limited liability company agreement among the Original Equity Owners and the Operating Company, the split between the number of Class A Units among the Original Equity Owners and Bridge Investment Group Holdings Inc. will vary depending on the initial public offering price in this offering. The initial public offering price will also impact the relative allocation of Class A Units issued in the Transactions among the Original Equity Owners and, in turn, the shares of Class A common stock and Class B common stock issued to the Original Equity Owners in the Transactions. For more information regarding the impact of the initial offering price on the share information included throughout this prospectus, see “—The Offering.”

For more information regarding the Transactions and our structure, see “Our Organizational Structure.”


 

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Ownership Structure

The diagram below depicts our organizational structure after giving effect to the Transactions, including this offering, assuming no exercise by the underwriters of their option to purchase additional shares of Class A common stock.

 

LOGO

 

(1)

Investors in this offering will hold approximately 2.1% of the combined voting power of Bridge Investment Group Holdings Inc. (or approximately 2.4% of the combined voting power if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

(2)

The Continuing Equity Owners and certain individuals engaged in our business will continue to hold interests directly and indirectly in certain of the Operating Subsidiaries, including the fund manager entities for our Agency MBS, Debt Strategies, Logistics Net Lease and Logistics Properties funds and the Bridge GPs, to the extent such owners have not contributed such interests to us in exchange for Class A Units. As a result, Bridge Investment Group Holdings Inc. will record a significant non-controlling interest for the economic interest in the Operating Subsidiaries held directly or indirectly by such owners. For additional information see “Summary of the Transactions” and “Unaudited Pro Forma Condensed Financial Information.”

After giving effect to the Transactions, including this offering, Bridge Investment Group Holdings Inc. will be a holding company whose principal asset will consist of 19.8% of the outstanding Class A Units of the Operating Company (or 22.3% if the underwriters exercise in full their option to purchase additional shares of our Class A common stock).


 

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Interests of Original Equity Holders, Including Our Directors and Executive Officers, in the Transactions

In April 2021, we made a distribution to the Original Equity Owners, including certain of our directors and executive officers, in an amount equal to $75 million. This amount will not be available for the operations of the Company.

As part of the Transactions, we will enter into (1) the Stockholders Agreement with certain of the Continuing Equity Owners (including each of our executive officers), (2) the Registration Rights Agreement with certain of the Continuing Equity Owners (including each of our executive officers) and (3) the Tax Receivable Agreement with the Operating Company and the Continuing Equity Owners (including each of our executive officers). For a description of the terms of the Stockholders Agreement, the Registration Rights Agreement and the Tax Receivable Agreement, see “Certain Relationships and Related Party Transactions.”

The Operating Company intends to use approximately $137.1 million (or approximately $171.0 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock) of the net proceeds from this offering to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners. Accordingly, certain of the Original Equity Owners, which include certain of our directors and executive officers, will receive a substantial cash payment in connection with the sale of a portion of their Class A Units at the time of the offering. Additionally, we intend to make restricted stock grants to certain of our executive officers effective on completion of this offering. See “Executive Compensation.”

Corporate Information

Bridge Investment Group Holdings Inc., the issuer of the Class A common stock in this offering, was incorporated as a Delaware corporation on March 18, 2021. Our corporate headquarters are located at 111 East Sego Lily Drive, Suite 400, Salt Lake City, Utah 84070. Our telephone number is (801) 716-4500. Our principal website address is www.bridgeig.com. The information on any of our websites is deemed not to be incorporated in this prospectus or to be part of this prospectus.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of certain reduced reporting and other requirements that are otherwise generally applicable to public companies. As a result:

 

   

we are required to have only two years of audited financial statements and only two years of related management’s discussion and analysis of financial condition and results of operations disclosure;

 

   

we are not required to engage an auditor to report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

 

   

we are not required to comply with the requirement of the Public Company Accounting Oversight Board, or PCAOB, regarding the communication of critical audit matters in the auditor’s report on the financial statements;

 

   

we are not required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”; and

 

   

we are not required to comply with certain disclosure requirements related to executive compensation, such as the requirement to present a comparison of our Chief Executive Officer’s compensation to our median employee compensation.

We may take advantage of these reduced reporting and other requirements until the last day of our fiscal year following the fifth anniversary of the completion of this offering, or such earlier time that we are no longer an


 

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emerging growth company. However, if certain events occur prior to the end of such period, including if we have more than $1.07 billion in annual revenue, have more than $700 million in market value of our Class A common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period, we will cease to be an emerging growth company prior to the end of such period. We may choose to take advantage of some but not all of these accommodations. We have elected to adopt the reduced requirements with respect to our financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure, including in this prospectus.

In addition, the JOBS Act permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. 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 use this extended transition period, and, therefore, while we are an emerging growth company we will not be subject to new or revised accounting standards at the same time that they become applicable to other public companies that are not emerging growth companies or emerging growth companies that have elected to not take this option. As a result, the information that we provide to stockholders may be different than the information you may receive from other public companies in which you hold equity.


 

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The Offering

 

Issuer    Bridge Investment Group Holdings Inc.

Shares of Class A common stock offered by us

  

18,750,000 shares (or 21,562,500 shares if the underwriters exercise in full their option to purchase additional shares).

Underwriters’ option to purchase additional shares of Class A common stock from us

   2,812,500 shares.

Shares of Class A common stock to be issued to the Former Equity Owners, the Former Subsidiary Owners and the Former Profits Interest Program Participants

   3,002,812 shares.

Shares of Class A common stock to be outstanding immediately after this offering

  

21,752,812 shares, representing approximately 2.4% of the combined voting power of all of Bridge Investment Group Holdings Inc.’s common stock (or 24,565,312 shares, representing approximately 2.8% of the combined voting power of all of Bridge Investment Group Holdings Inc.’s common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock), 100% of the economic interest in Bridge Investment Group Holdings Inc. and 19.8% of the indirect economic interest in the Operating Company.

Shares of Class B common stock to be outstanding immediately after this offering

  

87,946,818 shares, representing approximately 97.6% of the combined voting power of all of Bridge Investment Group Holdings Inc.’s common stock (or 85,678,469 shares, representing approximately 97.2% of the combined voting power of all of Bridge Investment Group Holdings Inc.’s common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock) and no economic interest in Bridge Investment Group Holdings Inc.

Class A Units to be held by us immediately after this offering

  

21,752,812 Class A Units, representing approximately 19.8% of the economic interest in the Operating Company (or 24,565,312 Class A Units, representing approximately 22.3% of the economic interest in the Operating Company if the underwriters exercise in full their option to purchase additional shares of Class A common stock).


 

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Class A Units to be held by the Continuing Equity Owners immediately after this offering

  

87,946,818 Class A Units, representing approximately 80.2% of the economic interest in the Operating Company (or 85,678,469 Class A Units, representing approximately 77.7% of the economic interest in the Operating Company if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Ratio of shares of Class A common stock to
Class A Units

  

Our amended and restated certificate of incorporation and the Operating Company LLC Agreement will require that we and the Operating Company at all times maintain a one-to-one ratio between the number of shares of Class A common stock issued by us and the number of Class A Units owned by us, except as otherwise determined by us.

Ratio of shares of Class B common stock to Class A Units

  

Our amended and restated certificate of incorporation and the Operating Company LLC Agreement will require that we and the Operating Company at all times maintain a one-to-one ratio between the number of shares of Class B common stock owned by the Continuing Equity Owners and their permitted transferees and the number of Class A Units owned by the Continuing Equity Owners and their respective permitted transferees, except as otherwise determined by us. Immediately after the Transactions, the Continuing Equity Owners will together own 100% of the outstanding shares of our Class B common stock.

Permitted holders of shares of Class B
common stock

  

Initially, only the Continuing Equity Owners and the permitted transferees of Class B common stock as described in this prospectus will be permitted to hold shares of our Class B common stock. Shares of Class B common stock must be transferred to us together with an equal number of Class A Units upon an exchange for shares of Class A common stock. See “Certain Relationships and Related Party Transactions—Operating Company LLC Agreement.”

Voting rights

   Holders of shares of our Class A common stock and our Class B common stock will vote together as a single class on all matters presented to stockholders for their vote or approval, except as otherwise required by law or our amended and restated certificate of incorporation. Each share of our Class A common stock entitles its holders to one vote per share and each share of our Class B common stock entitles its holders to ten votes per share on all matters presented to our stockholders generally. See “Description of Capital Stock.”

 

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Voting power held by purchasers in this offering

  

2.1% (or 2.4%, if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Voting power held by the Former Equity Owners, the Former Subsidiary Owners and the Former Profits Interests Program Participants

  

0.3% (or 0.3%, if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Voting power held by all holders of Class A common stock after giving effect to this offering

  

2.4% (or 2.8%, if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Voting power held by the Continuing Equity Owners after giving effect to this offering

  

97.6% (or 97.2%, if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

Redemption rights of holders of Class A Units

   The Continuing Equity Owners may from time to time at each of their options require the Operating Company to redeem all or a portion of their Class A Units (87,946,818 Class A Units held by Continuing Equity Owners in the aggregate immediately after this offering (or 85,678,469 Class A Units held by Continuing Equity Owners in the aggregate if the underwriters exercise in full their option to purchase additional shares of Class A common stock)) in exchange for, at our election (determined by at least two of our independent directors (within the meaning of the NYSE rules) who are disinterested), newly issued shares of our Class A common stock on a one-for-one basis, or in connection with a redemption exercised in connection with the closing of this offering, a cash payment equal to the price per share for which shares of Class A common stock are sold in this offering less any applicable underwriting discounts or commissions and brokers’ fees or commissions, or to the extent there is cash available from a secondary offering, a cash payment equal to a volume weighted average market price of one share of our Class A common stock for each common unit so redeemed, in each case, in accordance with the terms of the Operating Company LLC Agreement; provided that, at our election (determined by at least two of our independent directors (within the meaning of the NYSE rules) who are disinterested), we may effect a direct exchange by Bridge Investment Group Holdings Inc. of such Class A common stock or such cash, as applicable, for such Class A Units. The Continuing Equity Owners may exercise such redemption right for as long as their Class A Units remain outstanding. See “Certain Relationships and Related Party Transactions—Operating Company LLC Agreement.”

 

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   Simultaneously with the payment of cash or shares of Class A common stock, as applicable, in connection with the exercise of the redemption or exchange of Class A Units (1) the Continuing Equity Owners will be required to transfer and surrender a number of shares of our Class B common stock registered in the name of such redeeming or exchanging Continuing Equity Owner, and therefore, will be transferred to the Company and will be cancelled for no consideration on a one-for-one basis with the number of Class A Units so redeemed or exchanged and (2) all redeeming members will surrender Class A Units to the Operating Company for cancellation.
Use of proceeds    We estimate, based upon an assumed initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus), that we will receive net proceeds from this offering of approximately $274.3 million (or $316.2 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock), after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering (including any net proceeds from any exercise of the underwriters’ option to purchase additional shares of Class A common stock) to purchase 18,750,000 Class A Units (or 21,562,500 Class A Units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) directly from the Operating Company at a price per unit equal to the initial public offering price per share of Class A common stock in this offering, less the underwriting discounts and commissions and estimated offering expenses payable by us. The Operating Company intends to use the $274.3 million in net proceeds from the sale of Class A Units to Bridge Investment Group Holdings Inc. (or $316.2 million if the underwriters exercise their option to purchase additional shares of Class A common stock), after deducting estimated offering expenses (i) to pay $137.1 million (or approximately $171.0 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock) in cash to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners and (ii) for general corporate purposes to support the growth of our business. The Operating Company will bear or reimburse Bridge Investment Group Holdings Inc. for all of the expenses incurred in connection with the Transactions, including this offering. See “Use of Proceeds.”

 

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Dividend policy    Our current intention is to pay to holders of Class A common stock a quarterly dividend representing substantially all of Bridge Investment Group Holdings Inc.’s share of Distributable Earnings attributable to the Operating Company, subject to adjustment by amounts determined by our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments and clawback obligations. All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our board of directors and our board of directors may change our dividend policy at any time, including, without limitation, to reduce such quarterly dividends or even to eliminate such dividends entirely. Holders of our Class B common stock are not entitled to participate in any dividends declared by our board of directors. Additionally, because we are a holding company, our ability to pay cash dividends on our Class A common stock depends on our receipt of cash distributions from the Operating Company and, through the Operating Company, cash distributions and dividends from our other direct and indirect subsidiaries. Accordingly, our ability to pay any cash dividends on our Class A common stock is limited by restrictions on the ability of the Operating Company and our other subsidiaries to pay dividends or make distributions to us under the terms of our Credit Facilities. Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors, subject to compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness. Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, debt repayment obligations, capital expenditure needs, contractual restrictions, covenants in the agreements governing our current and future indebtedness, industry trends, the provisions of Delaware law affecting the payment of dividends to stockholders and any other factors our board of directors may consider relevant. See “Dividend Policy.”
Controlled company exception    After the consummation of the Transactions, the parties to the Stockholders Agreement will have more than 50% of the combined voting power of our common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of the NYSE rules and intend to elect not to comply with certain corporate governance standards, including that: (1) a majority of our

 

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   board of directors consists of “independent directors,” as defined under the NYSE rules; (2) we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; (3) we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and (4) we perform annual performance evaluations of the nominating and corporate governance and compensation committees. As a result, we do not currently intend to have a majority of independent directors on our board of directors, or to have a nominating and corporate governance committee or compensation committee (or perform annual performance evaluations of nominating and corporate governance and compensation committees, if any) unless and until such time as we are required to do so.
Tax receivable agreement    We will enter into a Tax Receivable Agreement with the Operating Company and each of the Continuing Equity Owners that will provide for the payment by Bridge Investment Group Holdings Inc. to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that Bridge Investment Group Holdings Inc. actually realizes (or in some circumstances is deemed to realize) as a result of (1) increases in Bridge Investment Group Holdings Inc.’s allocable share of the tax basis of the Operating Company’s assets resulting from (a) Bridge Investment Group Holdings Inc.’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 this offering, as described under “Use of Proceeds,” (b) future redemptions or exchanges (or deemed exchanges in certain circumstances) of Class A Units for Class A common stock or cash as described above under “—Redemption rights of holders of Class A Units,” and (c) certain distributions (or deemed distributions) by the Operating Company; (2) Bridge Investment Group Holdings Inc.’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 this offering), which tax basis is allocated to the Class A Units being redeemed or exchanged and acquired by Bridge Investment Group Holdings Inc. and (3) certain additional tax benefits arising from payments made under the Tax Receivable Agreement. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement” for a discussion of the Tax Receivable Agreement.

 

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Registration rights agreement    Pursuant to the Registration Rights Agreement, we will, subject to the terms and conditions thereof, agree to register the resale of the shares of our Class A common stock that are issuable to certain of the Continuing Equity Owners (including each of our executive officers) upon redemption or exchange of their Class A Units. See “Certain Relationships and Related Party Transactions—Registration Rights Agreement” for a discussion of the Registration Rights Agreement.
Directed Share Program    At our request, the underwriters have reserved up to 5% of the shares of our Class A common stock to be issued by us and offered by this prospectus for sale, at the initial public offering price, at our discretion, to certain of our directors, officers, employees, business associates and related persons through a directed share program. The number of shares of Class A common stock available for sale to the general public will be reduced to the extent that such persons purchase such reserved shares. Any reseved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares of Class A common stock offered by this prospectus. Shares purchased through the directed share program will not be subject to lockup restrictions with the underwriters, except in the case of shares purchased by any of our directors or executive officers. See “Underwriting” for more information.
Risk factors    See “Risk Factors” beginning on page 35 and other information included in this prospectus for a discussion of risks you should carefully consider before deciding to invest in shares of our Class A common stock.
Trading symbol    We have applied to list our Class A common stock on the NYSE under the symbol “BRDG.”

Unless we indicate otherwise or the context otherwise requires, all information in this prospectus:

 

   

gives effect to the amendment and restatement of the Operating Company LLC Agreement that converts all existing ownership interests in the Operating Company into 97,321,818 Class A Units and a like amount of Class B Units, as well as the filing of our amended and restated certificate of incorporation;

 

   

gives effect to the other Transactions, including the consummation of this offering;

 

   

includes 282,758 shares of Class A common stock to be issued in the organizational transactions in exchange for profits interests and to be subject to similar vesting conditions;

 

   

excludes 2,193,993 shares of our common stock issuable upon the vesting of restricted stock granted to certain of our executive officers, directors, employees and consultants under our 2021 Incentive Award Plan, or the 2021 Plan, in connection with this offering;

 

   

excludes the remaining shares of Class A common stock reserved for issuance under the 2021 Plan after giving effect to the issuance of the restricted stock described above, as well as any shares of our Class A common stock that become available pursuant to provisions in the 2021 Plan that automatically increase the share reserve under our 2021 Plan;


 

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assumes an initial public offering price of $16.00 per share of Class A common stock (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus); and

 

   

assumes no exercise by the underwriters of their option to purchase 2,812,500 additional shares of Class A common stock.

Certain owners of our non-wholly-owned subsidiaries have the option to contribute their interests in such entities to us in exchange for Class A Units, which would result in the issuance of Class A Units (exchangeable into shares of Class A common on a one-to-one basis) and a like amount of shares of Class B common stock.

Unless otherwise indicated, this prospectus assumes the shares of Class A common stock are offered at $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus). Although the combined number of Class A Units outstanding after the offering will remain fixed regardless of the initial public offering price in this offering, pursuant to the terms of the existing LLC Agreement among the Original Equity Owners and the Operating Company, the split between the number of Class A Units will vary depending on the initial public offering price in this offering. The initial public offering price will also impact the relative allocation of Class A Units issued in the Transactions among the Original Equity Owners and Bridge Investment Group Holdings Inc. and, in turn, the shares of Class A common stock and Class B common stock issued to the Original Equity Owners in the Transactions.


 

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Summary Historical and Pro Forma Condensed Combined Financial and Other Data

The following tables present the summary historical combined financial and other data for the Company, which is a combination of multiple entities formed to provide real estate asset management services. Its business is conducted through a large number of entities for which there is no single controlling holding entity. Thus, the historical periods presented in this section reflect the operating results of the Bridge business as historically managed and include the combined accounts of the Operating Company and the Bridge GPs, along with pro forma adjustments and other data where indicated. The Operating Company and the Bridge GPs are the predecessor of the issuer, Bridge Investment Group Holdings Inc., for financial reporting purposes. The summary combined statements of operations data and statements of cash flows data for the three months ended March 31, 2021 and 2020, and the years ended December 31, 2020 and 2019, and the summary combined balance sheet data as of March 31, 2021 are derived from the combined financial statements of the Operating Company and the Bridge GPs included elsewhere in this prospectus. The results of operations for the periods presented below are not necessarily indicative of the results to be expected for any future period. The information set forth below should be read together with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the combined financial statements and the accompanying notes included elsewhere in this prospectus.

The summary unaudited pro forma condensed combined financial data of the Company presented below have been derived from our unaudited pro forma condensed combined financial information included elsewhere in this prospectus. The following summary unaudited pro forma condensed combined financial information as of and for the three months ended March 31, 2021, and the year ended December 31, 2020 gives pro forma effect to the Transactions described under “Our Organizational Structure” and “Use of Proceeds,” including the consummation of this offering and our intended use of proceeds therefrom after deducting the underwriting discounts and commissions and other costs of this offering, as though such Transactions had occurred at the beginning of the period presented. The unaudited pro forma condensed combined financial information includes various estimates which are subject to material change and may not be indicative of what our operations or financial position would have been had this offering and related transactions taken place on the dates indicated, or that may be expected to occur in the future. See “Unaudited Pro Forma Condensed Financial Information” for a complete description of the adjustments and assumptions underlying the summary unaudited pro forma condensed combined financial information.

The summary historical combined financial and other data of Bridge Investment Group Holdings Inc. has not been presented because it is a newly incorporated entity, has had no business transactions or activities to date and had no assets or liabilities during the periods presented in this section.

