Q2 2023 Bridge Investment Group Holdings Inc Earnings Call
Yes.
Greetings and welcome to the breach Inlet Spin group second quarter was 2023 earnings call and webcast.
At this time, all participants are in listen only mode.
A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It's now my pleasure to introduce your host Ms.
Bonnie Rosen head of shareholder relations.
Thank you you may begin.
Good morning, everyone. Welcome to the bridge investment Group Conference call to review, our second quarter 2023 financial results.
Prepared remarks include comments from our executive Chairman, Robert Morris, Chief Executive Officer, Jonathan Slager, and Chief Financial Officer, Katy out that way.
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 Dot Bridge I G dotcom.
These slides can be found under the presentation portion of the site along with the second quarter earnings call exactly. They are also available live during the webcast.
I will present, our GAAP metrics, and Katie will review and analyze our non-GAAP data.
We reported a GAAP net loss to the company for the second quarter of 2023 of $2.8 million on a basic and diluted basis net loss attributable to bridge per share of class a common stock was 24 cents, mostly due to changes in noncash items.
Distributable earnings of the operating company with $35 million or 20 cents per share after tax and our board of directors declared a dividend of 17 cents per share, which will be paid to shareholders of record as of September 1st. It is now my pleasure to turn the call over to Bob.
Thank you Bonnie and good morning to all.
In the three months since our last earnings update we have seen an improvement in the macroeconomic environment.
Activity levels, beginning to recover at adjusted and attractive prices in the U S. Real estate markets richest focus on selected sectors of U S real estate residential rental logistics and credit and our recent expansion into secondaries have served the company well <unk>.
Strong underlying fundamentals in these sectors have helped to preserve values of existing portfolios through operational improvements, while some of our dry powder in existing investment vehicles has been deployed at attractive values recently.
In addition, several of our newer initiatives, including a MBS net lease industrial income and renewable energy are gaining traction and momentum we are optimistic about bridges positioning looking forward raising capital globally and investing in selective high performing sectors of alternative.
Assets with an attractive mix of mature investments and relatively new sectors with high potential.
Our areas of investment focus benefit not only from secular tailwind, but also from the resilience and relative strength of the U S economy, while the global outlook has softened and many major economies. The U S continues to demonstrate that it is the preeminent destination for investment regional banking turbulence.
Last quarter did not put an end to the economic expansion nor did it signals the beginning of a systemic crisis.
Financial conditions have tightened over the past year restricted monetary policy has not yet resulted in a severe a rapid deceleration of growth nor has it compromised a strong labor market consumer confidence remains high and consumer activity continues to bolster the economy's momentum.
As a result, we have seen stronger than expected domestic growth amid a meaningful deceleration of inflation.
Perhaps the most meaningful measure is core CPI minus shelter, which stands at two 7% year over year compared to the peak in February of last year at seven 6%.
As of August 1st equity markets have responded with the S&P 500 up approximately 20% and the equal weight index up 10% as the market rally has become more broadly based which has diminished. The so called denominator effect, which has challenged the investment capability of many institutions.
Strong labor and wage growth is also helping to support residential fundamentals as we've witnessed across many of our investment portfolios. This has especially been the case for the lower half of the income band, which are the cohort bridge serves in much of our leading residential rental investments, including our flagship workforce.
Housing and multifamily series.
In the aggregate our largest overall investment theme is in residential rental and we provide shelter and comprehensive services to thousands of families and individuals in some of the most attractive markets in the country.
Through market cycles forward integration and sector specialization is our vital differentiator, we've seen our operational focus driving results within our real estate portfolios over the years and especially over this past year.
Operationally most of our residential rental and industrial properties are outperforming their underwritten pro form is and we're seeing positive fundamentals with healthy occupancy and rent growth on.
On the capital raising front, our client solutions group is larger and more capable than at anytime in bridge's history, and we are busier than ever before in the institutional wealth management and direct high net worth channels.
