Bridge Investment Group Holdings Inc. (NYSE:BRDG) Q1 2024 Earnings Call Transcript

Bridge Investment Group Holdings Inc. (NYSE:BRDG) Q1 2024 Earnings Call Transcript May 11, 2024

Bridge Investment Group Holdings Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to the Bridge Investment Group First Quarter 2024 Earnings Call and Webcast. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Bonni Rosen, Head of Shareholder Relations for Bridge Investment Group. Thank you. You may begin.

Bonni Rosen: Good morning, everyone. Welcome to the Bridge Investment Group conference call to review our first quarter 2024 financial results. Prepared remarks include comments from our Executive Chairman, Robert Morse; Chief Executive Officer, Jonathan Slager; and Chief Financial Officer, Katie Elsnab. We will hold a Q&A session following the prepared remarks. I’d like to remind you that today’s call may include forward-looking statements, which are uncertain, outside the firm’s control, and may differ materially from actual results. We do not undertake any duty to update these statements. For a discussion of some of the risks that could affect results, please see the risk factors section of our Form 10-K. During the call, we will also discuss certain non-GAAP financial metrics.

The reconciliation of the non-GAAP metrics are provided in the appendix of our supplemental slides. The supplemental materials are accessible on our IR website at ir.bridgeig.com. These slides can be found under the Presentations portion of the site along with the first quarter earnings call event link. They are also available live during the webcast. We reported a GAAP net loss to the company of approximately $36.8 million for the first quarter of 2024. On a basic and diluted basis, net income attributable to Bridge per share of Class A common stock was $0.24 and a net loss of $0.05, respectively, mostly due to changes in non-cash items. Distributable earnings of the Operating Company were $32.2 million, or $0.17 per share after tax, and our Board of Directors declared a dividend of $0.12 per share, which will be paid on June 14 to shareholders of record as of May 31.

It is now my pleasure to turn the call over to Bob.

Bonni Rosen: Thank you, Bonni, and good morning to all. Bridge reported improved financial results for the first quarter of 2024, with distributable earnings increasing 27% from last quarter and fee-related earnings to the Operating Company increasing 19%. Excluding the impact of prior quarter write-offs, distributable earnings increased 10% and fee-related earnings to the Operating Company increased 4%. Our FRE base continues to build as we’ve expanded the number of specialized funds we offer and is composed of mostly long-tenured, closed-end fund revenues. Since IPO, our quarterly FRE has grown at a 12% compound annual growth rate from $24.9 million in 2Q 2021 to $33.9 million as of Q1 2024. Fee-earning AUM has grown at a 29% compound annual growth rate, driven by successful fundraising, including the successively larger funds in our flagship real estate strategies, the launch of new strategies, and the accretive acquisition of Newbury Partners, which now comprises the Bridge Secondaries business.

We’ve achieved this growth through an incredibly volatile real estate environment, which highlights the strengths of our diversified and highly specialized platforms. As a capital-light alternative asset manager with high margins and limited ongoing capital needs outside of GP commitments to our funds, our business has produced strong cash flow during an otherwise challenging period for the broader commercial real estate industry. This profitability in our platform is a testament to our resilient, profitable business model. As I will explain further, with a new cycle forming, we believe these positive attributes of our platform are not adequately reflected in our share price today. Our recently published 2024 outlook, Navigating the Curve, outlines our perspective and provides details on why we feel so strongly about investing in the areas where Bridge has developed distinctive competencies.

In late 2022 and throughout 2023, as rates increased and the lending environment for real estate worsened, real estate asset prices reset more or less across the board. Although the Fed has kept rates at current elevated levels for the last six meetings, we believe we are close to or at the end of rate increases. The delay in rate reduction has had a modest positive effect as it has actually forced selected real estate asset sellers into the market at realistic prices. In response to our macro assessment, which candidly is mirrored by many of our industry counterparts and by much of our investor base, we believe 2024 represents an attractive entry point to deploy capital into our specialized strategies. We also believe that Bridges’ patience over the last 18 months has been warranted, and with $3.1 billion of dry powder, we have started to lean in to capitalize on selected opportunities.