 

    Pro Forma     Three Months
Ended March 31,
    Year Ended
December 31,
 
Combined Statement of Operations   Three Months
Ended
March 31,
2021
    Year Ended
December 31,
2020
    2021     2020     2020     2019  
($ in thousands, except per share data)                                    

Revenues

           

Fund management fees

  $ 30,860     $ 110,277     $ 30,851     $ 25,719     $ 110,235     $ 118,194  

Property management and leasing fees

    16,747       59,986       16,747       16,522       59,986       59,754  

Construction management fees

    1,826       8,155       1,826       1,562       8,155       7,312  

Development fees

    386       1,966       386       205       1,966       555  

Transaction fees

    5,326       39,298       5,326       7,345       39,298       48,088  

Insurance premiums

    1,894       6,291       1,894       1,155       6,291       5,246  

Other asset management and property income

    1,520       6,017       1,520       1,200       6,017       7,127  
     

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

  $ 58,559     $ 231,990     $ 58,550     $ 53,708     $ 231,948     $ 246,276  
     

 

 

   

 

 

   

 

 

   

 

 

 

 

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    Pro Forma     Three Months
Ended March 31,
    Year Ended
December 31,
 
Combined Statement of Operations   Three Months
Ended
March 31,
2021
    Year Ended
December 31,
2020
    2021     2020     2020     2019  
($ in thousands, except per share data)                                    

Investment income

           

Incentive fees

    910       —         910       —         —         5,898  

Performance allocations

           

Realized

    5,557       42,377       5,557       4,111       42,365       41,738  

Unrealized

    14,729       61,808       14,719       18,816       61,803       30,051  

Earnings (losses) from investments in real estate

    (43     515       (3     (412     522       1,697  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

  $ 21,153     $ 104,700     $ 21,183     $ 22,515     $ 104,690     $ 79,384  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

           

Employee compensation and benefits

    29,443       110,098       27,151       24,694       100,932       95,156  

Incentive fee compensation

    82       —         82       —         —         581  

Performance allocations compensation:

           

Realized

    347       2,523       494       388       4,281       3,895  

Unrealized

    623       4,218       1,429       2,280       8,983       5,461  

Loss and loss adjustment expenses

    786       3,119       786       581       3,119       2,622  

Third-party operating expenses

    8,626       28,415       8,626       8,560       28,415       32,853  

General and administrative expenses

    4,100       17,242       4,101       4,691       17,249       17,953  

Depreciation and amortization

    753       3,214       753       672       3,214       2,769  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

  $ 44,760     $ 168,829     $ 43,422     $ 41,866     $ 166,193     $ 161,290  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

           

Realized and unrealized gains (losses)

    6,068       117       5,798       655       549       (1,812

Interest income

    608       1,527       608       372       1,527       1,837  

Interest expense

    (1,547     (4,972     (1,587     (481     (5,058     (2,777
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

    5,129       (3,328     4,819       546       (2,982     (2,752
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

    40,081       164,533       41,130       34,903       167,463       161,618  

Income tax provision

    (1,548     (5,530     (410     (12     (1,006     (985
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

  $ 38,533     $ 159,003     $ 40,720     $ 34,891     $ 166,457     $ 160,633  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less: net gain/(loss) attributable to non-controlling interest in subsidiaries

    16,720       72,267       3,949       2,034       19,535       20,271  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to the Operating Company

    21,813       86,736       36,771       32,857       146,922       140,362  

Less: net gain/(loss) attributable to non-controlling interest

    18,400       73,164          
 

 

 

   

 

 

         

Net income attributable to Bridge Investment Group Holdings Inc.

  $ 3,413     $ 13,572          
 

 

 

   

 

 

         

Pro forma net income per share data:

           

Pro forma weighted average shares of Class A common stock outstanding:

           

Basic and diluted

    21,752,812       21,752,812          

Pro forma net income available to Class A common stock per share:

           

Basic and diluted

  $ 0.15     $ 0.58          

 

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     Bridge Investment Group Historical  
Combined Statements of Cash Flows    Three Months Ended
March 31,
    Year Ended
December 31,
 
($ in thousands)    2021     2020     2020     2019  

Net cash provided by operating activities

   $ 26,304     $ 27,356     $ 130,096     $ 153,468  

Net cash provided by (used in) investing activities

     33,674       (40,714     (47,813     306  

Net cash used in financing activities

     (27,730     (12,353     (35,039     (129,393

 

Combined Balance Sheets    Pro Forma
Bridge
Investment
Group
Holdings
Inc.
     Historical
Bridge
Investment
Group
 
($ in thousands)    As of
March 31, 2021
 

Cash and cash equivalents

   $ 195,743      $ 133,620  

Investments

     236,714        236,974  

Total assets

     555,137        438,497  

Accrued performance allocations compensation

     13,720        24,749  

Notes payable, net

     147,820        147,820  

Total liabilities

     248,990        223,133  
  

 

 

    

 

 

 

Total members’ equity

     306,147        215,364  
  

 

 

    

 

 

 

 

Non-GAAP Financial
Measures
  Pro Forma for the
Three Months Ended
March 31, 2021
    Pro Forma for the
Year Ended
December 31, 2020
    Three Months Ended
March 31,
     Year Ended
December 31,
 
($ in thousands)   2021     2020      2020      2019  

Distributable Earnings attributable to the Operating Company (1)(2)

  $ 16,947     $ 85,826     $ 19,705     $ 16,360      $ 103,922      $ 133,844  

Fee Related Earnings(2)

    17,608       85,141       17,598       14,964        85,092        106,972  

 

(1)

The pro forma financial information as of and for the three months ended March 31, 2021 and the year ended December 31, 2020 gives effect to the Reorganization Adjustments, but does not give effect to the Offering Adjustments, which are described below under “Unaudited Pro Forma Condensed Financial Information.”

(2)

To provide investors with additional insight and allow for a more comprehensive understanding of the information used by management in its financial and decision-making surrounding operations, we supplement our combined financial statements presented on a basis consistent with GAAP with Distributable Earnings and Fee Related Earnings, both non-GAAP financial measures.

Distributable Earnings attributable to the Operating Company. 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 income before provision for income taxes computed in accordance with U.S. GAAP in that it does not include depreciation and amortization, unrealized performance allocations and related compensation expense, unrealized gains (losses), share-based compensation, net income attributable to non-controlling interests, charges (credits) related to corporate actions and non-recurring items. Such items, if applicable, charges (credits) related to corporate actions and non-recurring items include: charges associated with acquisitions or strategic investments, changes in the tax receivable agreement 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


 

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Earnings is not a measure of performance calculated in accordance with U.S. 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 U.S. 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—Key Components of our Results of Operations—Combined Results of Operations” prepared in accordance with U.S. 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 of to generate profits from fee-based revenues that are measured and received on a recurring basis. Fee Related Earnings differs from income before provision for income taxes computed in accordance with U.S. 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, net insurance income, earnings from investments in real estate, net interest (interest income less interest expense), net realized gain/(loss), and, if applicable, certain general and administrative expenses when the timing of any future payment is uncertain. Fee Related Earnings is not a measure of performance calculated in accordance with U.S. GAAP. The use of Fee Related Earnings without consideration of the related U.S. 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.

Fee Related Revenues. Fee Related Revenues is a component of Fee Related Earnings. Fee Related Revenues is comprised of fund management fees, transaction fees net of any third-party operating expenses, net earnings from Bridge property operators, development fees, and other asset management and property income. 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. Fee Related Revenues differs from revenue computed in accordance with U.S. GAAP in that it excludes insurance premiums. 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 U.S. 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, and expenses attributable to non-controlling interest 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.

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.


 

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Net income is the U.S. GAAP financial measure most comparable to Distributable Earnings and Fee Related Earnings. The following table sets forth a reconciliation of net income to Distributable Earnings and to Fee Related Earnings:

 

    Pro Forma
for the
Three Months
Ended
March 31,
    Pro Forma
for the Year
Ended
December 31,
    Three Months Ended
March 31,
    Year Ended
December 31,
 
    2021     2020     2021     2020     2020     2019  
($ in thousands)                              

Net income

  $ 38,533     $ 159,003     $ 40,720     $ 34,891     $ 166,457     $ 160,633  

Income tax provision

    1,548       5,530       410       12       1,006       985  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

    40,081       164,533       41,130       34,903       167,463       161,618  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Depreciation and amortization

    753       3,214       753       672       3,214       2,769  

Less: Unrealized performance allocations

    (14,729     (61,808     (14,719     (18,816     (61,803     (30,051

Plus: Unrealized performance allocations compensation

    623       4,218       1,429       2,280       8,983       5,461  

Less: Unrealized (gains)/losses

    (5,780     (558     (5,780     (1,032     (558     2,293  

Plus: Share based compensation

    3,133       15,324       841       387       6,158       12,025  

Less: Net realized performance allocations attributable to non-controlling interests

    (4,486     (23,830     —         —         —         —    

Less: Net income attributable to non-controlling interests in operating subsidiaries

    (2,648     (15,267     (3,949     (2,034     (19,535     (20,271
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributable Earnings attributable to the Operating Company

    16,947       85,826       19,705       16,360       103,922       133,844  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Realized performance allocations and incentive fees

    (6,467     (42,377     (6,467     (4,111     (42,365     (47,635

Realized performance allocations and incentive fees compensation

    429       2,523       576       388       4,281       4,476  

Net realized performance allocations attributable to non-controlling interests

    4,486       23,830       —         —         —         —    

Net insurance income

    (1,108     (3,172     (1,108     (574     (3,172     (2,624

(Earnings)/losses from investments in real estate

    43       (515     3       412       (522     (1,697

Net interest (income)/expense and realized (gain)/loss

    630       3,759       940       455       3,413       337  

Net income attributable to non-controlling interests in operating subsidiaries

    2,648       15,267       3,949       2,034       19,535       20,271  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Fee Related Earnings

  $ 17,608     $ 85,141     $ 17,598     $ 14,964     $ 85,092     $ 106,972  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less: Total Fee Related Earnings attributable to non-controlling interests

    2,648       15,267       3,949       2,034       19,535       20,271  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Fee Related Earnings to the Operating Company

  $ 14,960     $ 69,874     $ 13,649     $ 12,930     $ 65,557     $ 86,701  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The following table sets forth our total Distributable Earnings and Fee Related Earnings for the three months ended March 31, 2021 and 2020 and for the years ended December 31, 2020 and 2019:

 

    Pro Forma
for the Three Months
Ended March 31,
    Pro Forma
for the

Year Ended
December 31,
    Three Months Ended
March 31,
    Year Ended
December 31,
 
    2021     2020     2021     2020     2020     2019  
($ in thousands)                              

Fund-level fee revenues

           

Fund management fees

  $ 30,860     $ 110,277     $ 30,851     $ 25,719     $ 110,235     $ 118,194  

Transaction fees

    5,326       39,298       5,326       7,345       39,298       48,088  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net fund level fee revenues

    36,186       149,575       36,177       33,064       149,533       166,282  

Net earnings from Bridge property operators

    2,094       8,362       2,094       1,495       8,362       6,833  

Development fees

    386       1,966       386       205       1,966       555  

Other asset management and property income

    1,520       6,017       1,520       1,200       6,017       7,127  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fee Related Revenues

    40,186       165,920       40,177       35,964       165,878       180,797  

Cash-based employee compensation and benefits

    (20,308     (70,954     (20,308     (18,269     (70,954     (62,620

Net administrative expenses

    (2,270     (9,825     (2,271     (2,731     (9,832     (11,205
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Fee Related Expenses

    (22,578     (80,779     (22,579     (21,000     (80,786     (73,825
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Fee Related Earnings

    17,608       85,141       17,598       14,964       85,092       106,972  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Realized performance allocations and incentive fees

    6,467       42,377       6,467       4,111       42,365       47,635  

Realized performance allocations and incentive fees compensation

    (429     (2,523     (576     (388     (4,281     (4,476

Net realized performance allocations attributable to non-controlling interests

    (4,486     (23,830     —         —         —         —    

Net insurance income

    1,108       3,172       1,108       574       3,172       2,624  

Earnings/(losses) from investments in real estate

    (43     515       (3     (412     522       1,697  

Net interest income/(expense) and realized gain/(loss)

    (630     (3,759     (940     (455     (3,413     (337

Net income attributable to non-controlling interests in operating subsidiaries

    (2,648     (15,267     (3,949     (2,034     (19,535     (20,271
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributable Earnings attributable to the Operating Company

  $ 16,947     $ 85,826     $ 19,705     $ 16,360     $ 103,922     $ 133,844  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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The following table sets forth the components of the employee compensation and benefits, general and administrative expenses, total other income (expense) and net income attributable to non-controlling interests line items on our combined statement 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. Net income attributable to non-controlling interests is presented separately based upon the nature of the income and is used to determine Fee Related Earnings to the Operating Company.

 

    Pro Forma for the
Three Months
Ended March 31,
2021
    Pro Forma for
the Year Ended
December 31, 2020
    Three Months Ended
March 31,
    Year Ended
December 31,
 
($ in thousands)   2021     2020     2020     2019  

Cash-based employee compensation and benefits

  $ 20,308     $ 70,954     $ 20,308     $ 18,269     $ 70,954     $ 62,620  

Compensation expense of Bridge property operators

    6,002       23,820       6,002       6,038       23,820       20,511  

Share based compensation

    3,133       15,324       841       387       6,158       12,025  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Employee compensation and benefits

  $ 29,443     $ 110,098     $ 27,151     $ 24,694     $ 100,932     $ 95,156  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
           

Administrative expenses, net of Bridge property operators

  $ 2,270     $ 9,825     $ 2,271     $ 2,731     $ 9,832     $ 11,205  

Administrative expenses of Bridge property operators

    1,830       7,417       1,830       1,960       7,417       6,748  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

General and administrative expenses

  $ 4,100     $ 17,242     $ 4,101     $ 4,691     $ 17,249     $ 17,953  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
           

Unrealized gains/(losses)

  $ 5,780     $ 558     $ 5,780     $ 1,032     $ 558     $ (2,293

Other expenses from Bridge property operators

    (21     (127     (21     (31     (127     (122

Net interest income/(expense) and realized gain/(loss)

    (630     (3,759     (940     (455     (3,413     (337
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

  $ 5,129     $ (3,328   $ 4,819     $ 546     $ (2,982   $ (2,752
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to non-controlling interests in subsidiaries

  $ 2,648     $ 15,267     $ 3,949     $ 2,034     $ 19,535     $ 20,271  

Net realized performance allocations attributable to non-controlling interests

    4,486       23,830       —         —         —         —    

Net unrealized performance allocations attributable to non-controlling interests

    9,586       33,170       —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total net income attributable to non-controlling interests

  $ 16,720     $ 72,267     $ 3,949     $ 2,034     $ 19,535     $ 20,271  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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RISK FACTORS

Investing in our Class A common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our combined financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our Class A common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our Class A common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business. See “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

The historical performance of our investments may not be indicative of the future results of our investments or our operations or any returns expected on an investment in our Class A common stock.

In considering the performance information contained in this prospectus, prospective Class A common stockholders should be aware that past performance of our funds and investments is not necessarily indicative of future results or of the performance of our Class A common stock. An investment in our Class A common stock is not an investment in any of our funds or other investments. In addition, the historical and potential future returns of funds or other investments that we manage are not directly linked to returns on our Class A common stock. Therefore, you should not conclude that continued positive performance of our funds or other investments will necessarily result in positive returns on an investment in our Class A common stock. However, poor performance of our funds or other investments could cause a decline in our revenue, and could therefore have a negative effect on our performance and on returns on an investment in our Class A common stock.

The historical performance of our funds and other investments should not be considered indicative of the future performance of these funds or of any future funds we may raise, in part because:

 

   

market conditions and investment opportunities during previous periods may have been significantly more favorable for generating positive performance than those we may experience in the future;

 

   

our historical returns derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed;

 

   

our newly established funds may generate lower returns during the period that they initially deploy their capital;

 

   

in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in private markets alternatives and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future; and

 

   

the performance of particular funds or other investments also will be affected by risks of the real estate markets and properties in which they invest.

The substantial growth of our business in recent years may be difficult to sustain, as it may place significant demands on our resources and employees and may increase our expenses in the future.

The substantial growth of our business has placed, and if it continues, will continue to place, significant demands on our infrastructure, our investment team and other employees, and will increase our expenses. In addition, we are required to develop continuously our infrastructure in response to the increasingly complex investment management industry and increasing sophistication of investors. Legal and regulatory developments also contribute to the level of our expenses. The future growth of our business will depend, among other things, on

 

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our ability to maintain the appropriate infrastructure and staffing levels to sufficiently address our growth and may require us to incur significant additional expenses and commit additional senior management and operational resources. We may face significant challenges in maintaining adequate financial and operational controls as well as implementing new or updated information and financial systems and procedures. Training, managing and appropriately sizing our work force and other components of our business on a timely and cost-effective basis may also pose challenges. In addition, our efforts to retain or attract qualified investment professionals may result in significant additional expenses. There can be no assurance that we will be able to manage our growing business effectively or that we will be able to continue to grow, and any failure to do so could adversely affect our ability to generate revenue and control our expenses.

Valuation methodologies for certain assets can be subject to significant subjectivity, and the values of assets may not be the same when realized.

The investments of our funds are illiquid and thus have no readily ascertainable market prices. We value these investments based on our estimate, or an independent third party’s estimate, of their fair value as of the date of determination, which often involves significant subjectivity. There is no single standard for determining fair value in good faith and in many cases fair value is best expressed as a range of fair values from which a single estimate may be derived. We estimate the fair value of our investments based on third-party models, or models developed by us, which include discounted cash flow analyses and other techniques and may be based, at least in part, on independently sourced market parameters. The material estimates and assumptions used in these models include the timing and expected amount of cash flows, the appropriateness of discount rates used, and, in some cases, the ability to execute, the timing of and the estimated proceeds from expected financings, some or all of which factors may be ascribed more or less weight in light of the particular circumstances. The actual results related to any particular investment often vary materially as a result of the inaccuracy of these estimates and assumptions.

We include the fair value of illiquid assets in the calculations of net asset values, returns of our funds and our assets under management. Furthermore, we recognize performance fees from affiliates based in part on these estimated fair values. Because these valuations are inherently uncertain, they may fluctuate greatly from period to period. Also, they may vary greatly from the prices that would be obtained if the assets were to be liquidated on the date of the valuation and often do vary greatly from the prices we eventually realize; as a result, there can be no assurance that such unrealized valuations will be fully or timely realized.

If we realize value on an investment that is significantly lower than the value at which it was reflected in prior valuations, we could suffer losses in the applicable fund. This could in turn lead to a decline in asset management fees and a loss equal to the portion of the performance fees from affiliates reported in prior periods that was not realized upon disposition. These effects could become applicable to a large number of our investments if our estimates and assumptions used in estimating their fair values differ from future valuations due to market developments. If asset values turn out to be materially different than values reflected in fund net asset values, fund investors could lose confidence which could, in turn, result in difficulties in raising additional capital.

If the investments we make on behalf of our funds perform poorly, we may suffer a decline in our investment management revenue and earnings, and our ability to raise capital for future funds may be materially and adversely affected.

Our revenue is derived from fees earned for our management of our funds and incentive fees or carried interest, among other sources. In the event that our funds or individual investments perform poorly, our revenues and earnings derived from incentive fees will decline and make it more difficult for us to raise capital for new funds or gain new fund investors in the future. In addition, if carried interest that was previously distributed to us exceeds the amounts to which we are ultimately entitled, we may be required to repay that amount under a “clawback” obligation. If we are unable to raise or are required to repay capital, our business, financial condition and results of operations would be materially and adversely affected.

 

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Additionally, certain of our strategies are designed to permit fund investors to be eligible to obtain certain tax benefits through their investment in the funds within these strategies. For example, our Opportunity Zone funds are organized to be “qualified opportunity funds” as defined in Section 1400Z-2(d) of the Code. Although our Opportunity Zone funds do not guarantee eligibility for tax benefits available to investors in “qualified opportunity funds,” if these fund investors lose or otherwise become ineligible for some or all of the tax benefits available to investors in a “qualified opportunity fund,” that could negatively impact our ability to attract new capital for our opportunity zone and other funds, which could have a negative impact on our management fees.

Our revenues are subject to the risks inherent in the ownership and operation of real estate and the construction and development of real estate.

