Bridge Investment Group Prepar ared ed for r Sant nta a Clara - - PowerPoint PPT Presentation

Private & Confidential – Not For Distribution

Bridge Investment Group

Prepar ared ed for r Sant nta a Clara ra Valley ey Transpo ansportatio rtation n Auth thority rity

April ril 2, 2019

AGENDA ITEM #6

Private & Confidential – Not For Distribution

Executive Summary

2

Capital Appreciation, Current Income and Tax Efficiency

• Strong absolute and risk-adjusted returns driven by solid real estate fundamentals and asset level alpha
• High and steady quarterly distributions
• Tax efficient relative to other asset classes

Diversification and Inflation Protection

• Low correlation to both traditional assets and other illiquid alternatives
• Hard, income-producing assets that typically preserve value during periods of inflation
• Lower loss rates and fewer defaults via real estate debt investing relative to corporate credit

Hedge Against Rising Rates

• Rent escalators and floating rate exposures provide protection

Healthy Real Estate Fundamentals

• Favorable supply / demand dynamics
• High occupancy rates
• Strong employment growth
• Rising rents
• Tailwinds created by demographic trends (e.g., growth in millennial population, aging of baby boomers,

transition to a knowledge economy)

Key Differentiators

• Long-tenured senior management who are owner operators with a 28-year history
• Specialization across Real Estate Debt, Multifamily, Office and Seniors Housing
• Keen focus on portfolio construction and risk management
• Disciplined market selection driven by fundamental research and local teams embedded in Bridge Target

Markets across the U.S.

• Large operating platform creates value at the asset level through high-touch property management

Why Real Estate? Why Now? Why Bridge?

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We live and breathe our assets. That’s how we find value where others don’t.

Bridge seeks to be a globally-trusted investment manager offering exceptional returns to our investors, pursued with uncompromising principles. We are a high-touch, detail-oriented investor in the commercial real estate and fixed income sectors. We are a people business. It is a privilege to serve as steward of

• ur Investors’ capital. Our residents and tenants are the lifeblood of our assets. We strive to create vibrant communities where people are excited to live and
• work. We hire the best people and provide them with unparalleled opportunity to succeed and advance.

Core Values T E A M W O R K We emphasize teamwork in everything we do. We thrive on collaboration, hard work and open and honest communication. We forge strong and inclusive relationships, trust each other, and win as a team. E X C E L L E N C E We strive to be the best performing firm in our industry. We take pride in our performance and celebrate our achievements. We do what is right- for the right reasons. A C C O U N T A B I L I T Y We stand behind our word and strive for continuous improvement in all that we do. We face facts and realities, and we embrace challenges. E M P O W E R M E N T We empower our people to reach their full potential. We cultivate a diverse and inclusive culture of disciplined analysis and action. We believe that diversity is the only path to superior performance. S P E C I A L I Z A T I O N We develop specialized investment and operating teams which have deep sectoral knowledge of the areas in which we invest. We use data, carefully analyzed and fully vetted, to complement decades of experience, in guiding our investment decisions. C R E A T I V I T Y & I N N O V A T I O N We consistently reexamine how we operate and seek innovative solutions to improve our performance, at the asset level, at the Fund level and at the corporate level. New ideas are carefully examined and adopted if appropriate.

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Private & Confidential – Not For Distribution

Bridge Investment Group Overview

Private & Confidential – Not For Distribution

National Reach With Local Expertise

5

$15+ billion in AUM

Private real estate investment management firm started by Bridge principals in 1991 Fully vertically integrated operating company with 2,600+ employees

12 Sponsored closed-end strategies across

equity and debt

5 Dedicated, specialized and synergistic

investment teams Over$169 million of voluntary GP commitments across Bridge strategies

B r i d g e O f f i c e s

New York, NY

B R I D G E F O O T P R I N T

M u l t i f a m i l y W o r k f o r c e O f f i c e S e n i o r s H o u s i n g F i x e d I n c o m e

Private & Confidential – Not For Distribution 2014 Launch of commercial real estate (CRE) backed fixed-income strategy with Bridge Debt I

6

1991 Bridge principals establish predecessor as real estate

• wner/operator

2000 Bridge’s predecessor becomes vertically integrated with the addition of Bridge Property Management 2009 Launch of discretionary fund business with Bridge Multifamily I 2011 Principals organize Bridge as an SEC- regulated Registered Investment Adviser 2012 Launch of Bridge Multifamily II 2013

• Bridge featured in Private

Equity International (“PEI) as Top 10 Emerging Manager

• Launch of seniors housing and

medical properties strategy with Bridge Seniors I 2015 Launch of Bridge Multifamily III 2016

• Bridge breaks into Private

Equity Real Estate (”PERE”) Top 50 Real Estate Private Equity firms

• Launch of Bridge Debt II
• Bridge acquires Fairlead

Commercial Real Estate and launches dedicated Bridge Office platform 2017

• Launch of Bridge Office
• Launch of Bridge Seniors II
• Launch of Bridge Workforce

and Affordable Housing I 2018

• Bridge moves to #27 in PERE

Top 50 Real Estate Private Equity firms

• Launch of Bridge Debt III
• Launch of Bridge Multifamily IV

2019

• Launch of Bridge Qualified

Opportunity Zone Initiative

Bridge Investment Group History

Private & Confidential – Not For Distribution

Specialized Bridge Platforms

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• $2.5 billion in equity

capital

• 134 existing

investments

• 1,400+ properties in

current portfolio

• $2.3 billion in equity

& joint venture commitments

• 63 existing

investments

• 34,000+ units in

current portfolio

• $750 million

targeted equity

• 40 to 50 expected

investments

• 4,500 units in

current portfolio

• $1.8 billion in equity

& joint venture commitments

• 78 existing

investments

• 10,300 units in

current portfolio

• $750 million

targeted equity

• 40 to 50 expected

investments

• 13 million square feet

in current portfolio

• Bridge Debt I (2014)
• Bridge Debt II (2016)
• Bridge Debt III

(2018)

• Bridge Multifamily I

(2009)2

• Bridge Multifamily II

(2012)3

• Bridge Multifamily III

(2014)

• Bridge Multifamily IV

(2018) WFAH exposure previously managed in Multifamily funds and now an exclusive portfolio.