Investors in the second quarter of 2023 remained cautious resulting in $320 million of new capital raised across our investment vehicles, yet the high volume of constructive dialogue and interest support our optimism entering the second half of the year. Additionally.
Additionally, with a large workforce housing portfolio acquisition expected to close today, we have essentially reached the required deployment threshold in our latest workforce and affordable housing fund.
Along with our leading debt strategies fund this enables us to large successor vehicles in both strategies to drive future fee, earning AUM in the coming quarters on the back of strong track records in these sectors remember the immediate predecessor vehicles in each of these strategies were the largest in British history.
Two Q inflows included the additional towns in joint venture previously announced at the end of June Bridges continued partnership with Townsend represents another milestone in expanding the progression of our value add logistics strategy. We also had inflows into many of our newer verticals, including a M. B S. Net.
Lease prop tech and secondaries as well as our debt strategies and opportunities on vehicles year to date, we've raised approximately $1 billion.
From a sales channel perspective, we continue to maintain a good balance between individual investors and institutional clients.
46% of our Investor base is retail oriented with 54% institutional historically, we've always had a strong retail component with qualified purchasers ultra high net worth and high net worth investors.
This is resulted from our highly differentiated platform in high touch approach. We are also exploring ways to expand our retail efforts by making certain products accessible to accredited investors, thereby broadening our potential investor base.
As we look forward bridge has a number of growth vectors in our high conviction areas of investing residential rental logistics credit and secondaries in both mature and exciting new sectors are more established strategies, including multifamily workforce and affordable housing in debt strategies.
<unk> achieved significant profitability, yet have substantial runway to scale further in future vintages, especially with the strong performance track Records that bridge is established.
In addition, Newberry partners, our recent PE secondaries acquisition is contributing meaningful fee, earning AUM further bolstered by the positive reception of its most recent vintage in the market.
I'd like to elaborate a bit on the impact of Newbury on our overall business. We acquired the firm at an attractive valuation we implemented a swat team of our best and brightest professionals to ensure seamless integration and cross sell and we have exceeded our already high internal expectations. We indicated at the time of our.
I P O that inorganic growth and consolidation was an important component of future growth and we've delivered on that objective via the Gorilla brothers at Newbury partners acquisitions, even in challenging times.
Longer term, we have a number of newer organic strategies that have yet to achieve positive FRE, but are well positioned to scale over time.
M B S and net lease industrial income are reaching critical mass in a U M and moving closer to profitability.
As banks and other balance sheet lenders reduced commercial real estate exposure. We believe these opportunities will continue to multiply in a world of corporate costs rising and uncertainty about capital availability Triple net lease it looks like an attractive option for many corporate users.
In addition, the fact that our net lease industrial income strategy is relatively new and unburdened with assets acquired at higher prices pre fed tightening along with a singular focus on logistics manufacturing and mission critical assets is a significant advantage in the market.
We stood up an experienced logistics team now totaling 31 professionals and they have deployed over $1 $5 billion of gross capital from a standing start logistics and manufacturing demand remains robust, particularly in infill locations as onshoring e-commerce and supply chain resilience.
See our durable demand drivers with staying power.
Within residential rental our single family rental team has built a high quality portfolio of over 3300 homes housing is critically under supplied and tight conditions are expected to persist for years due to elevated costs and availability of debt for new construction.
Renewable energy, which just had its first close will benefit from the global shift to transition energy sources broadly coupled with an unmet need for renewable energy solutions on commercial real estate with that I'll turn the call over to Jonathan.
Thank you Bob and good morning.
As Bob mentioned Britt, just beginning to see some renewed activity. Despite the fact that Q2 commercial real estate transaction volume remained at depressed levels is higher interest rate and volatility within the debt capital markets continued to weigh on activity.
For the latest real capital analytics data transaction volume for Q2 was down 62% year over year, However, up slightly from Q1 and seems to be starting to reemerge as owners are either becoming for sellers to generate liquidity I have capitulated to the impact of higher rates for longer.