We are optimistic about Bridge’s positioning. We are raising capital globally, leveraging our forward integration into property operations, and investing in selective, high-performing sectors of alternative assets with a middle market focus. Importantly, we continue to invest in our platform, building upon our best-in-class infrastructure and sales organization, with a number of mid and senior-level hires over the past year. Additionally, we continue to find new avenues to enhance operating efficiencies, driving lower costs for our LPs in areas such as property insurance and investor reporting. Turning to capital raising. The first quarter was busy, and we believe the dialogue with investors will bear fruit over the course of the year. We raised $153.2 million of capital during the first quarter, primarily in our Secondaries and opportunity zone strategies.

While the debt strategies vertical did not have a closing in Q1, we anticipate meaningful inflows in Q2. Our CSG team logged over 1,000 meetings and calls in the first quarter with both current and prospective investors. Capital raising has taken us across the Middle East in the UAE, Saudi Arabia, Kuwait, and others, into Japan and Singapore in APAC, up to the Nordics and multiple visits to London and then closer to home to Bermuda and Puerto Rico. Across the U.S., we have already touched over a third of the U.S. states and the District of Columbia and are on pace for our goal of having boots on the ground in almost every state this year. 2024 is meaningfully different than 2023 in terms of which Bridge strategies are available to investors.

For most of 2023, our capital raising was focused on net lease industrial, AMBS, and solar renewable energy, which are relatively newer strategies with lower targets as we build a following. In 2024, capital raising activities will feature vehicles from what we call our four horsemen, including our debt strategies, Workforce & Affordable Housing, Newbury Partners Secondaries, and Logistics Value-add strategies. Although these strategies will represent the bulk of capital raising focus, we have other attractive vehicles and initiatives to further drive our business in evolution, such as broadening wealth channel efforts. We launched an accredited investor-focused product within our net lease industrial income vertical in Q1 to capitalize on the growing retail investor segment.

We are now approved with several major custodians, including Fidelity, Schwab, and Pershing, as well as iCapital. iCapital is a leading platform providing alternative investment access to RIAs and broker dealers that do not have their own alternative investment groups. This is an important first step for the vehicle. We believe the combination of the attractiveness of the industrial sector, along with the yield, capital appreciation, and downside protection attributes of our net lease industrial income strategy will be in demand with this new retail constituency. Building on our success with qualified purchasers on the wealth platforms, this new channel represents an exciting opportunity for Bridge over time. We have also enhanced the team of CSG professionals who service the retail industrial distribution channel.

We’ve added retail distribution responsibilities to five members of our team, inclusive of multiple senior leaders, to complement our existing wealth team with more to come in this space in the future. With that, I will turn the call over to Jonathan.

Jonathan Slager: Thank you, Bob, and good morning. In the first quarter, industry-wide commercial real estate transaction volumes remained muted as higher interest rates and volatility within the debt capital markets continued to weigh on activity. However, we are seeing signs of a strengthening transaction environment, with prices beginning to stabilize and capital markets opening up. As of the end of April, year-to-date CMBS issuance is nearly triple the volume of at this point last year, and spreads on BBB minus loans have tightened 125 basis points. This gives us more confidence as debt capital becomes more available and cost trends lower. But we can’t predict when the Fed will start to cut rates or how much and how quickly they will adjust.

Our view is that the cost of capital and commercial real estate has peaked. And once the Fed gives the all clear from its first-rate drop, we anticipate that the two plus years of muted selling activity will bring sellers forward. With over $100 billion in dry powder and U.S. value-add and opportunistic equity funds and another $40 billion in debt funds, we expect markets to open up quickly and values to rebound. Trying to time the bottom precisely and waiting for this signal from the Fed has the potential to leave many investors behind. As such, we have started to lean in on select investments, particularly in Multifamily and Logistics. In Q1, we deployed over $330 million of equity capital. Notably, on the Multifamily side alone, we have closed or have under exclusive control nearly $800 million of assets by gross purchase price and another $250 million on the industrial side.

