Bridge Investment Group to Launch Single-family Rental Strategy Through Transaction With Gorelick Brothers Capital

Rhea-AI Summary

Bridge Investment Group Holdings Inc. (NYSE: BRDG) announced its acquisition of 60% of Gorelick Brothers Capital (GBC) for $50 million. This includes a portfolio of single-family homes and a majority of GBC's asset management business. The deal aims to capitalize on the single-family rental market, expected to close in Q1 2022, pending approvals. Bridge plans to jointly own a new SFR investment manager with GBC, enhancing its residential investment strategy amidst a U.S. housing shortage.

Positive

• Acquisition of 60% of GBC for $50 million expands Bridge's presence in the single-family rental market.
• Formation of a new single-family rental investment manager with GBC strengthens Bridge's investment capabilities.
• Recapitalization of over 2,700 homes valued at $660 million indicates robust growth potential.

Negative

• Dependence on obtaining necessary approvals for transaction completion poses risks.
• Market uncertainties could impact the anticipated benefits of the acquisition.

SALT LAKE CITY--(BUSINESS WIRE)-- Bridge Investment Group Holdings Inc. (“Bridge”) (NYSE: BRDG) announced today that it has entered into definitive agreements to acquire certain assets of Gorelick Brothers Capital (“GBC”), including a portfolio of single-family homes owned by GBC-managed vehicles and a majority of GBC’s asset and property management business. GBC is a privately held, vertically integrated investment management firm focused on investing in the single-family home rental (“SFR”) industry.

In connection with the transactions, Bridge is acquiring 60% of GBC’s business, valued at $50 million. Bridge expects to fund 50% of the acquisition with cash and 50% with units of Bridge Investment Group Holdings LLC. Upon the consummation of the transactions, (i) the GBC team will join Bridge to launch an SFR strategy on the Bridge platform, (ii) Bridge and the key principals of GBC will form and jointly own a new SFR investment manager within Bridge, and (iii) Bridge and GBC principals will lead a $660 million recapitalization of a portfolio comprising more than 2,700 homes in 14 markets, concentrated in the Sunbelt and certain Midwest markets of the United States. Assuming the satisfaction of closing conditions, including obtaining necessary approvals, both the acquisition and recapitalization are expected to close in the first quarter of 2022. Upon closing, Bridge will indirectly own a majority of the single-family rental investment manager, and the principals of GBC will own 40% of the new Bridge single-family rental investment and property management company.

Gorelick Brothers Capital is a 14-year-old investment firm based in Charlotte, North Carolina, that began investing in single-family rental properties in 2013. The GBC team comprises more than 90 people, including approximately 70 that work in local markets as part of the firm’s property management division.

“We are delighted to add the Gorelick team and their carefully curated SFR portfolio to the Bridge family,” said Robert Morse, Executive Chairman at Bridge. “We have long been investors in the residential real estate sector and are excited to expand into the single-family market. The addition of SFR capabilities enhances our residential activities, and positions Bridge to offer additional investment opportunities to investors to benefit from the protracted U.S. housing shortage. Concurrent with the recapitalization of the portfolio, Bridge is launching an investment strategy to further expand our SFR activities in selected prime growth markets in the U.S.”

“We are excited to join forces with Bridge as we enter the next chapter in our firm’s history,” said Todd Gorelick and Christopher Skardon, Co-Managing Partners of GBC. “Bridge’s hands-on, vertically integrated investment model will add significant strength and scale potential to our business. Together with our colleagues, we look forward to driving continued strong performance and business growth for many years to come.”

“The GBC portfolio has meaningful overlap with our carefully targeted multifamily footprint and reinforces our strategic position as a leading participant in the U.S. residential sector,” said Jonathan Slager, Chief Executive Officer at Bridge. “We are excited about acquiring a meaningful presence in a highly fragmented sector, where only approximately 2% of assets are owned by institutional managers. GBC’s experience with a variety of acquisition channels, including portfolio transactions and build-to-rent, positions the team for continued growth as we combine our companies at this exciting time.”

RBC Capital Markets LLC acted as financial advisor to Bridge and Latham & Watkins LLP acted as Bridge’s legal counsel. Goldman Sachs & Co. LLC acted as financial advisor to GBC and Kirkland & Ellis LLP acted as GBC’s legal counsel.

ABOUT BRIDGE INVESTMENT GROUP

Bridge is a leading, vertically integrated real estate investment manager, diversified across specialized asset classes, with approximately $31.8 billion of assets under management as of September 30, 2021. Bridge combines its nationwide operating platform with dedicated teams of investment professionals focused on select U.S. real estate verticals: multifamily, affordable housing, seniors housing, office, development, logistics net lease, logistics properties, debt strategies, and agency mortgage-backed securities.

FORWARD-LOOKING STATEMENTS

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future events or our future performance or financial condition. All statements other than statements of historical facts may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “outlook,” “could,” “believes,” “expects,” “potential,” “opportunity,” “continues,” “may,” “will,” “should,” “over time,” “seeks,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “foresees” or negative versions of those words, other comparable words or other statements that do not relate to historical or factual matters. Such forward-looking statements include, but are not limited to, statements about the benefits of the GBC acquisition and recapitalization, including the anticipated operations, financial position, liquidity, performance, prospects or growth and scale opportunities of Bridge, GBC or the combined company, the strategies, prospects, plans, expectations or objectives of management of Bridge or GBC for future operations of the combined company, any statements regarding the closing of the acquisition and recapitalization, including the satisfaction of closing conditions, and statements of belief and any statement of assumptions underlying any of the foregoing. Accordingly, we caution you that any such forward-looking statements are based on our beliefs, assumptions and expectations as of the date made, taking into account all information available to us at that time. These statements are not guarantees of future performance, condition or results and involve a number of risks and uncertainties that are difficult to predict and beyond our control. Actual results may differ materially from those expressed or implied in the forward-looking statements as a result of a number of factors, including but not limited to risks and uncertainties related to the pending transactions, including the failure to obtain, or delays in obtaining, necessary approvals; the failure to satisfy any of the other closing conditions to the proposed transactions on a timely basis or at all; the ability to realize anticipated benefits of the transactions; the ability to ensure continued performance and market growth of GBC's business; changes in the U.S. business environment and economic conditions; the availability and cost of credit; changes in relationships with key customers, vendors, investors and others as a result of the transactions; inability to retain key personnel; the impact of the COVID-19 pandemic on Bridge's and GBC's business, customers, vendors, investors and employees or the overall economy; and other factors affecting the SFR industry generally. In addition, please refer to the risks described from time to time in our filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made. Bridge undertakes no duty to publicly update any forward-looking statements made herein, whether as a result of new information, future developments or otherwise, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211217005113/en/

Investor Relations:

shareholderrelations@bridgeig.com

Media:

Charlotte Morse

Bridge Investment Group Holdings Inc.

(877) 866-4540

Source: Bridge Investment Group Holdings Inc.

FAQ

What assets did Bridge Investment Group acquire from Gorelick Brothers Capital?

Bridge Investment Group acquired 60% of Gorelick Brothers Capital's business, including a portfolio of single-family homes and asset management operations.

What is the value of the GBC acquisition?

The acquisition of Gorelick Brothers Capital is valued at $50 million.

When is the Bridge and GBC acquisition expected to close?

The acquisition is expected to close in the first quarter of 2022, subject to necessary approvals.

How many homes are involved in the GBC recapitalization?

The recapitalization involves a portfolio comprising more than 2,700 homes.

How much is the recapitalization of GBC's portfolio valued at?

The recapitalization of the GBC portfolio is valued at $660 million.