Real property investments are subject to varying degrees of risk. These risks include changes in general or local economic conditions, interest rates, availability of mortgage funds, real estate taxes and other operating expenses, environmental changes, acts of God (which may result in uninsured losses), local employment conditions, domestic and foreign competition, and other factors, which are beyond our control. Real estate values are affected by a number of factors, including (a) changes in the general economic climate, (b) local conditions (such as an oversupply of space or a reduction in demand for space), (c) the quality and philosophy of management, (d) competition based on rental rates, (e) attractiveness and location of the properties, (f) financial condition of tenants, buyers and sellers of properties, (g) quality of maintenance, insurance and management services and (h) changes in operating costs. Real estate values also are affected by such factors as government regulations (including those governing usage, improvements zoning and taxes), interest rate levels, the availability of financing, and potential liability under changing environmental and other laws.

Our funds are subject to risks arising from the ownership and operation of real estate and real estate-related businesses and assets. In addition to the general risks described above, these risks include the following: general and local economic conditions; changes in supply of and demand for competing properties in an area (as a result, for example, of overbuilding); changes in building, environmental and other laws; diminished financial resources of tenants; energy and supply shortages; uninsured or uninsurable risks; liability for “slip-and-fall” and other accidents on properties held by our funds; natural disasters; changes in government regulations (such as rent control and tax laws); changes in real property tax and transfer tax rates; changes in interest rates; the reduced availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable; negative developments in the economy that depress travel activity; environmental liabilities, including under environmental laws that impose, regardless of fault, joint and several liability for the cost of remediating contamination and compensation for damages; contingent liabilities on disposition of assets; unexpected cost overruns in connection with development projects; terrorist attacks, war and other factors that are beyond our control; and dependence on operating partners. Even in cases where we are indemnified against liabilities, we cannot assure you as to the financial viability of the indemnifying party to satisfy such indemnities or our ability to achieve enforcement of such indemnities.

If our funds or fund investors acquire direct or indirect interests in undeveloped land or underdeveloped real property, which may often be non-income producing, they will be subject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoning and other regulatory or environmental approvals, the cost and timely completion of construction (including risks beyond the control of our fund, such as weather or labor conditions or material shortages) and the availability of both construction and permanent financing on favorable terms. Additionally, such investments may be managed by a third party, which makes them dependent upon such third parties. Any of these factors may cause the value of real estate investments to decline, which may have a material adverse effect on our funds or our business, financial condition and results of operations.

Additionally, certain of our strategies are organized to permit fund investors to be eligible to obtain certain tax benefits through their investment in the funds within these strategies. For example, our Opportunity Zone funds are organized to be “qualified opportunity funds” as defined in Section 1400Z-2(d) of the Code. Although our

 

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Opportunity Zone funds do not guarantee eligibility for tax benefits available to investors in “qualified opportunity funds,” if these fund investors lose or otherwise become ineligible for some or all of the tax benefits available to investors in a “qualified opportunity fund,” that could negatively impact our ability to attract new capital for our opportunity zone and other funds, which could have a negative impact on our management fees.

Investors in our open-end funds may redeem their investments in these funds on short notice, which could lead to a decrease in our investment management revenue and earnings.

Investors in our open-end funds may redeem their investments following the expiration of a specified period of time, subject to the applicable fund’s specific redemption provisions. Redemptions from these open-end funds would decrease the management fee payable to us from these investors. In a declining market, these open-end funds may experience declines in value and the pace of redemptions and consequent reduction in management fees payable to us could accelerate. To the extent permissible under our fund’s governing documents, we may suspend redemptions during a redemption period, which could adversely impact our reputation.

The success of our business depends on the identification and availability of suitable investment opportunities for our funds.

Our success largely depends on the identification and availability of suitable investment opportunities for our funds. The availability of investment opportunities will be subject to market conditions and other factors outside of our control. The historical investment returns of our funds have benefited from investment opportunities and general market conditions that may not continue or reoccur, including favorable borrowing conditions in the debt markets, and we cannot assure you that our funds will be able to avail themselves of comparable opportunities and conditions.

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.

Our investments are materially affected by conditions in the global financial markets and economic and political conditions throughout the world, such as interest rates, the availability and cost of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to our taxation, taxation of our fund investors and the possibility of changes to regulations applicable to alternative asset managers), trade policies, commodity prices, tariffs, currency exchange rates and controls and national and international political circumstances (including wars and other forms of conflict, terrorist acts, and security operations) and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, other adverse weather and climate conditions and pandemics. These factors are outside of our control and may affect the level and volatility of securities prices and the liquidity and value of investments, and we may not be able to or may choose not to manage our exposure to these conditions.

Global financial markets have experienced heightened volatility in recent periods, including as a result of economic and political events in or affecting the world’s major economies. For example, the withdrawal of the U.K. from the EU in January 2020 and subsequent ongoing uncertainty regarding the future relationship between the U.K. and the EU following the end of the Brexit transition period on December 31, 2020, hostilities in the Middle East region, recent U.S. presidential and congressional elections and resulting uncertainties regarding actual and potential shifts in U.S. and foreign, trade, economic and other policies, and concerns over increasing inflation and deflation, as well as interest rate volatility and fluctuations in oil and gas prices resulting from global production and demand levels, have precipitated market volatility.

In addition, numerous structural dynamics and persistent market trends have exacerbated volatility generally. Concerns over significant declines in the commodities markets, sluggish economic expansion in non-U.S.

 

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economies, including continued concerns over growth prospects in China and emerging markets, growing debt loads for certain countries and uncertainty about the consequences of the U.S. and other governments withdrawing monetary stimulus measures all highlight the fact that economic conditions remain unpredictable and volatile. In recent periods, trade tensions between the U.S. and China have escalated. Further escalation of trade tensions between the U.S. and China, or the countries’ inability to reach a timely trade agreement, may negatively impact the rate of global growth. Moreover, there is a risk of both sector-specific and broad-based corrections and/or downturns in the equity and credit markets. Any of the foregoing could have a significant impact on the markets in which we operate and a material adverse impact on our business prospects and financial condition.

A number of factors have had and may continue to have an adverse impact on credit markets in particular. The weakness and the uncertainty regarding the stability of the oil and gas markets resulted in a tightening of credit across multiple sectors. In addition, although the Federal Reserve has recently lowered the federal funds rate following a period of numerous increases, changes in and uncertainty surrounding interest rates may have a material effect on our business, particularly with respect to the cost and availability of financing for acquisition and disposition transactions.

These and other conditions in the global financial markets and the global economy may result in adverse consequences for us and many of our funds, each of which could adversely affect the investments of such funds, restrict such funds’ investment activities, impede such funds’ ability to effectively achieve their investment objectives and result in lower returns than we anticipated at the time certain of our investments were made. More specifically, these economic conditions could adversely affect our operating results by causing:

 

   

decreases in the market value of securities, debt instruments or investments held by some of our funds;

 

   

illiquidity in the market, which could adversely affect transaction volumes and the pace of realization of our funds’ investments or otherwise restrict the ability of our funds to realize value from their investments, thereby adversely affecting our ability to generate performance fees or other income;

 

   

our assets under management to decrease, thereby lowering a portion of our management fees payable by our funds to the extent they are based on market values; and

 

   

increases in costs or reduced availability of financial instruments that finance our funds.

During periods of difficult market conditions or slowdowns, negative financial results may reduce the net asset value of our funds and the investment returns for our funds, which could have a material adverse effect on our operating results and cash flow. Our funds may be adversely affected by reduced opportunities to exit and realize value from their investments, by lower than expected returns on investments made prior to the deterioration of the credit markets and by our inability to find suitable investments for the funds to effectively deploy capital, which could adversely affect our ability to raise new funds and thus adversely impact our prospects for future growth.

We have obligations to investors in our funds and may have obligations to other third parties that may conflict with your interests.

Our subsidiaries that serve as the general partners of or advisors to our funds have fiduciary and contractual obligations to the investors in those funds and accounts, and some of our subsidiaries may have contractual duties to other third parties. As a result, we may take actions with respect to the allocation of investments among our funds (including funds and accounts that have different fee structures), the purchase or sale of investments in our funds, the structuring of investment transactions for those funds, the advice we provide or other actions in order to comply with these fiduciary and contractual obligations.

 

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Our ability to retain our senior leadership team and attract additional qualified investment professionals is critical to our success.

Our success depends on our ability to retain our senior leadership team and to recruit additional qualified investment and other professionals. However, we may not be successful in our efforts to retain our senior leadership team, as the market for investment professionals is extremely competitive. The individuals that comprise our senior leadership team possess substantial experience and expertise and, in many cases, have significant relationships. Accordingly, the loss of any one of our senior leadership team could adversely affect certain relationships or limit our ability to successfully execute our investment strategies, which, in turn, could have a material adverse effect on our business, financial condition and results of operations.

We intend to expand our business and may enter into new investment asset classes, new lines of business and/or new markets, which may result in additional risks and uncertainties in our business.

We may grow our business by offering additional products and services and by entering into new investment asset classes, new lines of business and/or new markets. To the extent we enter into new lines of business or expand our existing business, we will face numerous risks and uncertainties, including risks associated with the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk, the required investment of capital and other resources and the loss of fund investors due to the perception that we are no longer focusing on our core business. In addition, we may from time to time explore opportunities to grow our business via acquisitions, partnerships, investments or other strategic transactions. There can be no assurance that we will successfully identify, negotiate or complete such transactions, or that any completed transactions will produce favorable financial results.

Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. In addition, certain aspects of our cost structure, such as costs for compensation, office space and communication and information technology services will be largely fixed, and we may not be able to timely adjust these costs to match fluctuations in revenue related to growing our business or entering into new lines of business. If a new business generates insufficient revenue or if we are unable to efficiently manage our expanded operations, our business, financial condition and results of operations could be materially and adversely affected.

Defaults by investors in our funds could adversely affect that fund’s operations and performance.

Our business is exposed to the risk that fund investors that owe us money may not pay us. If investors in our funds default on their obligations to us, there may be adverse consequences on the investment process, and we could incur losses. For example, investors in most of our funds make capital commitments to those funds that we are entitled to call from those fund investors at any time during prescribed periods. We depend on fund investors fulfilling and honoring their commitments when we call capital from them for those funds to consummate investments and otherwise pay their obligations when due. Any fund investor that did not fund a capital call would be subject to several possible penalties, however, those penalties may not be adequate to make us and the applicable fund whole. A failure of fund investors to honor a significant amount of capital calls for any particular fund or funds could have a material adverse effect on the operation and performance of those funds.

The COVID-19 pandemic has caused severe disruptions in the U.S. and global economy, may affect the investment returns of our funds, has disrupted, and may continue to disrupt, industries in which we and our funds operate and could potentially negatively impact us or our funds.

Over the past year and a half, the COVID-19 pandemic has resulted in a global and national health crisis, adversely impacted global commercial activity and contributed to significant volatility in equity and debt markets. Many countries and states in the United States, including those in which we and our funds operate and in which our properties are located, issued (and in some instances continue to re-issue) orders requiring the

 

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closure of, or certain restrictions on the operation of, nonessential businesses and/or requiring residents to stay at home. The COVID-19 pandemic and preventative measures taken to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both globally and in the United States. Such measures, as well as the general uncertainty surrounding the dangers and impact of the COVID-19 pandemic, have created significant disruption in supply chains and economic activity. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter. While several countries, as well as certain states, counties and cities in the United States, relaxed the early public health restrictions with a view to partially or fully reopening their economies, many cities, both globally and in the United States, have since experienced a surge in the reported number of cases and hospitalizations related to the COVID-19 pandemic. This increase in cases has led to the re-introduction of such restrictions and business shutdowns in certain states, counties and cities in the United States and globally and could lead to the re-introduction of such restrictions elsewhere. In December 2020, the U.S. Food and Drug Administration authorized COVID-19 vaccines and the distribution of such vaccines has commenced. However, it remains unclear how quickly the vaccines will be widely distributed nationwide and globally or when “herd immunity” will be achieved and whether the restrictions that were imposed to slow the spread of the virus will be lifted entirely. Ongoing restrictions and any delay in distributing the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. Even after the COVID-19 pandemic subsides, the U.S. economy and other major global economies may continue to experience a recession, and we anticipate our and our funds’ business and operations could be materially adversely affected by a prolonged recession.

The extent of the impact of the COVID-19 pandemic (including the restrictive measure taken in response thereto) on our and our funds’ operational and financial performance will depend on many factors, including the duration, severity and scope of the public health emergency, the actions taken by governmental authorities to contain its financial and economic impact (including eviction moratoria or rent-control measures), the continued implementation of travel advisories and restrictions, the impact of such public health emergency on overall supply and demand, goods and services, investor liquidity, consumer confidence and levels of economic activity and the extent of its disruption to global, regional and local supply chains and economic markets, all of which are uncertain and difficult to assess.

The effects of a public health crisis such as the COVID-19 pandemic may materially and adversely impact our value and performance and the value and performance of our funds. Further, the impact of the COVID-19 pandemic may not be fully reflected in the valuation of our or our funds’ investments, which may differ materially from the values that we may ultimately realize with respect to such investments. Our valuations, and particularly valuations of our interests in our funds and our funds’ investments, reflect a moment in time, are inherently uncertain, may fluctuate over short periods of time and are often based on subjective estimates, comparisons and qualitative evaluations of private information. Accordingly, we and our funds may incur losses in the future, which could have a material adverse effect on our business, financial condition and results of operations. Any public health emergency, including the COVID-19 pandemic or any outbreak of other existing or new epidemic diseases, or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us, the fair value of our and our funds’ investments and could adversely impact our funds’ ability to fulfill our investment objectives.

Our funds may experience a slowdown in the pace of their investment activity and capital deployment, which could also adversely affect the timing of raising capital for new or successor funds and could also impact the management fees we earn on funds that generate fees based on invested (and not committed) capital. While the increased volatility in the financial markets caused by the COVID-19 pandemic may present attractive investment opportunities, we or our funds may not be able to complete those investments due to, among other factors, increased competition or operational challenges, such as our ability to obtain attractive financing,

 

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conduct due diligence and consummate the acquisition and disposition of investments for our funds because of continued and re-introduced shelter-in-place orders, travel restrictions and social distancing requirements.

The COVID-19 pandemic may adversely impact our business and operations since an extended period of remote working by our employees could strain our technology resources and introduce operational risks, including heightened cybersecurity risk. While we have taken steps to secure our networks and systems, remote working environments may be less secure and more susceptible to hacking attacks, including phishing and social engineering attempts that seek to exploit the COVID-19 pandemic. In addition, our data security, data privacy, investor reporting and business continuity processes could be impacted by a third party’s inability to perform due to the COVID-19 pandemic or by failures of, or attacks on, their information systems and technology. In addition, COVID-19 presents a significant threat to our employees’ well-being and morale, and we may experience potential loss of productivity. If our senior management or other key personnel become ill or are otherwise unable to perform their duties for an extended period of time, we may experience a loss of productivity or a delay in the implementation of certain strategic plans. Further, local COVID-19-related laws can be subject to rapid change depending on public health developments, which can lead to confusion and make compliance with laws uncertain and subject us or our funds to increased risk of litigation for non-compliance.

Fund investors may be unwilling to commit new capital to our funds or advisory accounts as a result of our decision to become a public company, which could materially and adversely affect our business, financial condition and results of operations.

Some of our fund investors may view negatively the prospect of our becoming a publicly traded company, including concerns that as a public company we will shift our focus from the interests of our fund investors to those of our public stockholders. Some of our fund investors may believe that we will strive for near-term profit instead of attractive risk-adjusted returns for our fund investors over time or grow our AUM for the purpose of generating additional management fees without regard to whether we believe there are sufficient investment opportunities to effectively deploy the additional capital. There can be no assurance that we will be successful in our efforts to address such concerns or to convince current or future fund investors that our decision to pursue an initial public offering will not affect our longstanding priorities or the way we conduct our business. A decision by a significant number of our current fund investors or future fund investors not to commit additional capital to our funds or to cease doing business with us altogether could inhibit our ability to achieve our investment objectives and may materially and adversely affect our business, financial condition and results of operations.

Our funds may face risks relating to undiversified investments.

We cannot give assurance as to the degree of diversification that will be achieved in any of our funds. Difficult market conditions or slowdowns affecting a particular asset class, geographic region or other category of investment could have a significant adverse impact on a given fund if its investments are concentrated in that area, which would result in lower investment returns. Accordingly, a lack of diversification on the part of a fund could adversely affect its investment performance and, as a result, our business, financial condition and results of operations.

We may not be able to maintain our desired fee structure as a result of industry pressure from private markets investors to reduce fees, which could have a material adverse effect on our profit margins and results of operations.

We may not be able to maintain our current funds’ fee structures as a result of industry pressure from private markets investors to reduce fees. In order to maintain our desired fee structure in a competitive environment, we must be able to continue to provide fund investors with investment returns and service that incentivize our fund investors to pay our desired fee rates. We cannot assure you that we will succeed in providing investment returns and service that will allow us to maintain our desired fee structure. Fee reductions on existing or future new business could have a material adverse effect on our profit margins and results of operations.

 

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Our risk management strategies and procedures may leave us exposed to unidentified or unanticipated risks.

Risk management applies to our investment management operations as well as to the investments we make for our funds. We have developed and continue to update strategies and procedures specific to our business for managing risks, which include market risk, liquidity risk, operational risk and reputational risk. Management of these risks can be very complex. These strategies and procedures may fail under some circumstances, particularly if we are confronted with risks that we have underestimated or not identified. In addition, some of our methods for managing the risks related to our funds’ investments are based upon our analysis of historical private markets behavior. Statistical techniques are applied to these observations in order to arrive at quantifications of some of our risk exposures. Historical analysis of private markets returns requires reliance on valuations performed by Fund Managers, which may not be reliable measures of current valuations. These statistical methods may not accurately quantify our risk exposure if circumstances arise that were not observed in our historical data. In particular, as we enter new lines of business, our historical data may be incomplete. Failure of our risk management techniques could materially and adversely affect our business, financial condition and results of operations, including our right to receive incentive fees.

The due diligence process that we undertake in connection with investments may not reveal all facts that may be relevant in connection with an investment.

Before making or recommending investments for our fund investors, we conduct due diligence that we deem reasonable and appropriate based on the facts and circumstances applicable to each investment. When conducting due diligence, we may be required to evaluate important and complex business, financial, tax, accounting, environmental and legal issues. Outside consultants, legal advisors and accountants may be involved in the due diligence process in varying degrees depending on the type of investment and the parties involved. Nevertheless, when conducting due diligence and making an assessment regarding an investment, we rely on the resources available to us, including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence investigation that we will carry out with respect to any investment opportunity may not reveal or highlight all relevant facts that are necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in the investment ultimately being successful. Poor investment performance could result in negative reputational effects, which could materially and adversely affect our business, financial condition and results of operations.

Operational risks and data security breaches may disrupt our business, result in losses or limit our growth.

We rely heavily on our financial, accounting, compliance, monitoring, reporting and other data processing systems. Any failure or interruption of these systems, including the loss of data, whether caused by fire, other natural disaster, power or telecommunications failure, computer viruses, act of terrorism or war or otherwise, could result in a disruption of our business, liability to our funds, regulatory intervention or reputational damage, and thus materially and adversely affect our business. Although we have back-up systems in place, including back-up data storage, our back-up procedures and capabilities in the event of a failure or interruption may not be adequate. In recent years, we have substantially upgraded and expanded the capabilities of our data processing systems and other operating technology, and we expect that we will need to continue to upgrade and expand these capabilities in the future to avoid disruption of, or constraints on, our operations. We may incur significant costs to further upgrade our data processing systems and other operating technology in the future. In addition, we are dependent on the effectiveness of our information security policies, procedures and capabilities to protect our computer and telecommunications systems and the data such systems contain or transmit. An external information security breach, such as a “hacker attack,” a virus or worm, or an internal problem with information protection, such as failure to control access to sensitive systems, could materially interrupt our business operations or cause disclosure or modification of sensitive or confidential information. Such a failure could result in material financial loss, regulatory actions, breach of contracts, reputational harm or legal liability, which, in turn, could cause a decline in our earnings or stock price.

 

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In 2017, we were the subject of a cyber-attack against our internal network servers. We promptly took action to (1) secure the affected servers offline and implement new security measures designed to prevent similar cyber-attacks in the future, (2) notify all investors in the affected funds of this security breach, and (3) restore corrupted and stolen data from backup files.