For Multifamily, this 2024 activity has been awarded at unlevered underwritten IRRs that are 30% better than pre-pandemic levels. And on a replacement cost basis, we’re at 60% versus pre-pandemic levels of 80%. And at the peak, we were nearly at 100%. While we are encouraged by the increased level of deal sourcing activity, our overall deployment trajectory will depend in part on a broader rebound in industry transaction volumes. The operating trends in most of our property portfolios remain healthy. Despite softening conditions in the market and our most recent Multifamily and Workforce vintages, we have exceeded our NOI projections by 9.6% life to date. In our first Logistics Value vintage, we have exceeded net effective rents by 21.8% on average since inception.

Operations are always important, but in the current environment where near-term supply issues and tight labor markets exist, operations will drive alpha and Bridge’s vertical integration and operational focus continue to drive results. Since 2020, Bridge Multifamily rents have outperformed by 24% compared to market rents. Our local operating knowledge and insights are so critical in a slower market for making sound investment decisions by knowing, which assets to lean in on and more importantly, which ones not to. Now turning to investment performance, excluding office, which is only 1.5% of our fee earning AUM, our equity real estate portfolio valuations were roughly flat in Q1. This is in line with broader market trends of stabilization.

As holders of assets and closed-end funds with long fund durations, we have the wherewithal to withstand short-term capital markets volatility as we focus on improving operations at the property level to maximize future exit values. In our credit strategies, the increase in base rates has supported a strong distribution yield. In commercial real estate, the last time we saw a meaningful reset in asset values and transaction volumes was during the GFC. Cycles provide the chance to capitalize on lower entry points and have always created attractive investment opportunities. For example, during the GFC, property values declined by 30% to 40%, creating a meaningful opportunity to capture value at a discount through replacement costs. The current cycle has seen value declines of a similar magnitude and we believe will offer similarly attractive entry points.

I’ll now turn the call over to Katie.

Katie Elsnab: Thank you, Jonathan. Bridge’s recurring fund management fees continue to provide stability to our business in a more volatile capital markets environment. Recurring fund management fees increased 17% year-over-year and 11% from last quarter. Fee-earning AUM increased 1% compared to last quarter, driven by deployment within Workforce & Affordable Housing Fund II. Over 97% of our fee-earning AUM is in long-term, closed-end funds with a weighted average duration of 6.6 years. Adding to the foundational stability of the business, our balance sheet remains resilient. Fee-related earnings to the Operating Company were $33.9 million in the quarter, increasing 19% from last quarter, mostly attributable to the $5.7 million write-off taken in Q4, along with higher transaction revenue, which was partially offset by higher fee-related expenses.

As we indicated on our call last quarter, the higher fee-related expenses reflect a more normalized expense environment and an increase for inflation adjustments to compensation and increased variable compensation. The year-over-year increase also includes the impact from our acquisition of Newbury Partners. On a modeling note, Q1 net earnings from Bridge property operators included a one-time leasing commission we earned of $1.5 million. As Bob and Jonathan noted, transaction activity appears to be improving. However, we are reliant on the broader commercial real estate market, which could cause more muted transaction-related revenue to persist in the near term. Fee-related margins will continue to be impacted to the extent that we have lower transaction fees and catch-up fees from capital closing into closed-end funds.