On valuations.
On the P E secondaries front our partners at Newbury have also seen strong transaction flow despite headline volumes down 25% in the first half of 2023 according to Jefferies.
Notably that's off from a record high set in the first half of 2022.
After a slower start to the year market activity picked up in Q2, reflecting an improving macroeconomic backdrop.
Buyer demand is expected to be strong heading into the second half of 2023 for both G. P Lad and traditional L. P transactions.
Against that backdrop, Richard quite $490 million with most coming from within our secondary credit strategies.
As asset values have come down over the past year fund managers have taken increasingly realistic marks on that portfolio valuation, creating a willingness to transact.
Additionally, the large amount of near term debt coming due it's pressuring asset owners to find solutions to fix broken capital structures.
These owners in many cases high quality assets, but with unattractive that terms.
These are exactly the kinds of situations, we're well capitalized investors like bridge, our position to act with conviction.
With $4 $1 billion in dry powder to deploy into multifamily logistics workforce and affordable and debt strategies were actively underwriting investment opportunities and our pipelines had been increasing from the historically low levels experienced in Q1.
This momentum is building in a number of strategies across our platforms as Bob mentioned.
We expect to close today on a large workforce housing portfolio in Boston, which opens up our multifamily geographic footprint further into an attractive major market.
In logistics, we acquired four distribution and warehousing facilities within our prime infill locations Enbridge net lease we acquired an off market manufacturing asset with the distribution facility both.
On long term leases with credit tenants.
E M. B S. We bought $240 million of securitized residential credit at attractive pricing in.
And that strategy as we Opportunistically bought 273 million of floating rate CRE D. C. L. O N C. MBS bond during Q2 with ratings that range from Triple a to triple B at a weighted average discount margin. So for plus 456, these highly risk mitigated investment grade bonds.
Have significant equity cushion and subordinate debt below them and have exhibited outsize yields due to market volatility.
Subsequent to the quarter, we continued to take advantage of market. Dislocations. However, we have started to see spreads come in and more activity return as the inevitable flow of transaction returns to the market.
On the operating side, the underlying fundamentals of our portfolio investments remained healthy.
Sample, our multifamily and work force assets are 93% occupied and our same store effective rent growth for Q2 increased six 4% year over year.
While the sector is experiencing supply issues in some markets and slowing rent growth NOI across our portfolio was up six 6% year over year.
Fundamentals in our latest single family residential portfolio are similarly, strong with nine 9% year over year rent growth in Q2 occupancy at 95%.
Logistics, which is a growing component of our AUM continues to experience historically low vacancy rates.
Fundamentals in the infill coastal gateway markets in which we primarily invest remain relatively strong despite modest uptick in vacancy.
Even in light of market headwinds leasing outperformance continues to drive portfolio returns by exceeding original acquisition underwriting by 28% on a net effective rent basis. So far this year.
While a slowing tempo of transaction volume has been evident across the sector. We expect fundamentals to regain putting in 'twenty 'twenty four as challenges that constrained supply and limited availability of functional product persist in our target markets.
Now turning to investment performance after several quarters of market related markdown or equity real estate portfolios were roughly flat in the quarter with the exception of our off that's funds, which represent only 4% of our fee earning AUM.
Well, we continue to see price volatility in assets. It seems the bulk values are beginning to stabilize the historic rise in short interest rates comes to an end and pent up demand and dry powder on the debt and equity side of the market began to take hold.
Subsequent to the quarter.
We announced the successful closing of <unk>.
$550 million recapitalization of assets from bridge multifamily fund three into a continuation vehicle.
<unk> was in its first extension period beyond its original term and the transaction was driven by the need for additional time to complete certain business plans at the asset and the desire of many L piece for liquidity.
We are proud of the success. This funds are achieved and the attractive returns we have delivered for our investors.
Looking back to our IPO two years ago, we've grown fee, earning AUM and recurring fund management fees by over 100%.