While we and our service providers have established enhanced data-security measures, business continuity plans and information technology systems designed to prevent cyber-attacks from reoccurring in the future, there are inherent limitations in such plans and systems including the possibility that certain risks have not been identified. Similar types of cyber security risks are also present for service providers and other third parties with which we do business. These service providers and other third parties may hold our information or fund investor information and not have the same level of protection as we maintain for their information, or may nevertheless be subject to risk of breach even with enhanced data security measures, any of which could result in material adverse consequences for us.

Finally, we rely on third-party service providers for certain aspects of our business, including for certain information systems and technology and administration of our funds. Any interruption or deterioration in the performance of these third parties or failures of their information systems and technology could impair the quality of the funds’ operations and could affect our reputation and hence adversely affect our business, financial condition and results of operations.

Employee misconduct could harm us by impairing our ability to attract and retain fund investors and subjecting us to significant legal liability and reputational harm.

There is a risk that our employees could engage in misconduct that adversely affects our business. We have a large employee headcount relative to many of our peers due to our vertically integrated business model. We are subject to a number of obligations and standards arising from our advisory and investment management businesses and our discretionary authority over the assets we manage. The violation of these obligations and standards by any of our employees would adversely affect our funds and us. Our business often requires that we deal with confidential matters. If our employees were to improperly use or disclose confidential information, we could be subject to legal or regulatory action and suffer serious harm to our reputation, financial position and current and future business relationships. It is not always possible to detect or deter employee misconduct, and the extensive precautions we take to detect and prevent this activity may not be effective in all cases.

Employee misconduct may include binding us to unauthorized transactions or present unacceptable risks. Losses could also result from actions by third-party service providers, including the misappropriation of assets. We may also be adversely affected if there is misconduct by management or employees of companies involved in real estate projects in which we invest, and we may be unable to control or mitigate such misconduct. Further, although we have adopted measures reasonably designed to prevent and detect employee misconduct and to select reliable third-party service providers, such measures may not be effective in all cases. If one of our employees were to engage in misconduct or were to be accused of such misconduct, our business and our reputation could be materially and adversely affected.

We may face damage to our professional reputation and legal liability if our services are not regarded as satisfactory or for other reasons.

As an investment manager, we depend to a large extent on our relationships with our fund investors and our reputation for integrity and high-caliber professional services to attract and retain fund investors. As a result, if a fund investor is not satisfied with our services, such dissatisfaction may be more damaging to our business than to other types of businesses.

In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against financial advisors has been increasing. Our asset management and advisory activities may subject us to

 

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the risk of significant legal liabilities to our funds and third parties, including our fund investors or beneficiaries, under securities or other laws and regulations for materially false or misleading statements made in connection with securities and other transactions. In our investment management business, we make investment decisions on behalf of our fund investors that could result in substantial losses. Any such losses also may subject us to the risk of legal and regulatory liabilities or actions alleging negligent misconduct, breach of fiduciary duty or breach of contract. These risks often may be difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time. We may incur significant legal expenses in defending litigation. In addition, litigation or regulatory action against us may tarnish our reputation and harm our ability to attract and retain fund investors. Substantial legal or regulatory liability could materially and adversely affect our business, financial condition or results of operations or cause significant reputational harm to us, which could seriously harm our business.

Our failure to appropriately manage conflicts of interest could damage our reputation and adversely affect our business.

Actual, potential or perceived conflicts can give rise to fund investor dissatisfaction, litigation or regulatory enforcement actions. Appropriately managing conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential or actual conflicts of interest. Enforcement action or litigation asserting improper management of conflicts of interest, even if unproven, could harm our reputation and our business in a number of ways, including affecting our ability to raise additional funds causing existing fund investors to reduce or terminate doing business with us.

Certain of our executive officers have not previously managed a public company.

We have historically operated our business as a privately owned company. While certain members of our senior management have experience managing public companies, certain of our executive officers do not have experience managing a publicly traded company. Compliance with public company requirements will place significant additional demands on our management and will require us to enhance our public investor relations, legal, financial and tax reporting, internal audit, compliance with the Sarbanes-Oxley Act of 2002 and corporate communications functions. These additional efforts may strain our resources and divert management’s attention from other business concerns, which could adversely affect our business and profitability.

A change of control of our company could result in an assignment of our investment management agreements.

Under the Investment Advisers Act of 1940, or the Investment Advisers Act, each of the investment management agreements for the funds and other accounts we manage must provide that it may not be assigned without the consent of the particular fund or other account. An assignment may occur under the Investment Advisers Act if, among other things, we or the Operating Company undergoes a change of control. If a change of control transaction occurs, we cannot be certain that our relevant SEC-registered investment adviser subsidiaries will be able to obtain the necessary consents from our funds and other accounts, which could cause us to lose the management fees and performance fees we earn from such funds and other accounts.

In certain circumstances, investors in our funds have the right to remove us as the general partner of the relevant fund and to terminate the investment period or terminate our investment management under certain circumstances, leading to a decrease in our revenues, which could be substantial.

The governing agreements of our funds provide that, subject to certain conditions, investors in those funds have the right to remove us as the general partner of the relevant fund or terminate the fund. Any such removal or dissolution could result in a cessation in management fees we would earn from such funds or a significant reduction in the expected amounts of carried interest or incentive fees from those funds.

 

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We may need to pay “clawback” obligations if and when they are triggered under the governing agreements of our funds.

Generally, if at the termination of a fund and in certain cases at interim points in the life of a fund, the fund has not achieved investment returns that exceed the preferred return threshold, we would be obligated to repay an amount equal to the excess of amounts previously distributed to us over the amounts to which we are ultimately entitled less applicable taxes. This obligation is known as a “clawback” obligation. We cannot assure you that we will not incur a clawback obligation in the future. We may need to use or reserve cash to repay such clawback obligations instead of using the cash for other purposes.

Dependence on leverage by certain funds and investments subjects us to volatility and contractions in the debt financing markets and could adversely affect the ability of our funds to achieve attractive rates of return on those investments.

Our funds rely on the debt financing markets for financing leverage for investments, and volatility or contractions in those markets could impact the performance of our investments or inhibit our ability to make new investments. In addition, it is expected that major banking institutions will transition away from use of the London Interbank Offered Rate, or LIBOR, after 2021, which remains a cause of significant uncertainty in the markets in which we are active. Any such events could adversely affect the availability of credit generally, the cost or terms on which lenders are willing to lend, or the strength of the overall economy.

The absence of available sources of sufficient debt financing for extended periods of time or an increase in either the general levels of interest rates or in the risk spread demanded by sources of indebtedness would make it more expensive to finance those investments. Certain investments may also be financed through fund level debt facilities, which may or may not be available for refinancing at the end of their respective terms. In addition, the interest payments on the indebtedness used to finance our funds’ investments are generally deductible expenses for income tax purposes, subject to limitations under applicable tax law and policy. Any change in such tax law or policy to eliminate or limit these income tax deductions, as has been discussed from time to time in various jurisdictions, would reduce the after-tax rates of return on the affected investments.

Risks Related to Our Industry

The investment management business is intensely competitive.

The investment management business is intensely competitive, with competition based on a variety of factors, including investment performance, the quality of service provided to fund investors, brand recognition and business reputation. Our investment management business competes with a variety of traditional and alternative asset managers, commercial banks, investment banks and other financial institutions. A number of factors serve to increase our competitive risks:

 

•  some of our competitors have more relevant experience, greater financial and other resources and more personnel than we do;

 

•  there are relatively few barriers to entry impeding new asset management firms, including a relatively low cost of entering these lines of business, and the successful efforts of new entrants into our various lines of business have resulted in increased competition;

 

•  if, as we expect, allocation of assets to alternative investment strategies increases, there may be increased competition for alternative investments and access to fund general partners and managers;

 

•  certain investors may prefer to invest with private partnerships; and

 

•  other industry participants will from time to time seek to recruit our investment professionals and other employees away from us.

 

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This competitive pressure could adversely affect our ability to make successful investments and restrict our ability to raise future funds, either of which would materially and adversely impact our business, financial condition and results of operations.

Difficult market conditions can adversely affect our business by reducing the market value of the assets we manage or causing our fund investors to reduce their investments.

The future global market and economic climate may deteriorate because of many factors beyond our control, including rising interest rates or inflation, the availability of credit, changes in laws, terrorism, the effect of pandemic diseases, such as COVID-19 or any variation thereof, or political uncertainty. We may not be able to or may choose not to manage our exposure to certain of these market conditions. Market deterioration could cause us or the funds we manage to experience tightening of liquidity, reduced earnings and cash flow, and impairment charges, as well as challenges in raising additional capital, obtaining investment financing and making investments on attractive terms. These market conditions can also have an impact on our ability to liquidate positions in a timely and efficient manner.

Our business could generate lower revenue in a general economic downturn or a tightening of global credit markets. A general economic downturn or tightening of global credit markets may result in reduced opportunities to find suitable investments and make it more difficult for us or our funds to exit and realize value from existing investments, potentially resulting in a decline in the value of the investments held in our funds. Such a decline could cause our revenue and net income to decline.

A general economic downturn or a tightening of global credit markets may also reduce the commitments our fund investors are able to devote to alternative investments generally and make it more difficult for our funds to obtain funding for additional investments at attractive rates, which would further reduce our profitability.

Our profitability may also be adversely affected by our fixed costs and the possibility that we would be unable to scale back other costs within a time frame sufficient to match any decreases in revenue relating to changes in market and economic conditions. If our revenue declines without a commensurate reduction in our expenses, our net income will be reduced. Accordingly, difficult market conditions could materially and adversely affect our business, financial condition and results of operations.

Increased government regulation, compliance failures and changes in law or regulation could adversely affect us and the operation of our funds.

Governmental authorities around the world in recent years have called for or implemented financial system and participant regulatory reform in reaction to volatility and disruption in the global financial markets, financial institution failures and financial frauds. Such reform includes, among other things, additional regulation of investment funds, as well as their managers and activities, including compliance, risk management and anti-money laundering procedures; restrictions on specific types of investments and the provision and use of leverage; implementation of capital requirements; limitations on compensation to managers; and books and records, reporting and disclosure requirements. We cannot predict with certainty the impact on us, our funds, or on private markets funds generally, of any such reforms. Any of these regulatory reform measures could have an adverse effect on our funds’ investment strategies or our business model. We may incur significant expense in order to comply with such reform measures. Additionally, legislation, including proposed legislation regarding executive compensation and taxation of carried interest, may adversely affect our ability to attract and retain key personnel.

Our advisory and investment management businesses are subject to regulation in the United States, including by the Securities and Exchange Commission, or the SEC, the Commodity Futures Trading Commission, or the CFTC, the Internal Revenue Service, or the IRS and other regulatory agencies, pursuant to, among other laws, the Investment Advisers Act, the Securities Act, the Internal Revenue Code of 1986, as amended, or the Code, and the Securities Exchange Act of 1934, as amended, or the Exchange Act. Any change in such regulation or

 

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oversight may have a material adverse impact on our operating results. Our failure to comply with applicable laws or regulations could result in fines, suspensions of personnel or other sanctions, including revocation of our registration as an investment adviser. Even if a sanction imposed against us or our personnel is small in monetary amount, the adverse publicity arising from the imposition of sanctions against us by regulators could harm our reputation and cause us to lose existing fund investors or fail to gain new fund investors.

As a result of recent highly publicized financial scandals, investors have exhibited concerns over the integrity of the U.S. financial markets, and the regulatory environment in which we operate is subject to further regulation in addition to those rules already promulgated. For example, there are a significant number of new and proposed regulations that may affect our business under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act. The SEC in particular has increased its regulation of the asset management and the private equity industry in recent years, focusing on the private equity industry’s fees, allocation of expenses to funds, valuation practices, allocation of fund investment opportunities, disclosures to fund investors, the allocation of broken-deal expenses and general conflicts of interest disclosures. The SEC has also heightened its focus on the valuation processes employed by investment advisers. The lack of readily ascertainable market prices for many of the investments made by our funds could subject our valuation policies and processes to increased scrutiny by the SEC. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or foreign governmental regulatory authorities or self-regulatory organizations that supervise the financial markets.

Our tenant insurance business is subject to significant governmental regulation. The regulatory authorities generally have broad discretion to grant, renew and revoke licenses and approvals, to promulgate, interpret and implement regulations, and to evaluate compliance with regulations through periodic examinations, audits and investigations of the affairs of insurance providers. As a result of regulatory or private action in any jurisdiction, we may be temporarily or permanently suspended from continuing some or all of our insurance activities, or otherwise fined or penalized or suffer an adverse judgment, which could adversely affect our business and results of operations.

In addition, we are registered as an investment adviser with the SEC and we are subject to the requirements and regulations of the Investment Advisers Act. Such requirements relate to, among other things, restrictions on entering into transactions with fund investors, maintaining an effective compliance program, incentive fees, solicitation arrangements, allocation of investments, recordkeeping and reporting requirements, disclosure requirements, limitations on agency cross and principal transactions between an adviser and their advisory clients, as well as general anti-fraud prohibitions. As a registered investment adviser, we have fiduciary duties to our fund investors. A failure to comply with the obligations imposed by the Advisers Act, including recordkeeping, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities, could result in investigations, sanctions and reputational damage, and could materially and adversely affect our business, financial condition and results of operations.

Federal, state and foreign anti-corruption and sanctions laws create the potential for significant liabilities and penalties and reputational harm.

We are also subject to a number of laws and regulations governing payments and contributions to political persons or other third parties, including restrictions imposed by the Foreign Corrupt Practices Act, or the FCPA, as well as trade sanctions and export control laws administered by the Office of Foreign Assets Control, or OFAC, the U.S. Department of Commerce and the U.S. Department of State. The FCPA is intended to prohibit bribery of foreign governments and their officials and political parties, and requires public companies in the United States to keep books and records that accurately and fairly reflect those companies’ transactions. OFAC, the U.S. Department of Commerce and the U.S. Department of State administer and enforce various export control laws and regulations, including economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and individuals. These laws and regulations relate to a number of aspects of our business, including servicing existing fund investors and finding new fund investors.

 

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Similar laws in non-U.S. jurisdictions, such as EU sanctions or the U.K. Bribery Act, as well as other applicable anti-bribery, anti-corruption, anti-money laundering, or sanction or other export control laws in the U.S. and abroad, may also impose stricter or more onerous requirements than the FCPA, OFAC, the U.S. Department of Commerce and the U.S. Department of State, and implementing them may disrupt our business or cause us to incur significantly more costs to comply with those laws. Different laws may also contain conflicting provisions, making compliance with all laws more difficult. If we fail to comply with these laws and regulations, we could be exposed to claims for damages, civil or criminal financial penalties, reputational harm, incarceration of our employees, restrictions on our operations and other liabilities, which could negatively affect our business, operating results and financial condition. In addition, we may be subject to successor liability for FCPA violations or other acts of bribery, or violations of applicable sanctions or other export control laws committed by companies in which we invest or which we acquire. While we have developed and implemented policies and procedures designed to ensure strict compliance by us and our personnel with the FCPA and other anti-corruption, sanctions and export control laws in jurisdictions in which we operate, such policies and procedures may not be effective in all instances to prevent violations. Any determination that we have violated the FCPA or other applicable anti-corruption, sanctions or export control laws could subject us to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunctions on future conduct, securities litigation and a general loss of investor confidence, any one of which could adversely affect our business prospects, financial condition, results of operations or the market value of our Class A common stock.

Regulation of investment advisors outside the United States could adversely affect our ability to operate our business.

We provide investment advisory and other services and raise funds in a number of countries and jurisdictions outside the United States. In many of these countries and jurisdictions, which include the European Union, or the EU, the European Economic Area, or the EEA, the individual member states of each of the EU and EEA, South Korea, the Cayman Islands and Canada, we and our operations, and in some cases our personnel, are subject to regulatory oversight and requirements. In general, these requirements relate to registration, licenses, periodic inspections, the provision and filing of periodic reports, and obtaining certifications and other approvals. Across the EU, we are subject to the European Union Alternative Investment Fund Managers Directive, or the AIFMD, under which we are subject to regulatory requirements regarding, among other things, registration for marketing activities, the structure of remuneration for certain of our personnel and reporting obligations. Individual member states of the EU have imposed additional requirements that may include internal arrangements with respect to risk management, liquidity risks, asset valuations, and the establishment and security of depository and custodial requirements. Because some EEA countries have not yet incorporated the AIFMD into their agreement with the EU, we may undertake marketing activities and provide services in those EEA countries only in compliance with applicable local laws. Outside the EEA, the regulations to which we are subject primarily relate to registration and reporting obligations.

It is expected that additional laws and regulations will come into force in the EEA, the EU, and other countries in which we operate over the coming years. These laws and regulations may affect our costs and manner of conducting business in one or more markets, the risks of doing business, the assets that we manage or advise, and our ability to raise capital from fund investors. In addition, the exit of the United Kingdom from the EU may have adverse economic, political and regulatory effects on the operation of our business. Any failure by us to comply with either existing or new laws or regulations could have a material adverse effect on our business, financial condition and results of operations.

 

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Risks Related to Our Organizational Structure

Our principal asset after the completion of this offering will be our interest in the Operating Company, and, as a result, we will depend on distributions from the Operating Company to pay our taxes and expenses, including payments under the Tax Receivable Agreement and to pay dividends to holders of our Class A common stock. The Operating Company’s ability to make such distributions may be subject to various limitations and restrictions.

Upon the consummation of the Transactions, we will be a holding company and will have no material assets other than our ownership of Class A Units. As such, we will have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses or declare and pay dividends in the future, if any, will be dependent upon the financial results and cash flows of the Operating Company and its subsidiaries and distributions we receive from the Operating Company. There can be no assurance that the Operating Company and its subsidiaries will generate sufficient cash flow to distribute funds to us or that applicable state law and contractual restrictions, including negative covenants in our debt instruments, will permit such distributions. Although the Operating Company is not currently subject to any debt instruments or other agreements that would restrict its ability to make distributions to us, the terms of our Credit Facilities restrict the ability of our subsidiaries to pay dividends to the Operating Company.

The Operating Company will continue to be treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax. Instead, any taxable income of the Operating Company will be allocated to holders of Class A Units, including us. Accordingly, we will incur income taxes on our allocable share of any net taxable income of the Operating Company. Under the terms of the Operating Company Agreement, the Operating Company will be obligated, subject to various limitations and restrictions, including with respect to our debt agreements, to make tax distributions to holders of Class A Units, including us. In addition to tax expenses, we will also incur expenses related to our operations, including payments under the Tax Receivable Agreement, which we expect could be significant. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.” We intend, as its managing member, to cause the Operating Company to make cash distributions to the holders of Class A Units in an amount sufficient to (1) fund all or part of their tax obligations in respect of taxable income allocated to them and (2) cover our operating expenses, including payments under the Tax Receivable Agreement. However, the Operating Company’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which the Operating Company is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering the Operating Company insolvent. If we do not have sufficient funds to pay tax or other liabilities, or to fund our operations (including, if applicable, as a result of an acceleration of our obligations under the Tax Receivable Agreement), we may have to borrow funds, which could materially and adversely affect our liquidity and financial condition, and subject us to various restrictions imposed by any lenders of such funds. To the extent we are unable to make timely payments under the Tax Receivable Agreement for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the Tax Receivable Agreement resulting in the acceleration of payments due under the Tax Receivable Agreement. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement” and “Certain Relationships and Related Party Transactions—Operating Company LLC Agreement—Distributions.” In addition, if the Operating Company does not have sufficient funds to make distributions, our ability to declare and pay cash dividends will also be restricted or impaired. See “—Risks Related to the Offering and Ownership of our Class A Common Stock” and “Dividend Policy.”