As transaction and capital raising volumes normalize, we expect to see a movement of our margins towards our longer-term average of approximately 50%. Distributable earnings to the Operating Company for the quarter were $32.2 million, with after-tax fee per share of $0.17, increasing 22% from last quarter, mostly due to the items discussed within fee-related earnings, along with slightly higher net real-life performance fees. Similar to last quarter, realizations were comprised of tax distributions within debt strategies. Realization revenue in the near term is expected to remain subdued. However, we are well positioned for an eventual acceleration in the context of improving liquidity in the real estate transaction market. Net accrued performance revenues on the balance sheet stands at $320.3 million.

In closing, we believe that we are well-positioned to navigate the near-term challenges in the institutional real estate sector due to our long tenure fee streams and our AUM concentrated to some of the most attractive sectors to achieve success as conditions inevitably improve. With that, I would now like to open the call for questions.

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Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Ken Worthington with JPMorgan. Please proceed with your question.

Ken Worthington: Hi, good morning and thank you for taking the question. Robert, first for you, I was hoping you’d flesh out your comment on the new product in the wealth channel. So wealth has been sort of a big distribution channel for you historically. Can you talk about what is new with this fund? Is it a different fund structure? Is it just sort of focusing on a different part of wealth distribution? So please flesh out your comments and fill in the pieces for us, please.

Robert Morse: Yes. Good morning, Ken, and thanks for participating today and thanks for the question. We’ve had a longstanding presence in the wealth channel broadly defined. Our vehicles in the past have typically been qualified purchaser compliant, meaning at a higher level of wealth than the current vehicle, which is an accredited investor-compliant vehicle that’s structured as a private REIT. So it’s a different structure that seeks to build on the momentum and success that we’ve had for a decade plus in the wealth channel and offer another investment alternative for our wealth partners to share with their investor clients. And it’s – the ink is hardly dry. We’re just in the early stages of launch at this point.

Very excited about the structure, carefully designed structure. Very excited about the underlying investment thesis as well, which we think offers both the strong income as well as the exposure to a very strong asset class. So we hope and expect that it will gain some meaningful momentum as the months roll on.

Ken Worthington: Thank you there. And then just maybe modeling question, with the collapse of the profit interest, is there any NCI now associated with the performance fee revenue? Or I guess, performance earnings? If we look at the performance revenue of $13 million this quarter, how much of the net performance fees of $5.5 million actually now fall to the bottom line? Like, I’m trying to get a sense of what is yours and what is not yours, given the profits interest collapsing.

Robert Morse: Katie?

Katie Elsnab: Happy to take this one. When we collapsed the profits interest, that was really focused on our fee-related earnings. As it relates to our performance allocations, in general, nothing changed there. And so when you look at that, what drops to the OpCO unitholders in general is some of the realized performance allocations offset by the compensation and offset by the realized NCI. And so that – the $13 million less the $7.4 million [ph] less the $2.5 million [ph] is what drops down to the OpCo.

Ken Worthington: Okay, great. Thank you.

Operator: Thank you. Our next question comes from the line of Bill Katz with TD Cowen. Please proceed with your question.

Bill Katz: Okay, thank you very much. Good morning everybody. So, I just want to talk about maybe fundraising in general. And, Bob, you mentioned the four horsemen. I was wondering if you could sort of help size the opportunities across each of the verticals? And how much of any headwind to growth is more a function of the macro malaise versus any of the sort of the branding stuff that may have come up associated with office last quarter? Thank you.

Robert Morse: Bill, I think that our sense is the macro environment is improving. We try to communicate that in our prepared remarks. We’ve had literally hundreds of dialogue with various classes of investors over the first quarter, and there is a palpable sense of enthusiasm for what is a new entry point for real estate in the markets, real estate as an asset class, as in – really in large part. And when you look at specialized verticals, has reset and reset in a positive way, even as new construction costs and development costs have continued to go up. So in particular, the value of existing assets on a relative basis, many people feel has improved pretty significantly. And that’s inciting some meaningful interest across what we do.