This strong growth and long tenured AUM provide stable profitability to our business during periods such as now when market disruptions impact overall commercial real estate transaction volumes.
As mentioned, we are excited about the future as markets inevitably recover and bridge is well positioned with dry powder capable investment and operational teams in the most attractive sectors of real estate and secondaries and deep global capital partners to support our growth.
The future earnings power of bridge will benefit significantly both on the real estate side as activity levels in real estate investment sales market inevitably recover as well as the increased activity in the P E secondary space.
In addition to our market leading positions in our more mature business segments. We have made major investments in our platform in sectors that have large addressable markets, which we expect to drive significant future FRE M. D E to the company.
We are fully staffed with best in class investment teams that are poised to drive value as markets reopen and they further scale.
I will now hand, the call over to Katie to discuss our financial results.
Well, thank you Jonathan despite heightened market volatility on the banking crisis.
Second quarter earnings to close in the first quarter aided by the addition of new Great partners.
Our business continued to improve but recurring from management totaling $8 three.
3 million in Q2 up eight.
18% from last quarter, and 33% year over year.
Our recurrent I'm wrong, it's not blue on the graph the cube of acted as a bowler longtime vaccine market doesn't need it.
Yeah.
That's a 43% year over year to $22 2 billion, which includes approximately $4 3 billion from the Newberry acquisition.
This represents tremendous growth of 106% in this short period of time since our IPO in 2021, when I see any of them stood at $10 8 million.
Over 97% of our fee, earning AUM is in long term closed end funds that have no redemption features and a weighted average duration of 7.2 years.
Adding to the foundational stability of our business.
Over 95% of our fee, earning AUM is invested in high conviction themes, which include residential rental in the U S across multifamily workforce and affordable housing single family residential and seniors housing along with logistics credit and our newest secondary critical.
Our central theme of the year and conviction, we have thoughtfully position, our investor capital benefit from a variety of economic scenarios.
The related earnings call the operating company worth $35 1 million in the quarter.
A 14% from Q1s, mostly driven by the Liberty acquisition and slightly higher 10 Bucks.
Yeah.
These were partially offset by $2.7 million decrease in contract revenue along with the timing of higher placement agencies in the quarter.
Year over year comparison was impacted by the $13 million decrease in transactions.
What do you expect transaction revenue to begin to improve in the second half of last year with acquisitions like those that Bob and John mentioned.
On a modeling out of the workforce to what the three year mark of inbound in that period.
Management will make them being based on committed capital to invest that capital, which.
Which will result in a reduction in fee revenue in the third quarter in California that appointment of cars.
And you really don't know expenses increased.
One 1 million from Q1 with the addition of Newberry.
We continue to main call when unemployment compensation and other expenses with lower transaction activity.
Does that help protect margins, which have been impacted by a lot of catch up fee and transaction related revenue.
Our strongbox and markets rebound or dry powder will be put to work and that revenue pushed up margin.
On a long term basis, we expect our margins will average, 50% plus or minus four.
For example, the margin in Q2 with 45%.
But approximately 48% on a trailing 12 months.
Distributable earnings for the operating company for the quarter were $35 million with after tax de per share at 20 cents.
An increase of 5% from Q1 as net realizations had a slight pick up mostly due to multifamily suntory.
Q3 will include the impossible to recapitalize I should've asked him uncle warmer country, which will result in a realization of performance fees.
Overall, we're excited about the transaction, let's create the positive outcomes with I'm, sorry investors they don't realize they shouldn't that.
Well also extending that or somebody shop, that's two five years.
Unrealized carry decreased slightly by $19 3 million to $428 4 million.
As a reminder, accrued carry on the balance sheet was recorded one quarter in arrears.
Increase was primarily related to renovations and upgrades multifamily from three and tax distributions and bread steps such as in front.
Since our IPO in 2021, our crude carry has increased 74% and we are well positioned for additional increases that market stabilize and potentially rebound.