Under the Operating Company Agreement, we intend to cause the Operating Company, from time to time, to make distributions in cash to its equityholders (including us) in amounts sufficient to cover the taxes imposed on their allocable share of taxable income of the Operating Company. As a result of (1) potential differences in the amount of net taxable income allocable to us and to the Operating Company’s other equityholders, (2) the lower

 

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tax rate applicable to corporations as opposed to individuals, and (3) certain tax benefits that we anticipate from (a) future purchases or redemptions of Class A Units from the Continuing Equity Owners, (b) payments under the Tax Receivable Agreement and (c) any acquisition of interests in the Operating Company from other equityholders in connection with the consummation of the Transactions, these tax distributions may be in amounts that exceed our tax liabilities. Our board of directors will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses, the payment of obligations under the Tax Receivable Agreement and the payment of other expenses. We will have no obligation to distribute such cash (or other available cash) to our stockholders. No adjustments to the exchange ratio for Class A Units and corresponding shares of Class A common stock will be made as a result of any cash distribution by us or any retention of cash by us. To the extent we do not distribute such excess cash as dividends on our Class A common stock we may take other actions with respect to such excess cash, for example, holding such excess cash, or lending it (or a portion thereof) to the Operating Company, which may result in shares of our Class A common stock increasing in value relative to the value of Class A Units. The holders of Class A Units may benefit from any value attributable to such cash balances if they acquire shares of Class A common stock in exchange for their Class A Units, notwithstanding that such holders may have participated previously as holders of Class A Units in distributions that resulted in such excess cash balances.

The Tax Receivable Agreement with the Continuing Equity Owners requires us to make cash payments to them in respect of certain tax benefits to which we may become entitled, and we expect that such payments will be substantial.

In connection with the consummation of this offering, we will enter into a Tax Receivable Agreement with the Operating Company and each of the Continuing Equity Owners. Under the Tax Receivable Agreement, we will be required to make cash payments to the Continuing Equity Owners equal to 85% of the tax benefits, if any, that we actually realize, or in certain circumstances are deemed to realize, as a result of (1) the increases in our allocable share of the tax basis of the Operating Company’s assets resulting from (a) the purchase of Class A Units directly from the Operating Company and the partial redemption of Class A Units by the Operating Company as described under “Use of Proceeds,” (b) any future redemptions or exchanges of Class A Units from the Continuing Equity Owners as described under “Certain Relationships and Related Party Transactions—Operating Company LLC Agreement—Common Unit Redemption Right,” and (c) certain distributions (or deemed distributions) by the Operating Company; (2) our 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 this offering), which tax basis is allocated to the Class A Units being redeemed or exchanged and acquired by us and (3) certain other tax benefits arising from payments under the Tax Receivable Agreement. We expect that the amount of the cash payments we will be required to make under the Tax Receivable Agreement will be substantial.

Assuming no material changes in the relevant tax law and that we earn sufficient taxable income to realize all tax benefits that are subject to the Tax Receivable Agreement, we expect that the reduction in tax payments for us associated with the tax attributes described above would aggregate to approximately $507.1 million over 20 years from the date of this offering based on an initial public offering price of $16.00 per share of our Class A common stock, which is the midpoint of the price range set forth on the front cover of this prospectus, and assuming all future sales of Class A Units in exchange for our Class A common stock would occur on the one-year anniversary of this offering at such price. In this scenario, we estimate that we would be required to pay the Continuing Equity Owners 85% of such amount, or $431.0 million over the 20-year period from the date of this offering. The actual amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and Tax Receivable Agreement payments by us will be determined in part by reference to the market value of our Class A common stock at the time of the sale and the prevailing tax rates applicable to us over the life of the Tax Receivable Agreement and will be dependent on us generating sufficient future taxable income to realize the benefit. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

 

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Any payments made by us to the Continuing Equity Owners under the Tax Receivable Agreement will not be available for reinvestment in our business and will generally reduce the amount of overall cash flow that might have otherwise been available to us. To the extent that we are unable to make timely payments under the Tax Receivable Agreement for any reason, the unpaid amounts will be deferred and will accrue interest until paid by us. Payments under the Tax Receivable Agreement are not conditioned upon one or more of the Continuing Equity Owners maintaining a continued ownership interest in the Operating Company. Furthermore, our future obligation to make payments under the Tax Receivable Agreement could make us a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the Tax Receivable Agreement. For more information, see “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.” The actual existing tax basis the actual increase in tax basis, and the actual utilization of any resulting tax benefits, as well as the amount and timing of any payments under the Tax Receivable Agreement, will vary depending upon a number of factors including the timing of redemptions by the Continuing Equity Owners; the price of shares of our Class A common stock at the time of the exchange; the extent to which such exchanges are taxable; the amount of gain recognized by such Continuing Equity Owners; the amount and timing of the taxable income allocated to us or otherwise generated by us in the future; the portion of our payments under the Tax Receivable Agreement constituting imputed interest; and the federal and state tax rates then applicable.

Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the Continuing Equity Owners that will not benefit holders of our Class A common stock to the same extent that it will benefit the Continuing Equity Owners.

Our organizational structure, including the Tax Receivable Agreement, confers certain benefits upon the Continuing Equity Owners that will not benefit the holders of our Class A common stock to the same extent that it will benefit the Continuing Equity Owners. We will enter into the Tax Receivable Agreement with the Operating Company and the Continuing Equity Owners in connection with the completion of the Transactions, which will provide for the payment by us to the Continuing Equity Owners of 85% of the amount of tax benefits, if any, that we actually realize, or in some circumstances are deemed to realize, as a result of (1) increases in our allocable share of the tax basis of the Operating Company’s assets resulting from (a) the purchase of Class A Units directly from the Operating Company and, the partial redemption of Class A Units by the Operating Company as described under “Use of Proceeds,” (b) any future redemptions or exchanges of Class A Units from the Continuing Equity Owners as described under “Certain Relationships and Related Party Transactions—Operating Company LLC Agreement—Common Unit Redemption Right” and (c) certain distributions (or deemed distributions) by the Operating Company; (2) our 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 this offering), which tax basis is allocated to the Class A Units being redeemed or exchanged and acquired by Bridge Investment Group Holdings Inc. and (3) certain other tax benefits arising from payments under the Tax Receivable Agreement. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.” Although we will retain 15% of the amount of such tax benefits, this and other aspects of our organizational structure may adversely impact the future trading market for the Class A common stock.

In certain cases, payments under the Tax Receivable Agreement to the Continuing Equity Owners may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement.

The Tax Receivable Agreement will provide that if (1) we materially breach any of our material obligations under the Tax Receivable Agreement, (2) certain mergers, asset sales, other forms of business combinations or other changes of control were to occur after the consummation of this offering, or (3) we elect an early termination of the Tax Receivable Agreement, then our obligations, or our successor’s obligations, under the Tax Receivable Agreement to make payments would be based on certain assumptions, including an assumption that we would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the Tax Receivable Agreement.

 

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As a result of the foregoing, we would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the Tax Receivable Agreement, based on certain assumptions, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits. We could also be required to make cash payments to the Continuing Equity Owners that are greater than the specified percentage of any actual benefits we ultimately realize in respect of the tax benefits that are subject to the Tax Receivable Agreement. In these situations, our obligations under the Tax Receivable Agreement could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that we will be able to fund or finance our obligations under the Tax Receivable Agreement. We may need to incur debt to finance payments under the Tax Receivable Agreement to the extent our cash resources are insufficient to meet our obligations under the Tax Receivable Agreement as a result of timing discrepancies or otherwise.

We will not be reimbursed for any payments made to the Continuing Equity Owners under the Tax Receivable Agreement in the event that any tax benefits are disallowed.

Payments under the Tax Receivable Agreement will be based on the tax reporting positions that we determine, and the U.S. Internal Revenue Service, or the IRS, or another tax authority, may challenge all or part of the tax basis increases or other tax benefits we claim, as well as other related tax positions we take, and a court could sustain such challenge. We will not be reimbursed for any cash payments previously made to the Continuing Equity Owners under the Tax Receivable Agreement in the event that any tax benefits initially claimed by us and for which payment has been made to a Continuing Equity Owner are subsequently challenged by a taxing authority and are ultimately disallowed. Instead, any excess cash payments made by us to a Continuing Equity Owner will be netted against any future cash payments we might otherwise be required to make to such Continuing Equity Owner under the terms of the Tax Receivable Agreement. However, we might not determine that we have effectively made an excess cash payment to a Continuing Equity Owner for a number of years following the initial time of such payment and, if any of our tax reporting positions are challenged by a taxing authority, we will not be permitted to reduce any future cash payments under the Tax Receivable Agreement until any such challenge is finally settled or determined. Moreover, the excess cash payments we made previously under the Tax Receivable Agreement could be greater than the amount of future cash payments against which we would otherwise be permitted to net such excess. The applicable U.S. federal income tax rules for determining applicable tax benefits we may claim are complex and fact-specific in nature, and there can be no assurance that the IRS or a court will not disagree with our tax reporting positions. As a result, payments could be made under the Tax Receivable Agreement significantly in excess of any actual cash tax savings that we realize in respect of the tax attributes with respect to any Continuing Equity Owner that are the subject of the Tax Receivable Agreement.

Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.

We are subject to taxes by U.S. federal, state, local and foreign tax authorities. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

 

   

allocation of expenses to and among different jurisdictions;

 

   

changes in the valuation of our deferred tax assets and liabilities;

 

   

expected timing and amount of the release of any tax valuation allowances;

 

   

tax effects of stock-based compensation;

 

   

costs related to intercompany restructurings;

 

   

changes in tax laws, tax treaties, regulations or interpretations thereof; or

 

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lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates.

In addition, we may be subject to audits of our income, sales and other taxes by U.S. federal, state, and local and foreign taxing authorities. Outcomes from these audits could have an adverse effect on our operating results and financial condition.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act, including as a result of our ownership of the Operating Company, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (1) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities, or (2) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act.

We and the Operating Company intend to conduct our operations so that we will not be deemed an investment company. As the sole managing member of the Operating Company, we will control and operate the Operating Company. On that basis, we believe that our interest in the Operating Company is not an “investment security” as that term is used in the 1940 Act. However, if we were to cease participation in the management of the Operating Company, or if the Operating Company itself becomes an investment company, our interest in the Operating Company could be deemed an “investment security” for purposes of the 1940 Act.

If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to enforce contracts with third parties and that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company. If we were required to register as an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Risks Related to the Offering and Ownership of Class A Common Stock

The Continuing Equity Owners will continue to have significant influence over us after this offering, including control over decisions that require the approval of stockholders.

Upon consummation of this offering, the Continuing Equity Owners will control, in the aggregate, approximately 97.6% of the voting power represented by all our outstanding classes of stock. As a result, the Continuing Equity Owners will continue to exercise significant influence over all matters requiring stockholder approval, including the election and removal of directors and the size of our board of directors, any amendment of our amended and restated certificate of incorporation or bylaws and any approval of significant corporate transactions (including a sale of all or substantially all of our assets), and will continue to have significant control over our business, affairs and policies, including the appointment of our management. The directors that Continuing Equity Owners elect have the authority to vote to authorize the Company to incur additional debt, issue or repurchase stock, declare dividends and make other decisions that could be detrimental to stockholders.

We expect that members of our board of directors will continue to be appointed by and/or affiliated with the Continuing Equity Owners who will have the ability to appoint the majority of directors. The Continuing Equity

 

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Owners can take actions that have the effect of delaying or preventing a change of control of us or discouraging others from making tender offers for our shares, which could prevent stockholders from receiving a premium for their shares. These actions may be taken even if other stockholders oppose them. The concentration of voting power with the Continuing Equity Owners may have an adverse effect on the price of our Class A common stock. The Continuing Equity Owners may have interests that are different from yours and may vote in a way with which you disagree and that may be adverse to your interests.

We cannot predict the effect our dual class structure may have on the market price of our Class A common stock.

We cannot predict whether our dual class structure will result in a lower or more volatile market price of our Class A common stock, in adverse publicity, or other adverse consequences. For example, certain index providers have announced restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell announced that it plans to require new constituents of its indices to have greater than 5% of the company’s voting rights in the hands of public stockholders, and S&P Dow Jones announced that it will no longer admit companies with multiple-class share structures to certain of its indices. Affected indices include the Russell 2000 and the S&P 500, S&P MidCap 400, and S&P SmallCap 600, which together make up the S&P Composite 1500. Also in 2017, MSCI, a leading stock index provider, opened public consultations on their treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices and in October 2018, MSCI announced its decision to include equity securities “with unequal voting structures” in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under such announced policies, the dual class structure of our stock would make us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to track those indices would not invest in our Class A common stock. These policies are relatively new and it is unclear what effect, if any, they will have on the valuations of publicly traded companies excluded from such indices, but it is possible they may depress valuations, compared to similar companies that are included. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices would likely preclude investment by many of these funds and could make our Class A common stock less attractive to other investors. As a result, the market price of our Class A common stock could be adversely affected.

We are a “controlled company” within the meaning of the NYSE rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You may not have the same protections afforded to stockholders of companies that are subject to such corporate governance requirements.

After the consummation of the Transactions, the parties to the Stockholders Agreement will have more than 50% of the voting power for the election of directors, and, as a result, we will be considered a “controlled company” within the meaning of the NYSE rules. As such, we will qualify for, and intend to rely on, exemptions from certain corporate governance requirements, including the requirements to have a majority of independent directors on our board of directors, an entirely independent nominating and corporate governance committee, an entirely independent compensation committee or to perform annual performance evaluations of the nominating and corporate governance and compensation committees.

The corporate governance requirements and, specifically, the independence standards are intended to ensure directors who are considered independent are free of any conflicting interest that could influence their actions as directors. Following this offering, we intend to utilize certain exemptions afforded to a “controlled company.” As a result, we will not be subject to certain corporate governance requirements, including that a majority of our board of directors consists of “independent directors,” as defined under the NYSE rules. Therefore, immediately following the consummation of the Transactions, we do not intend to have a majority of independent directors on our board of directors, or to have a nominating and corporate governance committee or compensation committee (or perform annual performance evaluations of nominating and corporate governance and compensation committees, if any) unless and until such time as we are required to do so.

 

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Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of the NYSE rules. Our status as a controlled company could make our Class A common stock less attractive to some investors or otherwise harm our stock price.

The JOBS Act will allow us to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC. We cannot be certain if this reduced disclosure will make our Class A common stock less attractive to investors.

The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies.” As defined in the JOBS Act, a public company whose initial public offering of common equity securities occurs after December 8, 2011, and whose annual net revenues are less than $1.07 billion will, in general, qualify as an “emerging growth company” until the earliest of:

 

   

the last day of its fiscal year following the fifth anniversary of the date of its initial public offering of common equity securities;

 

   

the last day of its fiscal year in which it has annual gross revenue of $1.07 billion or more;

 

   

the date on which it has, during the previous three-year period, issued more than $1.07 billion in nonconvertible debt; and

 

   

the date on which it is deemed to be a “large accelerated filer, ” which will occur at such time as the company (1) has an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of its most recently completed second fiscal quarter, (2) has been required to file annual and quarterly reports under the Exchange Act for a period of at least 12 months, and (3) has filed at least one annual report pursuant to the Exchange Act.

Under this definition, we will be an “emerging growth company” upon completion of this offering and could remain an “emerging growth company” until as late as the fifth anniversary of the completion of this offering. For so long as we are an “emerging growth company,” we will, among other things:

 

   

only be required to have two years of audited financial statements and two years of related management’s discussion and analysis of financial condition and results of operations disclosure;

 

   

not be required to engage an auditor to report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

 

   

not be required to comply with the requirement of the PCAOB, regarding the communication of critical audit matters in the auditor’s report on the financial statements;

 

   

not be required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”; and

 

   

not be required to comply with certain disclosure requirements related to executive compensation, such as the requirement to present a comparison of our Chief Executive Officer’s compensation to our median employee compensation.

In addition, Section 107 of the JOBS Act provides that an emerging growth company can use the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This permits 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 use this extended transition period and, as a result, our combined financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to other public companies.

We cannot predict if investors will find our Class A common stock less attractive as a result of our decision to take advantage of some or all of the reduced disclosure requirements above. If some investors find our Class A

 

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common stock less attractive as a result, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.

Our management team will have immediate and broad discretion over the use of the net proceeds from this offering and may not use them effectively.

We currently intend to use a portion of the net proceeds from this offering to purchase Class A Units directly from the Operating Company and the remainder, if any, for general corporate purposes. See “Use of Proceeds.” Other than the uses described, our management will have broad discretion in the application of the net proceeds. Our shareholders may not agree with how our management chooses to allocate the net proceeds from this offering. The failure by our management to apply these funds effectively could have a material adverse effect on our business, financial condition, and results of operations. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income. The decisions made by our management may not result in positive returns on your investment and you will not have an opportunity to evaluate the economic, financial, or other information upon which our management bases its decisions.

We may pay dividends to our stockholders, but our ability to do so is subject to the discretion of our board of directors and may be limited by our holding company structure and applicable provisions of Delaware law.

Our current intention is to pay to holders of Class A common stock a quarterly dividend representing substantially all of Bridge Investment Group Holdings Inc.’s share of Distributable Earnings, subject to adjustment by amounts determined by our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments and clawback obligations. All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our board of directors and our board of directors may change our dividend policy at any time, including, without limitation, to reduce such quarterly dividends or even to eliminate dividends entirely. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, general and economic conditions, our results of operations and financial condition, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions, and such other factors that our board of directors may deem relevant. In addition, our ability to pay dividends is, and may be, limited by covenants of existing and any future outstanding indebtedness we or our subsidiaries incur, including under our Credit Facilities. Therefore, any return on investment in our Class A common stock is solely dependent upon the appreciation of the price of our Class A common stock on the open market, which may not occur. See “Dividend Policy” for more detail.

In addition, as a holding company, we will be dependent upon the ability of the Operating Company to generate earnings and cash flows and distribute them to us so that we may pay our obligations and expenses (including our taxes and payments under the Tax Receivable Agreement) and pay dividends to our stockholders. Our ability to declare and pay dividends to our stockholders is also subject to Delaware law (which may limit the amount of funds available for dividends). If, as a consequence of these various limitations and restrictions, we are unable to generate sufficient distributions from our business, we may not be able to make, or may be required to reduce or eliminate, the payment of dividends on our Class A common stock.

No market currently exists for our Class A common stock, and an active, liquid trading market for our Class A common stock may not develop, which may cause our Class A common stock to trade at a discount from the initial offering price and make it difficult for you to sell the Class A common stock you purchase.

Prior to this offering, there has not been a public market for our Class A common stock. We cannot predict the extent to which investor interest in us will lead to the development of a trading market or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have

 

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difficulty selling any of our Class A common stock that you purchase at a price above the price you purchase it or at all. The initial public offering price for the shares will be determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. The failure of an active and liquid trading market to develop and continue would likely have a material adverse effect on the value of our Class A common stock. The market price of our Class A common stock may decline below the initial offering price, and you may not be able to sell your shares of our Class A common stock at or above the price you paid in this offering, or at all. An inactive market may also impair our ability to raise capital to continue to fund operations by selling shares and may impair our ability to acquire other companies or assets by using our shares as consideration.

Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters and the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

Our amended and restated certificate of incorporation will provide (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, or the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, the exclusive forum provision shall not apply to claims seeking to enforce any liability or duty created by the Exchange Act as the Exchange Act provides that federal courts are the sole forum for claims under the Exchange Act. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation.

Our amended and restated certificate of incorporation will provide that the doctrine of “corporate opportunity” will not apply with respect to any director or stockholder who is not employed by us or our subsidiaries.

The doctrine of corporate opportunity generally provides that a corporate fiduciary may not develop an opportunity using corporate resources, acquire an interest adverse to that of the corporation or acquire property that is reasonably incident to the present or prospective business of the corporation or in which the corporation has a present or expectancy interest, unless that opportunity is first presented to the corporation and the corporation chooses not to pursue that opportunity. The doctrine of corporate opportunity is intended to preclude officers or directors or other fiduciaries from personally benefiting from opportunities that belong to the corporation. Our amended and restated certificate of incorporation will provide that the doctrine of “corporate opportunity” will not apply with respect to any director or stockholder who is not employed by us or our

 

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subsidiaries. Any director or stockholder who is not employed by us or our subsidiaries will, therefore, have no duty to communicate or present corporate opportunities to us, and will have the right to either hold any corporate opportunity for their (and their affiliates’) own account and benefit or to recommend, assign or otherwise transfer such corporate opportunity to persons other than us, including to any director or stockholder who is not employed by us or our subsidiaries.

As a result, certain of our stockholders, directors and their respective affiliates will not be prohibited from operating or investing in competing businesses. We, therefore, may find ourselves in competition with certain of our stockholders, directors or their respective affiliates, and we may not have knowledge of, or be able to pursue, transactions that could potentially be beneficial to us. Accordingly, we may lose a corporate opportunity or suffer competitive harm, which could negatively impact our business, operating results and financial condition.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our Class A common stock to decline.