And hopefully that will manifest into tangible capital commitments as time goes on. As I said, we’re beginning to see that start, and hopefully that momentum will change over time. I think that there is, in a more demanding operating environment, there’s increasingly a view that one size does not fit all, and the fact that there’s a specialized focus on particular verticals with fundamental strengths around them is appreciated. The fact that there’s an ability to, as appropriate, operate the assets, property manage the assets, and create value at the asset level in a more demanding operating environment is appreciated as well. So we feel pretty good about that. And certainly, when you look at the historical performance of what we really call the four horsemen, that’s a colloquialism.

It’s just the vehicles where we’ve had a lot of success over the years in the past, plus our relatively new logistics vehicle, which has gotten out of the gates very strongly. The fundamentals there are quite strong and interest appears to be quite strong. Your comment or your allusion to what happened with respect to our Office Fund I, I think most of our investor base, and we’ve talked to every single one of our investors who invested in office, understand the significant amount of value decay that has taken place in the office world. Our experience is not different than, and in many cases more muted than, the value decay that’s happened with a lot of other asset owners. And it’s a set of unfortunate circumstances that have culminated into – in the value diminution.

That – we either because we’re lucky or good, was and is a de minimis part of our overall AUM. And we think that, that damage and certainly the financial impacts of that was contained in our year-end earnings and that we moved pretty significantly beyond that.

Bill Katz: Thank you. Just as a follow-up, Bob, you mentioned in your own mind that the stock’s not adequately discounting sort of the opportunity in front of you. And just given the sharp drop in the stock, I’m wondering what is changing from either the management team or the Board’s team to try and drive value other than just waiting for a more benign macro backdrop? Thank you.

Robert Morse: Bill, we first and foremost, I think, have the objective of maximizing value in our investment vehicles. And as you know and others know, our income statement is comprised of a lot of different elements. One of those elements is making sure that we have the right transaction volume that takes place. 2023 was a pretty quiet year as it relates to transaction volumes, and intentionally, so on our part. I mentioned, Jonathan mentioned that we’ve started to lean in to the markets because of what we feel is an attractive reset in terms of valuation. And hopefully we will be able to prove that thesis over the course of this year and next and into the future. We feel that the suite of investment objectives that we have and the areas of focus that we have offer some pretty significant opportunity.

If you look back and you look back at what the drivers of our business were prior to and leading up to and through the IPO, and you compare that to the drivers of our business today, we have a lot of new and we think pretty exciting initiatives that will take the strong foundation of what we had and add to that the potential growth of these new initiatives, and that’ll create an even stronger revenue and earnings stream going forward. Not the least of which is our initiatives in Logistics. Newbury, Secondaries, our retail net lease business. We’ve talked in the past about renewable energy infrastructure. So there’s a set of multiple drivers of business initiatives and as appropriate for the businesses that are longer tenured within Bridge.

Successor funds typically are as big as, sometimes bigger than predecessor funds, so that should provide some growth as well.

Bill Katz: Thank you.

Operator: Thank you. Our next question comes from the line of Michael Cyprys with Morgan Stanley. Please proceed with your question.

Michael Cyprys: Hey, good morning. Thanks for taking the question. So I’m going to circle back to some of the commentary you were making earlier around the financing markets. I was hoping maybe you could just elaborate a bit more on your access to the financing markets. How is that evolving at the fund level, at the asset level? What’s changing for you over the last couple of months? And as you look out over the course of the year, how do you expect that to evolve? And any particular color around where is it more challenged versus where do you have more access? And how does that inform your actions and steps on the deployment and realization side?

Robert Morse: Jonathan, do you want to address that?

Jonathan Slager serves: Sure. Yes. Look, we think that the markets are poised to be much more active. And again, there’s been this long period here that we’ve had a pretty big bid-ask spread in the major asset classes, particularly Multifamily and industrial. And there’s been a concern over whether the actions of the Fed are continuing to indicate further rate hikes. I think we’re very, very much toward the back end of that. I think, as we’ve said, we’re believers that the next action that the Fed will likely take is a rate drop. But I do think that there’s a lot of dry powder that we alluded to it in my comments, right? There’s a lot of dry powder that’s also poised and anxious to get into the market because as we see it, the secular demand drivers exceed the supply potential in the next five years to 10 years in both industrial and in residential.