Our board of directors declared a dividend of <unk> 17 cents per share, which will be paid to shareholders of record as of Sept.
I'll go first.
The share count used in the dividend calculation includes the collapse of the 2021 profits interest program.
Which occurred on July 1st as a reminder, this was the last of our planned legacy profits interest classes for the foreseeable future.
Resulting in an increase to the diluted share count of $2 9 million, which is offset by lower noncontrolling interests going forward such that the overall transaction should be accretive for public shareholders.
As discussed last quarter, we funded the Newberry acquisition.
Our balance sheet resources, including 150, Marina Crosswalks and my recent private placement of debt.
The private placement and quite a bit.
120 million.
Seven year note I'm 39, or 10 year note.
With a weighted average interest rate of approximately 6%.
And that was funded with a closing of Newbury our March 31st.
In addition, our $225 million revolving credit facility was 80 million drawn at quarter end, we expect the sirona somewhere them out going forward in.
In Q3, we expect to recognize or realize that loss of $1 9 million on our balance sheet investment, which was monetized back at quarter end.
This loss will be reflected in our Q3, if I want to talk about net interest expense.
Uh huh.
The duration of our outstanding private placement as a possible my son in years and is well staggered with no maturities until 2025.
With our asset light business model, along with our increased scale yeah welcome.
Okay environment, and we are confident and bridges long term vision and strategy for success.
With that I would now like to open the call for questions.
Thank you.
Yes.
We will now be conducting a question and answer session. If you would like to ask a question. Please press star and one on your telephone keypad, a confirmation tone will indicate your line is in question Keith.
You May press Star and two if you would like to remove your question from the queue for participants using speaker equipment. It is necessary to pick up your handset before pressing the stock east.
One moment, please while we poll for questions.
Thank you. So first question is from Ken Worthington with JP Morgan. Please proceed sir.
Hi, good morning, Thanks for taking the question.
You talked a lot in your prepared remarks about the recovery in real estate and if we think about the recovery in private real estate investing where are we on this timeline and.
And I assume that deployment is really comes back first and that's sort of what you guys implied any view of the magnitude in recovery and deployment you see for the rest of the year is it something that deployment recovers a little bit or do you think given the opportunity set there is a it could recover more substantially.
The second part of the question.
Is to what extent is the recovery and fund raising.
Rail the recovery in deployment did those two sort of recover concurrently or is there really a healthy lag between the fund raising recovery and the deployment of a recovery.
Thanks for the question. This is Bob speaking I'm going to I'll start out and I'm going to ask Jonathan to make some comments, particularly about deployment as well I think as we tried to communicate in our prepared remarks, we've been we've been patient over the last half of 2022 in the first half or so almost first half of.
2023, as it related to deployment, because we felt that asset values were resetting it.
In retrospect it appears that that was an accurate assessment of of of how.
Values have changed we've we've we've we've worked hard operationally to to maintain and enhance the value of existing assets. While we have been patient in deploying incremental capital as we as we as we tried to communicate we've been.
I use the analogy of waiting in the water not diving into the water as it relates to.
Asset deployment as of as of late recently.
And we've found some pretty attractive opportunities we found opportunities in it.
In residential rental okay.
Many of our different aspects of residential rents we found opportunities in logistics, we continue to see dislocation in the credit markets, which have provided opportunities across our fixed income vehicles as well, we think and and and we're in those markets every day, we think that.
Those opportunities are going to continue to manifest in PA.
Probably accelerate over the course of the balance of the year and we're excited about some of the opportunities that are there that we're seeing now.
Jonathan can elaborate a little bit on that but I would say as it relates to fund raising.
What attracts capital is good deals.
And good performance we've had.
Very good performance in our vehicles in the past.
We think that some of the more recent investments that we've made we'll continue that good performance the amount of dialogue that we have with investors around the world is very strong and it's strong across all the various classes of <unk>.
Investors institutions wealth channel.