After this offering, the sale of shares of our Class A common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon consummation of the Transactions, we will have outstanding a total of 21,752,812 shares of Class A common stock. Of the outstanding shares, the 18,750,000 shares sold in this offering (or 21,562,500 shares if the underwriters exercise in full their option to purchase additional shares) will be freely tradable without restriction or further registration under the Securities Act, other than any shares held by our affiliates. In addition, the shares of Class A common stock issued to the Blocker Shareholder in the Transactions will be eligible for resale pursuant to Rule 144 without restriction or further registration under the Securities Act, other than affiliate restrictions under Rule 144. Any shares of Class A common stock held by our affiliates will be eligible for resale pursuant to Rule 144 under the Securities Act, subject to the volume, manner of sale, holding period and other limitations of Rule 144.

We, our officers and directors and substantially all of our stockholders have agreed that, without the prior written consent of the representatives on behalf of the underwriters and subject to existing pledges as of the date of this prospectus, we will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our Class A common stock or any securities convertible into or exercisable or exchangeable for shares of Class A common stock; (2) file any registration statement with the SEC relating to the offering of any shares of Class A common stock or any securities convertible into or exercisable or exchangeable for Class A common stock; or (3) enter into any swap, hedge, option, derivative or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our Class A common stock, in each case, whether any such transaction described above is to be settled by delivery of our Class A common stock or such other securities, in cash or otherwise.

In addition, our employees have agreed that, without the prior written consent of a majority of our board of directors and subject to existing pledges as of the date of this prospectus, they will not: (1) sell, transfer, assign, gift, bequest or dispose by any other means, whether for value or no value and whether voluntary or involuntary or (2) grant a security interest, lien, charge, claim, community or other marital property interest, pledge, alienate, mortgage, option, hypothecate, encumber or make a similar collateral assignment by any other means, whether for value or no value and whether voluntary or involuntary, or grant any other restriction on use, voting (excluding any voting rights or proxies granted pursuant to the Stockholders Agreement), transfer, receipt of income or exercise of any other attribute of ownership on any of the LLC Interests, shares of our Class A common stock and shares of our Class B common stock (or beneficial interest therein), issued and outstanding

 

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upon the completion of this offering (other than any restricted shares or issuer-directed shares purchased in this offering or in the open market in accordance with our insider trading or other applicable policy, and after giving effect to any shares sold by such employee in this offering) beneficially owned by such employee, or the existing interests.

The restrictions described in the immediately preceding paragraph will cease to apply to our employees, other than Robert Morse, Jonathan Slager, Adam O’Farrell, Dean Allara and Chad Briggs, commencing on or after the first anniversary of the completion of this offering.

The restrictions described in the immediately preceding paragraph will cease to apply to Messrs. Morse, Slager, O’Farrell, Allara and Briggs as follows:

 

   

on or after the first anniversary of the completion of this offering, each of Messrs. Morse, Slager, O’Farrell, Allara and Briggs may transfer or encumber up to one-third of his vested existing interests;

 

   

on or after the second anniversary of the completion of this offering, each of Messrs. Morse, Slager, O’Farrell, Allara and Briggs may transfer or encumber up to two-thirds of his vested existing interests; and

 

   

on or after the third anniversary of the completion of this offering, each of Messrs. Morse, Slager, O’Farrell, Allara and Briggs may transfer or encumber all of his vested existing interests.

See “Shares Eligible for Future Sale—Lock-up Agreements” and “Underwriting.”

In addition, we have reserved shares of Class A common stock for issuance under the 2021 Plan. Any Class A common stock that we issue under the 2021 Plan or other equity incentive plans that we may adopt in the future would dilute the percentage ownership held by the investors who purchase Class A common stock in this offering. See “Executive Compensation—2021 Incentive Award Plan” for information about the shares reserved for issuance under the 2021 Plan.

As restrictions on resale end or if these stockholders exercise their registration rights, the market price of our shares of Class A common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securities.

In the future, we may also issue securities in connection with investments, acquisitions or capital raising activities. In particular, the number of shares of our Class A common stock issued in connection with an investment or acquisition, or to raise additional equity capital, could constitute a material portion of our then-outstanding shares of our Class A common stock. Any such issuance of additional securities in the future may result in additional dilution to you, or may adversely impact the price of our Class A common stock.

If you purchase shares of Class A common stock in this offering, you will suffer immediate and substantial dilution of your investment.

The initial public offering price of our Class A common stock is substantially higher than the pro forma net tangible book value per share of our Class A common stock. Therefore, if you purchase shares of our Class A common stock in this offering, you will pay a price per share that substantially exceeds our pro forma net tangible book value per share after this offering. You will experience immediate dilution of $13.34 per share, representing the difference between our pro forma net tangible book value per share after giving effect to this offering and the initial public offering price. In addition, investors who purchase Class A common stock from us in this offering will have contributed 100% of the aggregate price paid by all purchasers of our outstanding equity but will own only approximately 2.1% of our voting power after this offering. See “Dilution” for more detail, including the calculation of the pro forma net tangible book value per share of our Class A common stock.

 

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General Risk Factors

The United Kingdom’s withdrawal from the European Union may have a negative effect on global economic conditions, financial markets and our business.

Following a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union and ratified a trade and cooperation agreement governing its future relationship with the European Union. The agreement, which is being applied provisionally from January 1, 2021 until it is ratified by the European Parliament and the Council of the European Union, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things. Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the United Kingdom and the European Union as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal.

These developments, or the perception that any related developments could occur, have had and may continue to have a material adverse effect on global economic conditions and financial markets, and may significantly reduce global market liquidity, restrict the ability of key market participants to operate in certain financial markets or restrict our access to capital. Any of these factors could have a material adverse effect on our business, financial condition and results of operations and reduce the price of Class A common stock.

We will incur significant costs as a result of operating as a public company.

Prior to this offering, we operated on a private basis. After this offering, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the NYSE and other applicable securities laws and regulations. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more difficult, time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. We also expect that being a public company and being subject to new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our Class A common stock, fines, sanctions and other regulatory action and potentially civil litigation. These factors may, therefore, strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

As a public reporting company, we will be subject to the NYSE rules and the rules and regulations established from time to time by the SEC regarding our internal control over financial reporting. If we fail to establish and maintain effective internal control over financial reporting and disclosure controls and procedures, we may not be able to accurately report our financial results, or report them in a timely manner.

Upon completion of this offering, we will become a public reporting company subject to the NYSE rules and the rules and regulations established from time to time by the SEC. These rules and regulations will require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.

In addition, as a public company we will be required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the

 

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effectiveness of our internal control over financial reporting by the time our second annual report is filed with the SEC and thereafter, which will require us to document and make significant changes to our internal control over financial reporting. Likewise, our independent registered public accounting firm will be required to provide an attestation report on the effectiveness of our internal control over financial reporting at such time as we cease to be an “emerging growth company,” as defined in the JOBS Act, and we become an accelerated or large accelerated filer. As described above, we could potentially qualify as an “emerging growth company” until as late as the fifth anniversary of the completion of this offering.

We expect to incur costs related to implementing an internal audit and compliance function in the upcoming years to further improve our internal control environment. If we identify future deficiencies in our internal control over financial reporting or if we are unable to comply with the demands that will be placed upon us as a public company, including the requirements of Section 404 of the Sarbanes-Oxley Act, in a timely manner, we may be unable to accurately report our financial results, or report them within the timeframes required by the SEC. We also could become subject to sanctions or investigations by the SEC or other regulatory authorities. In addition, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, when required, investors may lose confidence in the accuracy and completeness of our financial reports, we may face restricted access to the capital markets and our stock price may be adversely affected.

If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, or if there is any fluctuation in our credit rating, our stock price and trading volume could decline.

The trading market for our Class A common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. Securities and industry analysts do not currently, and may never, publish research on our company. If no securities or industry analysts commence coverage of us, the trading price of our shares would likely be negatively impacted. Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our stock could decline. If one or more of these analysts stops covering us or fails to publish reports on us regularly, we could lose visibility in the market, which, in turn, could cause our stock price or trading volume to decline.

Additionally, any fluctuation in the credit rating of us or our subsidiaries may impact our ability to access debt markets in the future or increase our cost of future debt, which could have a material adverse effect on our operations and financial condition, which in return may adversely affect the trading price of shares of our Class A common stock.

Certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of Delaware law and our amended and restated certificate of incorporation and amended and restated bylaws may have an antitakeover effect and may delay, defer, or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders. These provisions provide for, among other things:

 

   

a classified board of directors with staggered three-year terms;

 

   

the ability of our board of directors to issue one or more series of preferred stock;

 

   

advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

 

   

certain limitations on convening special stockholder meetings;

 

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no cumulative voting in the election of directors;

 

   

any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders;

 

   

our amended and restated bylaws may be altered only by the affirmative vote of a majority of the whole board of directors or the holders of at least a majority of the voting power represented by our then-outstanding voting stock, voting together as a single class;

 

   

subject to the rights of the holders of any preferred stock and the terms of the Stockholders Agreement, the number of directors will be determined exclusively by a majority of the whole board of directors; and

 

   

the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66 2/3% of the voting power represented by our then-outstanding common stock (other than directors appointed pursuant to the Stockholders Agreement, who may be removed with or without cause in accordance with the terms of the Stockholders Agreement).

These antitakeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares.

In addition, we have opted out of Section 203 of the General Corporation Law of the State of Delaware, which we refer to as the DGCL, but our amended and restated certificate of incorporation will provide that engaging in any of a broad range of business combinations with any “interested” stockholder (any stockholder with 15% or more of our voting stock) for a period of three years following the time at which the stockholder became an “interested” stockholder is prohibited, provided, however, that, under our amended and restated certificate of incorporation, the Operating Company and any of its respective affiliates will not be deemed to be interested stockholders regardless of the percentage of our outstanding voting stock owned by them, and accordingly will not be subject to such restrictions. See “Description of Capital Stock.”

Our stock price may change significantly following the offering, and you may not be able to resell shares of our Class A common stock at or above the price you paid or at all, and you could lose all or part of your investment as a result.

The initial public offering price for the shares will be determined by negotiations between us and the underwriters. You may not be able to resell your shares at or above the initial public offering price due to a number of factors included herein, including the following:

 

   

results of operations that vary from the expectations of securities analysts and investors;

 

   

results of operations that vary from those of our competitors;

 

   

changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

 

   

technology changes in our industry;

 

   

security breaches related to our systems or those of our affiliates;

 

   

changes in economic conditions for companies in our industry;

 

   

changes in market valuations of, or earnings and other announcements by, companies in our industry;

 

   

declines in the market prices of stocks generally, particularly those of companies in our industry;

 

   

strategic actions by us or our competitors;

 

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announcements by us or our competitors of significant contracts, acquisitions, joint ventures, other strategic relationships, or capital commitments;

 

   

changes in general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the real estate environment;

 

   

changes in business or regulatory conditions;

 

   

future sales of our Class A common stock or other securities;

 

   

investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives;

 

   

the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

 

   

announcements relating to litigation or governmental investigations;

 

   

guidance, if any, that we provide to the public, any changes in this guidance, or our failure to meet this guidance;

 

   

the development and sustainability of an active trading market for our stock;

 

   

changes in accounting principles; and

 

   

other events or factors, including those resulting from system failures and disruptions, natural disasters, war, acts of terrorism, an outbreak of highly infectious or contagious diseases, such as COVID-19, or responses to these events.

Furthermore, the stock market may experience extreme volatility that, in some cases, may be unrelated or disproportionate to the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the market price of our Class A common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our Class A common stock is low.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of management from our business regardless of the outcome of such litigation.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. All statements other than statements of historical facts contained in this prospectus may be forward-looking statements. Statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, including, among others, statements regarding the Transactions, including the consummation of this offering, expected growth, future capital expenditures, fund performance and debt service obligations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “seek,” “anticipates,” “plan,” “forecasts,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict and beyond our ability to control. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including those described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this prospectus. Such factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this prospectus. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Many of the important factors that will determine these results are beyond our ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to rely unduly upon these statements.

 

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OUR ORGANIZATIONAL STRUCTURE

Bridge Investment Group Holdings Inc., a Delaware corporation, was formed on March 18, 2021 and is the issuer of the Class A common stock in this offering. Prior to the Transactions, all of our business operations were conducted through the Operating Company and its direct and indirect subsidiaries and the Bridge GPs. We will consummate the Transactions, excluding this offering, substantially concurrently with or prior to the consummation of this offering.

Existing Organization

The Operating Company is treated as a partnership for U.S. federal income tax purposes and, as such is generally not subject to any U.S. federal entity-level income taxes. Prior to the consummation of this offering, the Original Equity Owners were the only members of the Operating Company. The Bridge GPs are also treated as partnerships for U.S. federal income tax purposes. Taxable income or loss of the Operating Company and the Bridge GPs is included in the U.S. federal income tax returns of the Operating Company’s members and to certain employees who are recipients of performance allocations.

Corporate Reorganization

Prior to the completion of this offering, we intend to complete a corporate reorganization, which we refer to in this prospectus as the corporate reorganization. Currently, the fund manager entities for our Seniors Housing and Office funds are partially owned by us and partially owned by certain Bridge employees and outside investors. As part of the corporate reorganization, these Bridge employees and outside investors are expected to contribute their entire interests in the respective fund managers to us in exchange for LLC Interests. Currently, the Operating Company does not own or control the general partner interests in each of our Seniors Housing, Office, Multifamily, Workforce and Affordable Housing, Opportunity Zone and Debt Strategies funds. As part of the corporate reorganization, certain of the current owners of the general partner interests, which include the Continuing Equity Owners, will contribute controlling interests in the Bridge GPs, with the exception of BDS I GP, to us in exchange for LLC Interests.

Transactions

The Operating Company is the only holder of a nominal amount of common stock of Bridge Investment Group Holdings Inc. which will be cancelled for no consideration in connection with the Transactions. We will consummate the following organizational transactions in connection with this offering:

 

   

we will acquire, by means of one or more mergers, the Blocker Company, which we refer to as the Blocker Merger, and will issue to the Blocker Shareholder 266,809 shares of our Class A common stock;

 

   

the minority investors that own a portion of the fund manager entities for our Seniors Housing and Office funds will contribute their entire interest in these fund managers to (i) the Operating Company in exchange for 5,835,715 Class A Units, and (ii) us in exchange for 143,500 shares of Class A common stock, which we will further contribute to Bridge Investment Group Holdings LLC in exchange for 143,500 Class A Units;

 

   

certain of the current owners of the active general partners in our Seniors Housing, Office, Multifamily, Workforce and Affordable Housing, Opportunity Zone and Debt Strategies funds, which include the Continuing Equity Owners, will contribute controlling interests in the Bridge GPs, with the exception of BDS I GP, to (i) the Operating Company, in exchange for 13,166,426 Class A Units, and (ii) us in exchange for 395,816 shares of Class A common stock (which includes 1,794 shares of Class A common stock issued to the Blocker Shareholder as consideration in the Blocker Merger), which we will further contribute to Bridge Investment Group Holdings LLC in exchange for 395,816 Class A Units;

 

   

we will amend and restate the existing limited liability company agreement of the Operating Company to, among other things, (1) convert the Operating Company to a limited liability company organized under the laws of the State of Delaware, (2) change the name of the Operating Company from “Bridge Investment

 

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Group LLC” to “Bridge Investment Group Holdings LLC,” (3) convert all existing ownership interests in the Operating Company into 97,321,818 Class A Units and a like amount of Class B Units and (4) appoint Bridge Investment Group Holdings Inc. as the sole managing member of the Operating Company upon its acquisition of LLC Interests in connection with this offering;

 

   

we will amend and restate Bridge Investment Group Holdings Inc.’s certificate of incorporation to, among other things, provide for (1) the recapitalization of our outstanding shares of existing common stock into one share of our Class A common stock, (2) the authorization of additional shares of our Class A common stock, with each share of our Class A common stock entitling its holder to one vote per share on all matters presented to our stockholders generally and (3) the authorization of shares of our Class B common stock, with each share of our Class B common stock entitling its holder to ten votes per share on all matters presented to our stockholders generally, and that shares of our Class B common stock may only be held by the Continuing Equity Owners and their respective permitted transferees as described in “Description of Capital Stock—Common Stock—Class B Common Stock;”

 

   

the Original Equity Owners will contribute the Class B Units to us in exchange for 97,321,818 shares of Class B common stock (which is equal to the number of Class A Units held directly or indirectly by such Continuing Equity Owners immediately following the Transactions);

 

   

the Former Equity Owners will contribute their indirect ownership of Class A Units to us in exchange for 2,180,738 shares of Class A common stock (which includes 265,015 shares of Class A common stock issued to the Blocker Shareholder as consideration in the Blocker Merger) on a one-to-one basis;

 

   

the Former Profits Interest Program Participants will exchange their awards for 4,781,623 Class A Units and 282,758 shares of Class A common stock with similar vesting requirements (in each case, based on the midpoint of the estimated initial offering price range for our Class A common stock set forth on the cover page of this prospectus);

 

   

we will issue 18,750,000 shares of our Class A common stock to the purchasers in this offering (or 21,562,500 shares if the underwriters exercise in full their option to purchase additional shares of our Class A common stock) in exchange for net proceeds of approximately $274.3 million (or approximately $316.2 million if the underwriters exercise in full their option to purchase additional shares of our Class A common stock) based upon an assumed initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus), less the underwriting discounts and commissions and estimated offering expenses payable by us;

 

   

we will use the net proceeds from this offering to purchase 18,750,000 newly issued Class A Units (or 21,562,500 Class A Units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) directly from the Operating Company at a price per unit equal to the initial public offering price per share of Class A common stock in this offering, less the underwriting discounts and commissions and estimated offering expenses payable by us;

 

   

the Operating Company intends to use the net proceeds from the sale of Class A Units to Bridge Investment Group Holdings Inc. (1) to pay $137.1 million (or approximately $171.0 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock) in cash to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners and (2) for general corporate purposes to support the growth of our business, in each case, as described under “Use of Proceeds”; and

 

   

Bridge Investment Group Holdings Inc. will enter into (1) a stockholders agreement, which we refer to as the Stockholders Agreement, with certain of the Continuing Equity Owners (including each of our executive officers), (2) a registration rights agreement, which we refer to as the Registration Rights Agreement, with certain of the Continuing Equity Owners (including each of our executive officers) and (3) a tax receivable agreement, which we refer to as the Tax Receivable Agreement, or TRA, with the Operating Company and the Continuing Equity Owners. For a description of the terms of the Stockholders Agreement, the Registration Rights Agreement and the Tax Receivable Agreement, see “Certain Relationships and Related Party Transactions.”

 

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Organizational Structure Following the Transactions (including this Offering)

 

   

Bridge Investment Group Holdings Inc. will be a holding company and its principal asset will consist of Class A Units it purchases from the Operating Company and certain of the Original Equity Owners (including the Blocker Shareholder);

 

   

Bridge Investment Group Holdings Inc. will be the sole managing member of the Operating Company and will control the business and affairs of the Operating Company and its direct and indirect subsidiaries;

 

   

Bridge Investment Group Holdings Inc. will own, directly or indirectly, 21,752,812 Class A Units of the Operating Company, representing approximately 19.8% of the economic interest in the Operating Company (or 24,565,312 Class A Units, representing approximately 22.3% of the economic interest in the Operating Company if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

 

   

Bridge Investment Group Holdings Inc. will own, directly or indirectly, approximately 40% of the economic interest in the active general partners of our Seniors Housing, Office, Multifamily, Workforce and Affordable Housing, and Opportunity Zone funds and approximately 24% of the economic interest in the active general partners of our Debt Strategies funds (excluding BDS I GP) (we expect to be the primary beneficiary of these variable interest entities and, as such, we will consolidate the operations of these entities);

 

   

the Continuing Equity Owners will own (1) 87,946,818 Class A Units of the Operating Company, representing approximately 80.2% of the economic interest in the Operating Company (or 85,678,469 Class A Units, representing approximately 77.7% of the economic interest in the Operating Company if the underwriters exercise in full their option to purchase additional shares of Class A common stock) and (2) 87,946,818 shares of Class B common stock of Bridge Investment Group Holdings Inc., representing approximately 97.6% of the combined voting power of all of Bridge Investment Group Holdings Inc.’s common stock (or 85,678,469 shares of Class B common stock of Bridge Investment Group Holdings Inc., representing approximately 97.2% of the combined voting power if the underwriters exercise in full their option to purchase additional shares of Class A common stock); and

 

   

the purchasers in this offering will own (1) 18,750,000 shares of Class A common stock of Bridge Investment Group Holdings Inc. (or 21,562,500 shares of Class A common stock of Bridge Investment Group Holdings Inc. if the underwriters exercise in full their option to purchase additional shares of Class A common stock), representing approximately 2.1% of the combined voting power of all of Bridge Investment Group Holdings Inc.’s common stock and approximately 86.2% of the economic interest in Bridge Investment Group Holdings Inc. (or approximately 2.4% of the combined voting power and approximately 87.8% of the economic interest if the underwriters exercise in full their option to purchase additional shares of Class A common stock), and (2) through Bridge Investment Group Holdings Inc.’s ownership of Class A Units, indirectly will hold approximately 17.1% of the economic interest in the Operating Company (or approximately 19.6% of the economic interest in the Operating Company if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

 

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The diagram below depicts our organizational structure after giving effect to the Transactions, including this offering, assuming no exercise by the underwriters of their option to purchase additional shares of Class A common stock.