And we see a huge addressable market, big opportunity, and we think Bridge is really well positioned for that. And one of our differentiators, as you probably well know, is that we have an internal debt capital markets team. And that debt capital markets team spends a tremendous amount of time with something in the order of 100 different lenders on a daily basis both looking for opportunities that might be coming from them, from borrowers that got over their skis on attractive opportunities that we might be able to help them with, but also in terms of just them being able to provide us with attractive capital. So as I alluded to in the remarks, or actually stated in the remarks, we are actually seeing spreads tighten. And so if we get a little bit of help from the underlying indexes, which I think are in some part connected to and driven by what the Fed does, I think we’re going to start to see activity really strengthen.

And our access to attractive debt capital will be there because we’re positioned for that.

Michael Cyprys: Great. And just a follow-up question on Multifamily. I was hoping maybe you could elaborate on some of the key trends you’re seeing across the Multifamily marketplace with more supply coming online. Just curious when you expect that new supply to fall off, what are you seeing across your markets in terms of rent growth? And anything else you’re able to elaborate on in terms of some of the steps you’re taking across your portfolio to navigate through this period?

Jonathan Slager serves: Yes, that’s a great question. This year we’re continuing to see the overhang of supply hitting a lot of our markets, but we see that waning toward the end of this year, meaning the supply pipeline really slowing down, and by 2025 we see demand exceeding supply again, which is not going to be the case this year and certainly was not the case last year. There’s this lag, as you probably well know. You conceive of finance and undertake a project and begin construction. It takes a couple of years until that project becomes an actual project in the market. So we can very well see what the supply pipeline is for the next few years, and we can very well see where the demand drivers are. So in some of the markets that got very heavily hit with supply, we think 2025 is going to start to be a year when that flips back around.

And by 2026 and 2027, we see really attractive markets in terms of supply-demand imbalance in favor of a lack of supply. And so we – in terms of what we’re doing operationally, that is one of – as you heard from us and you always hear from us, one of our core strengths. We spend a tremendous amount of time getting out ahead of the key performance drivers, making sure that we’re attracting the right amount of leads, that we’re closing on the leads properly, that everything at the asset level is very competitive. We’re not the kinds of people who want to follow. We sort of want to lead out in terms of being a market trendsetter and pace setter. And so we just were myopically focused on all those key performance drivers and making sure that we maintain the right balance between rent and rent growth and occupancy.

And across the portfolio, the rent growth is needed right now in the entire market. But as you heard me discuss, when we go back and we do measurements and metrics, Bridge’s outperformed the market pretty meaningfully.

Michael Cyprys: Great. Thank you.

Operator: Thank you. [Operator Instructions] Our next question comes from the line of Adam Beatty with UBS. Please proceed with your question.

Adam Beatty: Thank you and good morning. Follow-up on fundraising, and just parenthetically, when they arrive, I hope the four horsemen can leave the apocalypse at home in the closet. We probably don’t need one of those. But anyway, just on fundraising and I think Bob mentioned that successor funds generally being larger than prior vintages. So just wondering for fundraising this year, either separately or collectively, how you expect that to trend? Do you expect fund sizes to be bigger across the board or some puts and takes there? Thank you.

Robert Morse: Hi, there. Thanks for the question. And we share your view of the four horsemen. We’re hoping that they can be nice, big, sturdy Clydesdales so that’ll be bringing the kegs to town, as we go through the year. I think that in the past and going forward, we’ve always tried to marry capital raising with what the size of the opportunity is in front of us so that we can effectively raise and deploy capital in our strategies. And in the past, we’ve been disciplined in limiting fund size in order to marry that deployment opportunity and selectivity with capital raise. We’re going to continue to do that going forward. Having said that, it’s been our experience that as our – as we invest in our teams, as they grow, as the – as markets evolve, that we’ve found more opportunity.