Direct high net worth other other investors and and and and while there has been a while there's been I would call. It patients on their part as well what motivates capital raising is the opportunity to deploy capital at and attract.
The return so to your point, they're there they're linked but beginning to beginning to show some real signs of life.
Jonathan anything you'd like to add to that.
Well Bob. Thank you I think you know as you as you've noted today today we are.
Our closing on a very substantial portfolio that shows.
When you look at the Unlevered returns on that portfolio. There. There you know very strong extremely attractive and we're seeing we're seeing some larger.
Sort of off market things that are coming our way.
Difficult to know whether any of those will actually end up making but those those larger portfolio opportunities some of the off market things could move the needle pretty substantially in terms of deployment.
I think in the kind of regular way transactions side, there's still a lot of uncertainty about you know when when is the fed going to stop stop and when are we going to start to see more stability in the debt markets were seeing spreads tightening on the debt market, which is helping.
We're starting to see people you know kind of get to the point as I said in the prepared remarks, we're starting to see people get to the point, where they were kind of <unk>.
Recognizing our valuations at a more you know at a more attractive level.
Can that can be executed on so I would say is it's unclear what the second half is going to bring from deployment, but where we're very hopeful about the activity and certainly it's going to improve from the first half I think I feel very confident and directing that whether or not it gets you know anywhere near.
Our kind of normal levels or beyond it if it if we know inevitably it will it's just a question of when.
Okay perfect.
And then from a modeling perspective, you mentioned workforce three the step down can you quantify that is that a little impact or a big and then the transition to the continuation fund basically same question what is sort of the net impact from a fee perspective.
On that transition if any.
Yeah.
I guess, taking a step.
Second half weapon.
Yeah.
On workforce to a you know we will be about 72% invested in.
And so there'll be about eight.
$800000 stepped down.
From the perspective of multifamily fund three being converted to a continuation vehicle, it's about a 500 okay.
Perfect. Thank you no.
No problem.
Okay.
Thanks, Ken.
Okay.
Okay.
Yeah.
Okay.
Thank you operator.
Michael.
Our next question is from Michael surprise with Morgan Stanley . Please proceed.
Great. Good morning, Thanks for taking the question wanted to ask about secondaries.
With Newberry coming online here in the <unk>.
Quarter I was hoping you might be able to talk about some of the initiatives to expand the secondaries platform into real estate and credit what steps might you take there or what the timeframe might be to launch.
Sort of strategy, how you might go about that and then can you just give us an update on the Newberry a secondary private equity side, just in terms of where they stand in terms of deployment on fund five I believe it is and when they might be.
Debating and raising a fun sex and any sort of fee step downs to be aware of thank you.
Thanks, Thanks, Michael.
[noise] secondaries and Newberry is it is it as you know a new initiative to our second quarter was the first quarter, where we included their result with <unk> with our results.
Just to refresh memories the the.
The most recent fund that Newbury has raised and deployed is fund five and that's that that is that is fully deployed at this point and we are we are in the market collectively with our with fund six.
For for Newbury, and and we we our experience in the in the quarter and beyond.
Is that Theres, a great deal of interest in it.
In our secondaries and particularly the continuation of the tried and true strategy that Newbury has has has pursued since I think 2006 when the when the firm was founded.
The secondaries market is is considered very attractive at this point discounts are attractive there is theres a lot of product.
And and and our early experience across both the traditional bridge investors as well as the traditional Newberry investors and the cross sell associated with that has been very positive we of course in any M&A transaction buying.
Right and integrating and moving forward collectively is critically important to success.
We've we've established a strong team across both organizations to manage that integration and we think it's been.
It's been terrific. It's it's exceeded our expectations job number one is to go out and successfully raise and deploy funds six to continue the success that newbury's had in funds one to five.
With the with the great returns that they've that they've created I think job number two.
Which which will be pursued after job number one is to explore other avenues for expansion and we think that there are significant additional avenues for expansion within the broader secondary space. You you you mentioned a couple.