 

 

LOGO

 

(1)

Investors in this offering will hold approximately 2.1% of the combined voting power of Bridge Investment Group Holdings Inc. (or approximately 2.4% of the combined voting power if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

 

(2)

The Continuing Equity Owners and certain individuals engaged in our business will continue to hold interests directly and indirectly in certain of the Operating Subsidiaries, including the fund manager entities for our Agency MBS, Debt Strategies, Logistics Net Lease and Logistics Properties funds and the Bridge GPs, to the extent such owners have not contributed such interests to us in exchange for Class A Units. As a result, Bridge Investment Group Holdings Inc. will record a significant non-controlling interest for the economic interest in the Operating Subsidiaries held directly or indirectly by such owners. For additional information see “Prospectus Summary— Summary of the Transactions” and “Unaudited Pro Forma Condensed Financial Information.”

As the sole managing member of the Operating Company, Bridge Investment Group Holdings Inc. will operate and control all of the business and affairs of the Operating Company and, through the Operating Company and its direct and indirect subsidiaries, conduct our business. Following the Transactions, including this offering, we will control the management of the Operating Company as its sole managing member. As a result, Bridge Investment Group Holdings Inc. will consolidate the Operating Company and record a significant non-controlling interest and certain individuals engaged in our business, to the extent such owners have not contributed such interests to us in exchange for Class A Units for the economic interest in the Operating Company held directly or indirectly by the Continuing Equity Owners.

 

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Unless otherwise indicated, this prospectus assumes the shares of Class A common stock are offered at $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus). Although the combined number of Class A Units outstanding after the offering will remain fixed regardless of the initial public offering price in this offering, pursuant to the terms of the existing LLC Agreement among the Original Equity Owners and the Operating Company the split between the number of Class A Units among the Original Equity Owners and Bridge Investment Group Holdings Inc. will vary depending on the initial public offering price in this offering. The initial public offering price will also impact the relative allocation of Class A Units issued in the Transactions among the Original Equity Owners and, in turn, the shares of Class A common stock and Class B common stock issued to the Original Equity Owners in the Transactions.

Interests of Original Equity Holders, Including Our Directors and Executive Officers, in the Transactions

In April 2021, we made a distribution to the Original Equity Owners, including certain of our directors and executive officers, in an amount equal to $75 million. This amount will not be available for the operations of the Company.

As part of the Transactions, we will enter into (1) the Stockholders Agreement with certain of the Continuing Equity Owners (including each of our executive officers), (2) the Registration Rights Agreement with certain of the Continuing Equity Owners (including each of our executive officers) and (3) the Tax Receivable Agreement with the Operating Company and the Continuing Equity Owners (including each of our executive officers). For a description of the terms of the Stockholders Agreement, the Registration Rights Agreement and the Tax Receivable Agreement, see “Certain Relationships and Related Party Transactions.”

The Operating Company intends to use approximately $137.1 million (or approximately $171.0 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock) of the net proceeds from this offering to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners. Accordingly, certain of the Original Equity Owners, which include certain of our directors and executive officers, will receive a substantial cash payment in connection with the sale of a portion of their Class A Units at the time of the offering.

Incorporation of Bridge Investment Group Holdings Inc.

Bridge Investment Group Holdings Inc., the issuer of the Class A common stock offered in this offering, was incorporated as a Delaware corporation on March 18, 2021. Bridge Investment Group Holdings Inc. has not engaged in any material business or other activities except in connection with its formation and the Transactions. The amended and restated certificate of incorporation of Bridge Investment Group Holdings Inc. that will become effective immediately prior to the consummation of this offering will, among other things, (1) recapitalize our outstanding shares of existing common stock into one share of our Class A common stock and (2) authorize two classes of common stock, Class A common stock and Class B common stock, each having the terms described in “Description of Capital Stock.”

Reclassification and Amendment and Restatement of the Operating Company LLC Agreement

Prior to or substantially concurrently with the consummation of this offering, the existing limited liability company agreement of the Operating Company will be amended and restated to, among other things, recapitalize its capital structure by creating two new classes of units that we refer to as “common units” (Class A Units (which are entitled to a pro rata share of the economics of the Operating Company) and Class B Units (which are entitled to one vote, and have no economic entitlement)) and provide for a right of redemption of Class A Units (subject in certain circumstances to time-based vesting requirements and certain other restrictions) in exchange for, at our election (determined solely by our independent directors (within the meaning of the NYSE rules), who are disinterested), shares of our Class A common stock or cash. See “Certain Relationships and Related Party Transactions—Operating Company LLC Agreement.”

 

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USE OF PROCEEDS

We estimate, based upon an assumed initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus), that we will receive net proceeds from this offering of approximately $274.3 million (or $316.2 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock), after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

We intend to use the net proceeds from this offering (including any net proceeds from any exercise of the underwriters’ option to purchase additional shares of Class A common stock) to purchase 18,750,000 Class A Units (or 21,562,500 Class A Units if the underwriters exercise in full their option to purchase additional shares of Class A common stock) directly from the Operating Company at a price per unit equal to the initial public offering price per share of Class A common stock in this offering less the underwriting discounts and commissions and estimated offering expenses payable by us.

The Operating Company intends to use the $274.3 million in net proceeds from the sale of Class A Units to Bridge Investment Group Holdings Inc. (or $316.2 million if the underwriters exercise their option to purchase additional shares of Class A common stock), after deducting estimated offering expenses (i) to pay $137.1 million (or approximately $171.0 million if the underwriters exercise in full their option to purchase additional shares of Class A common stock) in cash to redeem certain of the Class A Units held directly or indirectly by certain of the Original Equity Owners and (ii) for general corporate purposes to support the growth of our business. The funds used to redeem some of the Class A Units held directly or indirectly by certain of the Original Equity Owners will not be available to us for use in connection with our future growth initiatives.

Pending use of the net proceeds from this offering described above, we may invest the net proceeds in short- and intermediate-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the United States government.

Assuming no exercise of the underwriters’ option to purchase additional shares of Class A common stock, each $1.00 increase (decrease) in the assumed initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus) would increase (decrease) the net proceeds to us from this offering by approximately $17.5 million and, in turn, the net proceeds received by the Operating Company from the sale of Class A Units to Bridge Investment Group Holdings Inc. by $17.5 million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions.

Each 1,000,000 share increase (decrease) in the number of shares offered by us in this offering would increase (decrease) the net proceeds to us from this offering by approximately $14.9 million and, in turn, the net proceeds received by the Operating Company from the sale of Class A Units to Bridge Investment Group Holdings Inc. by $14.9 million, assuming that the price per share for the offering remains at $16.00 (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus), and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

The Operating Company will bear or reimburse Bridge Investment Group Holdings Inc. for all of the expenses incurred in connection with the Transactions, including this offering.

 

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CAPITALIZATION

The following table shows the cash and capitalization as of March 31, 2021, as follows:

 

   

of Bridge on a historical basis;

 

   

of Bridge Investment Group Holdings Inc. and its subsidiaries on a pro forma basis to give effect to the Transactions, excluding this offering; and

 

   

of Bridge Investment Group Holdings Inc. and its subsidiaries on a pro forma as adjusted basis to give effect to the Transactions, including our sale of 18,750,000 shares of Class A common stock in this offering at an assumed initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus), after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, and the application of the net proceeds therefrom as described under “Use of Proceeds.”

For more information, please see “Our Organizational Structure,” “Use of Proceeds” and “Unaudited Pro Forma Condensed Financial Information” included elsewhere in this prospectus. You should read this information in conjunction with our combined financial statements and the related notes included elsewhere in this prospectus and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and other financial information contained in this prospectus.

 

    As of March 31, 2021  
($ in millions, except per share and share amounts)   Bridge
Historical
    Bridge
Investment
Group
Holdings
Inc.
Pro Forma
    Bridge
Investment
Group
Holdings
Inc. Pro
Forma As
Adjusted
 
    (unaudited)  

Cash(1)

  $ 134     $ 59     $ 196  
 

 

 

   

 

 

   

 

 

 

Long-term debt (including current portion)(2)

     

Private Placement Notes

    150       150       150  

General Partner Notes Payable

    15       12       12  
 

 

 

   

 

 

   

 

 

 

Total debt

    165       162       162  

Members’/stockholders’ equity

     

Equity

     

Net investment in common control group

    202       —         —    

Accumulated other comprehensive income

    —         —         —    

Stockholders’ equity

     

Class A common stock, par value $0.01 per share; 500,000,000 shares authorized, 3,002,812 shares issued and outstanding, pro forma; 500,000,000 shares authorized, 21,752,812 shares issued and outstanding, pro forma as adjusted

    —         —         —    

Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 97,321,818 shares issued and outstanding, pro forma; 250,000,000 shares authorized, 87,946,818 shares issued and outstanding, pro forma as adjusted

    —         1       1  

Additional paid-in capital

    —         —         46  

Non-controlling interests in subsidiaries

    13       123       123  

Non-controlling interests in Operating Company

    —         32       136  
 

 

 

   

 

 

   

 

 

 

Total members’/stockholders’ equity

    215       156       306  
 

 

 

   

 

 

   

 

 

 

Total capitalization

  $ 380     $ 318     $ 468  
 

 

 

   

 

 

   

 

 

 

 

(1)

Subsequent to March 31, 2021, the Company made a distribution in the form of a special dividend of $75.0 million, which was distributed to members of the Company on April 5, 2021.

(2)

See “Description of Indebtedness” for a description of our currently outstanding indebtedness.

 

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Each $1.00 increase (decrease) in the assumed public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus) would increase (decrease) each of additional paid-in capital and total members’ / stockholders’ equity on a pro forma as adjusted basis by approximately $1.7 million, assuming that the price per share for the offering remains at $16.00 (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus), and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

Each 1,000,000 share increase or decrease in the number of shares offered in this offering by us would increase or decrease each of additional paid-in capital and total members’ / stockholders’ equity on a pro forma as adjusted basis by approximately $0.3 million, assuming that the price per share for the offering remains at $16.00 (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus), and after deducting the underwriting discounts and commissions.

 

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DIVIDEND POLICY

Our current intention is to pay to holders of Class A common stock a quarterly dividend representing substantially all of Bridge Investment Group Holdings Inc.’s share of Distributable Earnings attributable to the Operating Company, subject to adjustment by amounts determined by our board of directors to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and funds, to comply with applicable law, any of our debt instruments or other agreements, or to provide for future cash requirements such as tax-related payments and clawback obligations. All of the foregoing is subject to the qualification that the declaration and payment of any dividends are at the sole discretion of our board of directors and our board of directors may change our dividend policy at any time, including, without limitation, to reduce such quarterly dividends or even to eliminate such dividends entirely. Holders of our Class B common stock are not entitled to participate in any dividends declared by our board of directors. Furthermore, because we are a holding company, our ability to pay cash dividends on our Class A common stock depends on our receipt of cash distributions from the Operating Company and, through the Operating Company, cash distributions and dividends from our other direct and indirect subsidiaries. Our ability to pay dividends may be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of us or our subsidiaries. See “Description of Capital Stock,” “Description of Indebtedness” and “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Liquidity and Capital Resources.” Any future determination as to the declaration and payment of dividends, if any, will be at the discretion of our board of directors, subject to compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness. Any such determination will also depend upon our business prospects, results of operations, financial condition, cash requirements and availability, debt repayment obligations, capital expenditure needs, contractual restrictions, covenants in the agreements governing our current and future indebtedness, industry trends, the provisions of Delaware law affecting the payment of dividends to stockholders and any other factors our board of directors may consider relevant. Accordingly, you may need to sell your shares of our Class A common stock to realize a return on your investment, and you may not be able to sell your shares at or above the price you paid for them.

Immediately following this offering, we will be a holding company, and our principal asset will be the Class A Units we purchase from the Operating Company. If we decide to pay a dividend in the future, we would need to cause the Operating Company to make distributions to us in an amount sufficient to cover such dividend. If the Operating Company makes such distributions to us, the other holders of Class A Units will be entitled to receive pro rata distributions. See “Risk Factors—Risks Related to Our Organizational Structure—Our principal asset after the completion of this offering will be our interest in the Operating Company, and, as a result, we will depend on distributions from the Operating Company to pay our taxes and expenses, including payments under the Tax Receivable Agreement and to pay dividends to holders of our Class A common stock. The Operating Company’s ability to make such distributions may be subject to various limitations and restrictions.”

 

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DILUTION

The Continuing Equity Owners will own Class A Units after the Transactions. Because the Continuing Equity Owners do not own any Class A common stock or have any right to receive distributions from Bridge Investment Group Holdings Inc., we have presented dilution in pro forma net tangible book value per share both before and after this offering assuming that all of the holders of Class A Units (other than Bridge Investment Group Holdings Inc.) had their Class A Units redeemed or exchanged for newly issued shares of Class A common stock on a one-for-one basis (rather than for cash) and the transfer to the Company and cancellation for no consideration of all of their shares of Class B common stock (which are not entitled to receive distributions or dividends, whether cash or stock from Bridge Investment Group Holdings Inc.) in order to more meaningfully present the dilutive impact on the investors in this offering. We refer to the assumed redemption or exchange of all Class A Units for shares of Class A common stock as described in the previous sentence as the Assumed Redemption.

Dilution is the amount by which the offering price paid by the purchasers of the Class A common stock in this offering exceeds the pro forma net tangible book value per share of Class A common stock after the offering. The Operating Company’s pro forma net tangible book value as of March 31, 2021 prior to this offering and after giving effect to the other Transactions and the Assumed Redemption was $154.7 million. Pro forma net tangible book value per share prior to this offering is determined by subtracting our total liabilities from the total book value of our tangible assets and dividing the difference by the number of shares of Class A common stock deemed to be outstanding after giving effect to the Assumed Redemption.

If you invest in our Class A common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share and the pro forma net tangible book value per share of our Class A common stock after this offering.

Pro forma net tangible book value per share after this offering is determined by subtracting our total liabilities from the total book value of our tangible assets and dividing the difference by the number of shares of Class A common stock deemed to be outstanding, after giving effect to the Transactions, including this offering and the application of the proceeds from this offering as described in “Use of Proceeds,” and the Assumed Redemption. Our pro forma net tangible book value as of March 31, 2021 after this offering would have been approximately $291.8 million, or $2.66 per share of Class A common stock. This amount represents an immediate increase in pro forma net tangible book value of $1.25 per share to our existing stockholders and an immediate dilution in pro forma net tangible book value of approximately $13.34 per share to new investors purchasing shares of Class A common stock in this offering. We determine dilution by subtracting the pro forma net tangible book value per share after this offering from the amount of cash that a new investor paid for a share of Class A common stock. The following table illustrates this dilution:

 

Assumed initial public offering price per share

      $ 16.00

Pro forma net tangible book value (deficit) per share as of March 31, 2021 before this offering

   $ 1.41   

Increase per share attributable to new investors in this offering

   $ 1.25   
  

 

 

    

Pro forma net tangible book value (deficit) per share after this offering

   $ 2.66     

Dilution per share to new Class A common stock investors in this offering

      $ 13.34  
     

 

 

 

A $1.00 increase (decrease) in the assumed initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus) would increase the pro forma net tangible book value (deficit) per share after this offering by approximately $0.08, and dilution in pro forma net tangible book value (deficit) per share to new investors by approximately $0.92 assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

 

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If the underwriters exercise in full their option to purchase additional shares of Class A common stock, the pro forma net tangible book value (deficit) after the offering would be $2.73 per share, the increase in pro forma net tangible book value per share to existing stockholders would be $1.32 per share and the dilution in pro forma net tangible book value to new investors would be $13.27 per share, in each case assuming an initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus).

The following table summarizes, as of March 31, 2021 after giving effect to the Transactions (including this offering) and the Assumed Redemption, the number of shares of Class A common stock purchased from us, the total consideration paid, or to be paid, to us and the average price per share paid, or to be paid, by existing owners and by the new investors. The calculation below is based on an assumed initial public offering price of $16.00 per share (which is the midpoint of the estimated initial offering price range set forth on the cover page of this prospectus).

 

     Shares
Purchased
    Total Consideration     Average Price
Per Share
 
     Number      Percent     Amount      Percent  

Original Equity Owners

     90,949,630        82.9   $ —          —       $ —    

New investors

     18,750,000        17.1       300,000,000        100     16.00  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total

     109,699,630        100   $ 300,000,000        100   $ 2.73  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Each $1.00 increase (decrease) in the assumed initial public offering price of $16.00 per share would increase (decrease) the total consideration paid by new investors and the total consideration paid by all stockholders by $18.8 million, assuming the number of shares offered by us remains the same.

Except as otherwise indicated, the discussion and the tables above assume no exercise of the underwriters’ option to purchase additional shares of Class A common stock. In addition, the discussion and tables above exclude shares of Class B common stock, because holders of the Class B common stock are not entitled to distributions or dividends, whether cash or stock, from Bridge Investment Group Holdings Inc. The number of shares of our Class A common stock outstanding after this offering as shown in the tables above is based on the number of shares outstanding as of March 31, 2021, after giving effect to the Transactions and the Assumed Redemption, and excludes shares of our Class A common stock reserved for issuance under our 2021 Plan (as described in “Executive Compensation—Incentive Compensation Plan—2021 Incentive Award Plan”), including approximately 2,193,993 shares of Class A common stock issuable pursuant to restricted stock awards we intend to grant to certain of our directors, executive officers and other employees, including certain of our named executive officers, in connection with this offering as described in “Executive Compensation—Incentive Compensation Plan—2021 Incentive Award Plan.”

To the extent all of such restricted stock awards had been outstanding as of March 31, 2021 the pro forma net tangible book value (deficit) per share after this offering would be $2.61, and total dilution per share to new investors would be $13.39.

If the underwriters exercise in full their option to purchase additional shares of Class A common stock:

 

   

the percentage of shares of Class A common stock held by the Original Equity Owners will decrease to approximately 12.2% of the total number of shares of our Class A common stock outstanding after this offering; and

 

   

the number of shares held by new investors will increase to 21,562,500, or approximately 87.8% of the total number of shares of our Class A common stock outstanding after this offering.

 

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UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined balance sheet as of March 31, 2021 gives pro forma effect to the Transactions described under “Our Organizational Structure,” including the consummation of this offering and our intended use of proceeds therefrom after deducting the underwriting discounts and commissions and other costs of this offering, as though such Transactions had occurred as of March 31, 2021. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2020 and the three months ended March 31, 2021 present our combined results of operations giving pro forma effect to the transactions described above as if they had occurred as of January 1, 2020. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosure about Acquired and Disposed Businesses.”