I’ll use Multifamily as an analogy for what are a number of different market segments at this point, we used to have only a generalized Multifamily investment vehicle. Now we have market rate Multifamily, which is for the most part Class B value add, as well as Workforce. And in both of those areas, there’s some – there’s, we think, some pretty significant opportunity. Asset values go up and down and transaction activity goes up and down, but the overall size of the Multifamily market as that example writ large is pretty significant and there’s ways to expand that market. So we think we do have the potential to effectively raise and deploy more capital looking forward than we did looking backward. It’s a similar story with different parameters around it in Logistics as an example.

We think, we hope, we’re just getting started in Logistics. And our – the team that we’ve stood up now numbers somewhere between 35 and 40 people. We are actively deploying capital in our Logistics Value-add Fund II. We are actively deploying capital in some build to core activities around that vertical as well, and we think that Logistics – when you look at Logistics as a – from a size perspective, the overall market is as big as the Multifamily market, to be sure. But our participation is much, much smaller at this point. So there should be a great deal of growth there. When you look at Secondaries, the Secondaries market has been growing really strongly. And we think that from an industry structure perspective, Secondaries, not only are here to stay, but are going to become an increasingly important strategic part of the overall alt universe, allowing both GPs and LPs to manage liquidity, et cetera.

So we think that there’s a lot of room to grow there. And I could go on and on about our different verticals. One of the factors that’s pretty fundamental to us when we try to curate where we participate, where we don’t, is what the future growth prospects are, what the potential for growth is, what the potential for related diversification is, building on what we strongly believe are differentiated capabilities in what we’re doing and how those capabilities might be applied in related ways to expand the markets that we do. So we think that we have some pretty attractive growth drivers in place that hopefully as we, at least from our perspective, see this as a at or near the cyclical bottom will be amplified going forward, both through the cyclical upturn, but also because of the secular growth of the underlying verticals.

Adam Beatty: Excellent. Thank you for piecing those out. And then just a question on the wealth management channel. One of the aspects of that channel that’s gotten some attention at your peers recently has been sort of liquidity features for individual investors. So maybe you could talk a little bit about, overall, in your wealth effort, what those liquidity features look like, and in particular for the new product that you’re bringing to market. Thank you.

Robert Morse: Sure. That’s a really good and appropriate question because there’s always the concern that you have a vehicle that offers liquidity and then underlying assets that are less liquid than potentially the capital. I think we’ve structured well around that. We have defined characteristics of liquidity that will help to guide investors in understanding what their options are. It’s really early in the capital raise for this vehicle. We did, over the course of the last couple of years, create a very strong seed portfolio. That seed portfolio, the investors who helped to fund that seed portfolio also do have liquidity – around their investment. The seed portfolio has been performing so well that we – I don’t think we’ve had a – if we’ve had any requests for liquidity, they’ve been de minimis.

I don’t want to say zero, but nothing that has risen to any level of importance in that respect. We invest in discreet investments that are relatively small individually, but aggregate to meaningful scale. So that enhances liquidity as well. Were there to be requests for liquidity, what we’ve invested in we think is highly marketable and to meet those liquidity requests. And we do have defined parameters around how much liquidity investors can expect that are relatively consistent with what other so-called retail democratized vehicles have in the marketplace as well.

Adam Beatty: Excellent. Thank you. Just very specifically, is there an initial lockup period for investors?

Robert Morse: I believe there is. I’m not – it might be one year. It might be a little bit more than one year. I’m not sure. We can come back to you on that.

Adam Beatty: Okay. No sweat. Thank you very much. Appreciate it.

Robert Morse: Thank you. Thanks for the questions.

Operator: Thank you. Ladies and gentlemen, this concludes our Q&A session and thus concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.