Our real estate secondaries credit secondaries et cetera, and they're not really limited to that bridge has a history of finding opportunities to organically expand in related diversification look at what we've done in from from our multifamily start we we've created.
Now multifamily workforce single family for rent and seniors housing verticals, you know essentially emanating from our residential rental perspective, and hope and expect that we can do the same across many of our.
Existing sectors, including including secondaries, but job number one is to successfully.
Raise and deploy a.
A successful fund six to follow into the pattern of the successful predecessor funds.
We are aware I'm sure you're aware as well.
Secondarily, the secondaries market from a macro perspective is big and is growing.
There was a there there there's a great deal of Theres, a great deal of focus and it's a very attractive time, we think to a to b to b, both raising and deploying capital in that sector.
Yes.
Great and just coming back to my earlier question point, just around any step downs to be aware of and timeframe for the activation might that be like a second half 'twenty three event on Newbury concepts.
On slide five.
Stepped down on five activation on six.
As it relates to as it relates to I don't believe that there's a step down for fund five that is happening anytime soon.
We've had and I think I believe Jonathan mentioned this we had a modest closing.
Very quickly at four for fund six so we have some capital that were there that we have to deploy and we're actively in the market with fund fix at this point.
Yes.
So it's really the automated and edit it sorry, its been activated and has and is.
Actively being being being raised and deployed funds.
One six.
Great. Thank you just a follow up question, if I could just on private wealth.
But you might be able to elaborate on the potential to expand distribution to access a credit to investors, what the sort of path and stops could look like there. Thank you.
Some of us in the organization when when when somebody says AI. We don't think of we don't think of artificial intelligence, we think about accredited investors and it's it's as important to us as AI is artificial intelligence is to too many people.
We are you know where we are we are actively focused on on that sector of the market, we think particularly with our wealth channel.
Penetration with with with most of the leading.
A private wealth.
Our managers in the in the U S and expanding overseas, we think that and an accredited investor vehicle would would be received very well.
We are we have some ideas about which of our sector focus is would be most appropriate for a.
For an accredited Investor vehicle, we are we think we understand.
Very well intimately what are what kind of structure would be best received by the market and so we we hope that we'll be able to execute.
And accredited investor product in the relatively near future certainly within a year or so.
Great. Thanks for taking my questions.
Thanks for your questions. Thank you.
Our next question is from Finian O'shea with Wells Fargo Securities. Please proceed.
Hi, everyone. Good morning.
Question on the management fees I think last quarter. It was 61.6 million mentioned pro forma for Newbury and we were a little below that.
Katie you May have mentioned something on placement fees, just looking to clarify that or if there was any other source and.
Changed this quarter. Thank you.
Thanks for the question Yeah, essentially we do have a few placement agent fees that are paid on an annual basis and there there were larger larger payments made during Q2, which had the impact.
Yeah.
Okay and those are netted out of topline fund management fees, yes that is accurate.
Okay.
Remember when we when we talk about placement agent fees that for US includes the participation of our wealth management partners. So it's not you know.
What people traditionally think about in that respect.
Yeah.
Thanks, Vinnie and for your question.
Thank you.
As there are no further questions at this time.
I am turning the call back to Mr. Robert Morris for closing comments.
Thanks, operator, and thanks to all for your participation today in our earnings call.
We appreciate the the focus that you've that you've given us we are we.
Amongst other things published an annual.
Review of our excuse me our outlook for the year. Our 2023 outlook is one of our entitled conviction conviction in looking at the broader market of trying to discern where there is opportunity of making sure that those opportunity.
These are priced right and then successfully pursuing them and we think that 2023 is shaping up to be the beginning of a very good vintage of opportunity within real estate. So we look forward to participating in the market as we go forward. Thanks, So much for your for your time and attention today.
Yeah.
Thank you.
This concludes today's teleconference. Thank you for your participation you may now disconnect your lines.
Thank you.
Goodbye.
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