The pro forma adjustments are based on available information and upon assumptions that management believes are reasonable in order to reflect, on a pro forma basis, the effect of these Transactions on the historical financial information of our predecessor. The Company is a combination of multiple entities formed to provide real estate asset management services. Its business was conducted through a large number of entities for which there was no single controlling holding entity. The historical periods presented in the unaudited condensed pro forma financial information reflect the operating results of the Bridge business as historically managed under common control and include the combined accounts of (i) the Operating Company and (ii) the Bridge GPs. The Operating Company and the Bridge GPs are together considered our predecessor for accounting purposes, and their combined financial statements will be our historical financial statements following this offering. Because certain of the continuing members of the Operating Company will continue to control the entities that own and manage the Operating Company after the corporate reorganization, we will account for the acquisition of such continuing members’ interests in our business, as part of the corporate reorganization, as a transfer of interests under common control. Accordingly, we will carry forward unchanged the value of such continuing members’ interest in the assets and liabilities in the Operating Company’s financial statements prior to this offering into our financial statements following this offering.

The Operating Company and the Contributed GP Entities (as defined below) are under common control prior to the Transactions. As such, we will carry forward unchanged the value of the related assets and liabilities recognized in the Contributed GP Entities’ financial statements prior to this offering into our financial statements following this offering. We have assessed the Contributed GP Entities for consolidation subsequent to the corporate reorganization and have concluded that the Contributed GP Entities represent a variable interest for which the Operating Company is the primary beneficiary. As a result, the Operating Company will consolidate the Contributed GP Entities following the corporate reorganization.

The Operating Company will acquire the non-controlling interest of its consolidated subsidiaries Bridge Seniors Housing Fund Manager LLC, or BSHFM, and Bridge Office Fund Manager LLC, or BOFM, which was accounted for as an equity transaction with no gain or loss recognized in combined net income. The carrying amounts of the non-controlling interest in BSHFM and BOFM were adjusted to zero.

The unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed combined statements of operations may not be indicative of the results of operations or financial position that would have occurred had the Transactions taken place on the dates indicated, or that may be expected to occur in the future. The adjustments are described in the notes to the unaudited pro forma condensed combined statements of operations and the unaudited pro forma condensed combined balance sheet. The unaudited pro forma condensed combined financial information and other data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our combined financial statements and the related notes included elsewhere in this prospectus.

 

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The pro forma adjustments in the Reorganization Adjustments and Offering Adjustments columns principally give effect to:

 

   

The Transactions described in “Our Organizational Structure,” which reflects, among other things, the following:

 

   

As part of the Transactions, the current owners of the active general partners, which include the Continuing Equity Owners, will contribute a portion of their interests in the general partners of each of our Seniors Housing, Office, Multifamily, Workforce and Affordable Housing, Opportunity Zone and Debt Strategies funds (except BDS I GP), to us in exchange for Class A Units, which is reflected in the pro forma financial information presented below. This legal reorganization is a transaction between entities under common control.

 

   

Prior to the Transactions, the fund manager entities for our Seniors Housing and Office funds were partially owned by us and partially owned by outside investors. As part of the corporate reorganization, the pro forma information reflects the outside investors contributing their entire interest in these fund managers to us in exchange for Class A Units.

 

   

The modification of the Operating Company’s profits interest program, such that certain awards will be exchanged for Class A Units and certain awards will be exchanged for restricted stock with similar vesting requirements.

 

   

The provision for corporate income taxes on the income of Bridge Investment Group Holdings Inc., which will be taxable as a corporation for U.S. federal and state income tax purposes.

 

   

The allocation of income (loss) associated with non-controlling interests primarily relating to Class A Units in the Operating Company, approximately 80.2% of which will be held by the Continuing Equity Owners of the Operating Company after this offering, assuming no exercise of the underwriters’ option to purchase additional shares.

We have not made any pro forma adjustments relating to reporting, compliance and investor relations costs that we will incur as a public company. No pro forma adjustments have been made for these additional expenses as an estimate of such expenses is not determinable at this time.

 

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Unaudited Pro Forma Condensed Combined Balance Sheet

As of March 31, 2021

 

($ in thousands)   Historical
Combined
Financial
Statements
    Reorganization
Adjustments
    Pro Forma
Before
Offering
Adjustments
    Offering
Adjustments
    Pro Forma  

Assets

           

Current assets

             

Cash and cash equivalents

  $ 133,620     $ (75,002     (1)(3)      $ 58,618     $ 137,125       (6  )    $ 195,743  

Marketable securities

    5,067       —           5,067       —           5,067  

Restricted cash

    5,982       —           5,982       —           5,982  

Receivables - principally from affiliated parties

    22,983       50       (3)        23,033       —           23,033  

Notes receivable

    11,835       —           11,835       —           11,835  

Note receivables from employees

    —         —           —         —           —    

Prepaid and other current assets

    3,359       —           3,359       —           3,359  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total current assets

    182,846       (74,952       107,894       137,125         245,019  

Investments

    236,974       (260     (3)        236,714       —           236,714  

Deferred tax assets

    —         1,893       (7)        1,893       52,834       (7  )      54,727  

Tenant improvements and equipment - net of depreciation

    4,026       —           4,026       —           4,026  

Intangible assets - net of amortization

    4,516       —           4,516       —           4,516  

Goodwill

    9,830       —           9,830       —           9,830  

Other assets

    305       —           305       —           305  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total assets

  $ 438,497     $ (73,319     $ 365,178     $ 189,959       $ 555,137  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Liabilities and equity

             

Liabilities

             

Accrued performance allocations compensation

  $ 24,749     $ (11,029 (2)      $ 13,720     $ —         $ 13,720  

Accounts payable and accrued expenses

    7,322       (15     (3)        7,307       —           7,307  

Accrued payroll and benefits

    13,476       —           13,476       —           13,476  

General Partner Notes Payable

    14,858       (2,552     (3)        12,306       —           12,306  

Insurance loss reserves

    4,227       —           4,227       —           4,227  

Self-insurance reserves and unearned premiums

    3,730       —           3,730       —           3,730  

Other current liabilities

    4,534       —           4,534       —           4,534  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total current liabilities

    72,896       (13,596       59,300       —           59,300  

Notes payable, net

    147,820       —           147,820       —           147,820  

Due to affiliates

    —         —           —         39,453       (7  )      39,453  

Other long-term liabilities

    2,417       —           2,417       —           2,417  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total liabilities

    223,133       (13,596 )         209,537      
39,453
 
      248,990  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Equity

             

Net investment in common control group

    202,167       (202,167     (1)(2)(3)(4)(5)              —           —    

Class A common stock

    —         30       (8)        30       188       (8  )      218  

Class B common stock

    —         973       (9)        973       (94     (9  )      879  

Additional paid-in capital

    —         (118     (10)        (118     46,034       (10  )      45,916  

Accumulated other comprehensive income

    5       —           5       —           5  

Non-controlling interests in subsidiaries

    13,192       109,946       (11)        123,138       —           123,138  

Non-controlling interests in Operating Company

    —         31,613       (12)        31,613       104,378       (12  )      135,991  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total equity

    215,364       (59,723       155,641       150,506         306,147  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

Total liabilities and equity

  $ 438,497     $ (73,319     $ 365,178     $ 189,959       $ 555,137  
 

 

 

   

 

 

     

 

 

   

 

 

     

 

 

 

 

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Notes to Unaudited Pro Forma Condensed Combined Balance Sheet

 

(1)

Reflects funding of a pre-offering distribution to members of the Operating Company, with a corresponding decrease to net investment in common control group, in an amount equal to $75.0 million. This amount will not be available for the operations of the Company.

 

(2)

The Contributed GP Entities have historically been under common control and, as such, the contribution was recorded at historical cost and resulted in no step up in basis from our historic combined financial statements. Prior to the corporate reorganization, the Contributed GP Entities have been combined with Bridge Investment Group LLC and its subsidiaries to reflect the historical operations and results of Bridge. As part of the Transactions, members of the Contributed GP Entities contributed a percentage of their interest in the respective general partners and related carried interest in exchange for new Class A Units in the Operating Company. The following entities represent the Contributed GP Entities, together with their respective percentage interests contributed to the Operating Company:

 

Entity

   Percentage Contributed

BOF I GP

   40%

BOF II GP

   40%

BSH I GP

   40%

BSH II GP

   40%

BSH III GP

   40%

BOZ I GP

   40%

BOZ II GP

   40%

BOZ III GP

   40%

BOZ IV GP

   40%

BMF III GP

   40%

BMF IV GP

   40%

BWH I GP

   40%

BWH II GP

   40%

BDS II GP

   24%

BDS III GP

   24%

BDS IV GP

   24%

We have assessed the Contributed GP Entities for consolidation subsequent to the corporate reorganization and have concluded that the Contributed GP Entities represent a variable interest for which the Operating Company is the primary beneficiary. As a result, we will consolidate the Contributed GP Entities following the corporate reorganization. The percentage contributed to the Operating Company will represent controlling interest in Bridge Investment Group Holdings Inc.’s consolidated financial statements and any remaining equity interests held at the Contributed GP Entities’ level will represent non-controlling interest, which is $114.4 million as of March 31, 2021. A portion of the contributed interests in the Contributed GP Entities was previously accounted for as accrued performance allocations compensation. As a result, accrued performance allocations compensation was reduced by $11.0 million with an offset to non-controlling interests.

 

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(3)

The equity interests in BDS I GP are not being contributed to the Operating Company as part of the Transactions. Subsequent to the Transactions, Bridge Investment Group Holdings Inc. will have no interest in BDS I GP. As a result, we have derecognized this entity from Bridge Investment Group Holdings Inc.’s combined financial statements. The following table summarizes BDS I GP’s balance sheet as of March 31, 2021 (in thousands):

 

     As of
March 31, 2021
 

Assets

  

Current assets

  

Cash and cash equivalents

   $ 2  
  

 

 

 

Total current assets

     2  

Investments

     260  
  

 

 

 

Total assets

   $ 262  
  

 

 

 

Liabilities and members’ equity

  

Liabilities

  

Management fee payable

   $ 50  

Accounts payable and accrued expenses

     15  

General Partner Notes payable

     2,552  
  

 

 

 

Total current liabilities

     2,617  

Members’ equity

  

Total members’ equity

     (2,355
  

 

 

 

Total liabilities and equity

   $ 262  
  

 

 

 

 

(4)

Prior to the consummation of this offering, the Operating Company expects to issue new Class A Units to certain professionals in our consolidated subsidiaries, BSHFM and BOFM, in exchange for their interests in BSHFM and BOFM, which is expected to increase the Operating Company’s interest in BSHFM from 60% to 100% and in BOFM from approximately 75% to 100%. The impact of this exchange was a reduction of non-controlling interest of $2.2 million and $2.2 million related to BSHFM and BOFM for the period ended March 31, 2021, respectively.

 

(5)

The computation of the pro forma net investment in common control group is shown below:

 

     As of March 31, 2021  
($ in thousands)    Reorganization
Adjustments
 

April 2021 distribution

   $ (75,000

Contribution of GP interests for Class A Units

     (103,348

Derecognition of BDS I GP

     2,355  

Exchange of BSHFM & BOFM non-controlling interests for Class A Units

     4,431  

Reorganization to a corporation

     (30,605
  

 

 

 

Total

   $ (202,167
  

 

 

 

 

(6)

Reflects proceeds, net of underwriting discounts and commissions of $20.2 million and offering costs of $5.5 million from this offering, with a corresponding increase to total stockholders’ equity. We will use approximately $137.1 million of the net proceeds from this offering to cause the Operating Company to purchase Class A Units from certain of its existing partners, at a per-unit price equal to the per-share price paid by the underwriters for shares of our Class A common stock in this offering.

 

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(7)

As described under “Certain Relationships and Related Party Transactions—Tax Receivable Agreement,” in connection with this offering, Bridge Investment Group Holdings Inc. will enter into a Tax Receivable Agreement with the Operating Company and each of the Continuing Equity Owners, pursuant to which Bridge Investment Group Holdings Inc. will pay to the Continuing Equity Owners 85% of the amount of tax benefits, if any, that Bridge Investment Group Holdings Inc. actually realizes (or in some circumstances is deemed to realize) as a result of (1) increases in Bridge Investment Group Holding Inc.’s allocable share of the tax basis of the Operating Company’s assets resulting from (a) Bridge Investment Group Holdings Inc.’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 this offering, as described under “Use of Proceeds,” (b) future redemptions or exchanges (or deemed exchanges in certain circumstances) of Class A Units for Class A common stock or cash and (c) certain distributions (or deemed distributions) by the Operating Company; (2) Bridge Investment Group Holdings Inc.’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 this offering), which tax basis is allocated to the Class A Units being redeemed or exchanged and acquired by Bridge Investment Group Holdings Inc. and (3) certain additional tax benefits arising from payments made under the Tax Receivable Agreement. The net deferred tax asset of $52.8 million and the $39.5 million due to affiliates for the Tax Receivable Agreement assumes: (A) only exchanges associated with the corporate reorganization and this offering, (B) a share price equal to $16.00 per share (the midpoint of the price range set forth on the cover of this prospectus) less any underwriting discounts and commissions, (C) a constant U.S. federal and state combined income tax rate of 25%, (D) no material changes in tax law, (E) the ability to utilize tax attributes, (F) no adjustment for potential remedial allocations and (G) future Tax Receivable Agreement payments. We recognized a deferred tax asset in the amount of $1.9 million as of March 31, 2021 associated with the increase in tax basis as a result of the corporate reorganization transactions, as well as the basis difference in the Company’s investment in the Operating Company.

 

(8)

Reflects 21,752,812 shares of Class A common stock with a par value of $0.01 outstanding immediately after this offering. This includes 18,750,000 shares of our Class A common stock issued in this offering, 3,002,812 shares of Class A common stock exchanged for Class A Units by the holders of Class A Units (other than Bridge Investment Group Holdings Inc.).

 

(9)

In connection with this offering, we will issue shares of Class B common stock to the Continuing Equity Owners, on a one-to-one basis with the number of Class A Units they own. Each share of our Class B common stock will entitle its holder to ten votes. See “Our Organizational Structure—Voting Rights.”

 

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(10)

The computation of the pro forma additional paid-in capital is below:

 

Computation of the pro forma additional paid-in capital

 

  
     March 31, 2021  
($ in thousands)    Reorganization
Adjustments
     Offering
Adjustments
 

Proceeds from offering net of underwriting discounts and commissions

   $ —        $ 139,875  

Offering expenses

     —          (2,750

Reclassification of net investment in common control group

     30,605        —    

Par value of Class A common stock

     (30      (188

Par value of Class B common stock

     (973      94  

Deferred tax asset

     1,893        52,834  

Due to affiliates for Tax Receivable Agreement

     —          (39,453

Non-controlling interests in Operating Company

     (31,613      (104,378
  

 

 

    

 

 

 

Additional paid-in capital

   $ (118    $ 46,034  
  

 

 

    

 

 

 

 

(11)

The computation of the pro forma non-controlling interests in subsidiaries is shown below:

 

     As of March 31, 2021  
     Reorganization
Adjustments
 

Contribution of GP interests for Class A Units

   $ 114,377  

Exchange of BSHFM & BOFM non-controlling interests for Class A Units

     (4,431
  

 

 

 

Non-controlling interests in subsidiaries

   $ 109,946  
  

 

 

 

 

(12)

Following this offering, Bridge Investment Group Holdings Inc.’s only business will be to act as the managing member of the Operating Company, and its only material assets will be Class A Units representing approximately 19.8% of the total Class A Units of the Operating Company (or 22.3% if the underwriters exercise their option to purchase additional shares of Class A common stock in full). In its capacity as the sole managing member of the Operating Company, Bridge Investment Group Holdings Inc. will indirectly operate and control all of the Operating Company’s business and affairs. As a result, Bridge Investment Group Holdings Inc. will consolidate the financial results of the Operating Company and will report non-controlling interests related to the interests held by the Continuing Equity Owners of the Operating Company, which will represent a majority of the economic interest in the Operating Company, on its consolidated balance sheet. Following this offering, assuming the underwriters do not exercise their option to purchase additional shares of Class A common stock, Bridge Investment Group Holdings Inc. will own 19.8% of the economic interests of the Operating Company, and the Continuing Equity Owners of the Operating Company will own the remaining 80.2%.

 

     Bridge Investment Group Holdings
LLC
Class A Units
     %  

Bridge Investment Group Holdings Inc.

     21,752,812        19.8 (a) 

Continuing Equity Owners

     87,946,818        80.2  
  

 

 

    

 

 

 

Total

     109,699,630        100.0

 

  (a)

Excludes 2,193,993 shares of restricted Class A common stock to be issued under the 2021 Plan in connection with this offering.

 

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The computation of the pro forma non-controlling interest in Operating Company is shown below:

 

     As of March 31, 2021  
     Reorganization
Adjustments
    Offering
Adjustments
     Pro Forma  

Net Investment in Common Control Group

   $ 202,167     $ —        $ 202,167  

Accumulated other comprehensive income

     5       —          5  

April 2021 distribution

     (75,000     —          (75,000

Contribution of GP interests for Class A Units

     (103,348     —          (103,348

Derecognition of BDS I GP

     2,355       —          2,355  

Exchange of BSHFM & BOFM non-controlling interests for Class A Units

     4,431       —          4,431  

Deferred tax asset

     1,893       —          1,893  

Proceeds from offering net of underwriting discounts and commissions

     —         137,125        137,125  
  

 

 

   

 

 

    

 

 

 

Total Equity

   $ 32,503     $ 137,125      $ 169,628  
  

 

 

   

 

 

    

 

 

 

Continuing Equity Owners’ economic interest in Operating Company

     97.3        80.2
  

 

 

   

 

 

    

 

 

 

Non-controlling interests in Operating Company

   $ 31,613     $ 104,378      $ 135,992  
  

 

 

   

 

 

    

 

 

 

 

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Unaudited Pro Forma Condensed Combined Statements of Operations and Other Data

For the Year Ended December 31, 2020

 

    Historical
combined financial
statements of
Bridge
    Reorganization
Adjustments
    Pro Forma
Before
Offering
Adjustments
    Offering
Adjustments
    Pro Forma  

($ in thousands except per share and share amounts)

         

Revenue

                                           

Fund management fees

  $ 110,235     $ 42 (2)    $ 110,277     $ —       $ 110,277  

Property management and leasing fees

    59,986       —         59,986       —         59,986  

Construction management fees

    8,155       —         8,155       —         8,155  

Development fees

    1,966       —         1,966       —         1,966  

Transaction fees

    39,298       —         39,298       —         39,298  

Insurance premiums

    6,291       —         6,291       —         6,291  

Other asset management and property income

    6,017       —         6,017       —         6,017  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

    231,948       42       231,990       —         231,990  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Investment income

         

Incentive fees

    —         —         —         —         —    

Performance allocations

         

Realized

    42,365       12 (2)      42,377       —         42,377  

Unrealized

    61,803       5 (2)      61,808       —         61,808  

Earnings (losses) from investments in real estate

    522       (7 )(2)      515       —         515  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income

    104,690       10       104,700       —         104,700  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Expenses

         

Employee compensation and benefits

    100,932       —         100,932       9,166 (3)      110,098  

Incentive fee compensation

    —         —         —         —         —    

Performance allocations compensation

         

Realized

    4,281       (1,758 )(1)      2,523       —         2,523  

Unrealized

    8,983       (4,765 )(1)      4,218       —         4,218  

Loss and loss adjustment expenses

    3,119       —         3,119       —         3,119  

Third-party operating expenses

    28,415       —         28,415       —         28,415  

General and administrative expenses

    17,249       (7 )(2)      17,242       —         17,242  

Depreciation and amortization

    3,214       —         3,214       —         3,214  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    166,193       (6,530     159,663       9,166       168,829  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

         

Realized and unrealized gains (losses)

    549       (432 )(2)      117       —         117  

Interest income

    1,527             1,527       —         1,527  

Interest expense

    (5,058     86 (2)      (4,972     —         (4,972
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense)

    (2,982     (346     (3,328     —         (3,328

Net Income before taxes

    167,463       6,236       173,699       (9,166     164,533  

Income tax provision

    (1,006     (687 )(4)      (1,693     (3,837 )(4)      (5,530
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

    166,457       5,549       172,006       (13,003     159,003  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less net gain/(loss) attributable to non-controlling interest in subsidiaries

    19,535       52,732 (1)      72,267       —         72,267  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to the Operating Company

    146,922       (47,183     99,739       (13,003     86,736  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Less net gain/(loss) attributable to non-controlling interest

    —         97,677 (5)      97,677       (24,513 )(5)      73,164  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Bridge Investment Group Holdings Inc.

      $ 2,062       $ 13,572