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New words:
began, BOF, BWH, challenged, contra, deceleration, East, economy, environmental, illiquidity, incalculable, Middle, November, paused, pressure, put, reconciling, sector, show, stop, tangible, unfavorable, unsecured
Removed:
added, BDS, borrow, collection, composition, comprising, coupled, deducted, delayed, derecognized, existed, expectation, extension, GBC, Gorelick, Industrial, jointly, launch, led, LIBOR, location, methodology, Midwest, minimal, modified, Morrocroft, Neighborhood, obtained, pandemic, predominantly, preliminary, Preqin, provisional, quartile, ranked, retrospective, slowdown, stabilized, Sunbelt, supportable, team, terminated, top
Financial report summary
?Risks
- The historical performance of our fund investments may not be indicative of the future results of our fund investments or our operations or any returns expected on an investment in our Class A common stock.
- 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.
- Valuation methodologies for certain assets held by our funds and other vehicles can be subject to significant subjectivity, and the values of assets may not be the same when realized.
- 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.
- A significant portion of our revenues are subject to the risks inherent in the ownership and operation of real estate and the construction, development and financing of real estate, including, among other risks, environmental liabilities.
- Dependence on leverage by certain funds and investments subjects us to volatility, high interest rates and contractions in the debt financing markets could adversely affect the ability of our funds to deploy capital or achieve attractive rates of return on those investments.
- 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.
- The success of our business depends on the identification and availability of suitable investment opportunities for our funds.
- We have obligations to investors in our funds and may have obligations to other third parties that may conflict with your interests.
- 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 and offer new investment products, which may result in additional risks and uncertainties in our business.
- 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.
- Defaults by investors in our funds could adversely affect such funds’ operations and performance.
- Cybersecurity risks and data security breaches could result in the loss of data, interruptions in our business and damage to our reputation, and subject us to regulatory actions, increased costs and financial losses.
- A public health crisis or global outbreak of disease may affect our operations and financial performance and the investment returns of our funds, and may disrupt industries in which we and our funds operate and could potentially negatively impact us or our funds and our results of operations, financial condition and cash flows.
- 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.
- Our funds may face risks relating to undiversified investments.
- 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.
- Our risk management strategies and procedures may leave us exposed to unidentified or unanticipated risks.
- 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.
- Operational risks may disrupt our business, result in losses or limit our growth.
- Changes in, or any failure to comply with, data privacy laws, regulations, and standards may adversely affect our business.
- Employee misconduct could harm us by subjecting us to significant legal liability and reputational harm and impairing our ability to attract and retain fund investors.
- We are subject to substantial risk of litigation and regulatory proceedings and may face significant liabilities and damage to our professional reputation as a result of litigation allegations and negative publicity.
- We may face damage to our professional reputation and legal liability if our services are not regarded as satisfactory or for other reasons.
- Our failure to appropriately manage conflicts of interest could damage our reputation and adversely affect our business.
- A change of control of our company could result in an assignment of our investment management agreements.
- 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 investment management business is intensely competitive.
- Extensive government regulation, compliance failures and changes in law or regulation could adversely affect us and the operation of our funds.
- Federal, state and foreign anti-corruption and sanctions laws create the potential for significant liabilities and penalties and reputational harm.
- Regulation of investment advisors outside the United States could adversely affect our ability to operate our business.
- Because our principal asset is our interest in the Operating Company, we depend on distributions from the Operating Company to pay our taxes and expenses, including payments under the Tax Receivable Agreement (“TRA”) 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.
- The TRA 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.
- The Continuing Equity Owners are entitled to certain benefits to which holders of our Class A common stock are not entitled or are not entitled to the same extent.
- In certain cases, payments under the TRA may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the TRA, and we will not be reimbursed for any payments made under the TRA in the event that any tax benefits are disallowed.
- 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.
- If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (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.
- The Continuing Equity Owners have significant influence over us, including control over decisions that require the approval of stockholders.
- We cannot predict with certainty the effect our dual class structure may have on the market price of our Class A common stock.
- We are a “controlled company” within the meaning of the New York Stock Exchange (“NYSE”) rules and, as a result, qualify for, and 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.
- 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.
- 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 amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is 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 provides 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.
- Future sales, or the expectation of future sales, by us or our existing stockholders in the public market could cause the market price for our Class A common stock to decline.
- We incur significant costs as a result of operating as a public company.
- As a public reporting company, we are 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 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.
- 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.
- Certain provisions of Delaware law and antitakeover provisions in our organizational documents could delay or prevent a change of control.
- Climate change may adversely impact the properties owned by our funds and may lead to additional compliance obligations and costs as well as additional taxes and fees.
- We are subject to increasing scrutiny with respect to climate change and the environmental, social and governance impact of investments made by our funds, which may constrain investment opportunities for our funds and adversely affect our ability to raise capital.
Management Discussion
- Fund Management Fees. Our fee-earning AUM decreased by $0.2 billion, or 1.0%, from March 31, 2023 to March 31, 2024. Our weighted-average management fee, which varies largely due to the size of investor commitments, was 1.35% as of March 31, 2024 compared to 1.38% as of March 31, 2023. The decrease in the weighted-average management fee from March 31, 2023 was largely attributed to the Newbury acquisition, which closed on March 31, 2023, as secondaries funds generally have a lower weighted-average management fee range than other Bridge-sponsored funds. See Note 8, “Business Combination and Goodwill,” to our consolidated financial statements included in this quarterly report on Form 10-Q for more information.