• Bridge Workforce

and Affordable Housing I (2017)

• Bridge Seniors I

(2014)

• Bridge Seniors II

(2017) Office exposure previously managed in Multifamily funds and now an exclusive portfolio.

• Bridge Office I (2017)

Debt Multifamily Workforce & Affordable Housing Seniors Housing Office

flow levels will continue. 2,Multifamily Fund I is fully realized. 3 Multifamily Fund II is fully realized.

Private & Confidential – Not For Distribution

Market Opportunity & Bridge Debt Platform

Private & Confidential – Not For Distribution

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• All-weather, income-focused strategy with moderate risk profile and medium-term liquidity
• Diversified portfolio focused on first mortgage floating-rate loans and Freddie Mac K-Series B-Pieces
• Primarily secured by recession-resistant multifamily assets in the U.S.
• Targeting 11-13% gross / 9-11% net IRR with 80-90% distributed in the form of quarterly cash coupon1
• Lending with an “owner’s mentality” at 70-75% loan-to-value (“LTV”) in established Bridge Target Markets2

Investment Group LLC (“Bridge”) is the parent company of Bridge Debt Strategies Fund Manager LLC (the “Investment Manager” or “Bridge Debt Manager”). As of Q4, 2018, Bridge and its subsidiaries have over $14.5 billion of assets under management, employ approximately 2,600 people, are headquartered in Salt Lake City, UT, and have offices in Atlanta, GA, Orlando, FL, New York, NY, and San Francisco, CA. The Investment Manager and Bridge Multifamily Fund Manager LLC, a subsidiary of Bridge, are registered investment advisers under the Investment Advisers Act of 1940, as amended (“the IAA”). Bridge Multifamily Fund Manager LLC is the “filing adviser” and the Investment Manager and certain additional affiliated advisers are “relying advisers” for IAA filing purposes, as such advisers conduct a single advisory business.

• Seeking to deliver strong, risk-adjusted returns and steady, predictable income
• Focus on lower beta, recession-resistant property types, including multifamily
• Attention to liquid, high growth secondary markets across the United States
• Grounded in healthy real estate fundamentals and leveraging a double layer of rigorous credit underwriting

Bridge e Debt Strategies Conviction

• n in Real Estate

Executive Summary

Private & Confidential – Not For Distribution

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• 26-person investment team comprised of former senior members of the Morgan Stanley Commercial Real Estate

Lending Group

• At Morgan Stanley, Jim Chung led the team in originating, pricing and securitizing $50+ billion of loans between

2000 and 2013

• The team had a zero net write-down rate during the 2008-2009 credit crisis when the other 12 major U.S.

Commercial Real Estate-backed fixed income lenders took aggregate net write downs of $25 billion1

• Expertise in structuring and executing sophisticated debt transactions, including warehouse lending, CRE CLOs and

re-securitizations

• Real estate expertise dating back to 1991 / managing $15+ billion in assets under management (AUM) across five

verticals: Commercial Real Estate-backed Fixed Income, Multifamily, Workforce & Affordable Housing, Commercial Office, Seniors Housing

• Vertically-integrated operating platform with an extensive national presence of more than 2,600+ professionals

across 19 states

• Bridge Debt Strategies leverages the Bridge acquisition and property management expertise in executing due

diligence

Team and Track Record rd Bridge e Investme ment nt Group

Executive Summary (con’t)

Private & Confidential – Not For Distribution

11

53% 11% 11% 13% 15% 5% 5% 0% 0% 1% 1% 2% 2% Banks & Thrifts Insurance Companies Securitized (CMBS + REIT) GSEs Government Pension Plans Finance Companies Other

Increa eased sed capital tal and liquidity ty requirem remen ents s and broad risk aver ersi sion

• n on the

e part t of traditional tional liquidity ty providers

• viders

create te opportun portuniti ties es for more nimble ble, private e lender ders s such ch as Bridge ge Debt bt Strategi tegies es

• Federal Reserve stress tests have forced banks to increase capital levels
• Banks have tightened credit standards significantly post-credit crisis in response to more stringent capital requirements
• Traditional CMBS issuance has contracted significantly due to risk retention rules
• Meaningful opportunity has been created for preferred partners of Freddie Mac CMBS

Landscap ape e of Liquidity y Provider ers Shifting g Lending g Standards

Pre Pre-Fina inanci ncial l Crisis sis Post-Fin inanci ncial l Crisis isis Loan to Value (LTV) V) 70-90% on aggressive valuations 60-80% on reasonable valuations Stabil biliz ized d Debt bt Servic vice Covera rage Ratio io (DSCR) 1.15 - 1.25x 1.25 - 1.50x Intere rest Reserve rves s for Transit sition ional l Deals ls Minimal interest reserves

• ften waived

Fully funded interest reserves with replenishment requirements or debt service guarantees Amortizatio ion n on Stabil biliz ized d Loans Full term (10 years) interest

• nly up to 80% LTV

Full term interest only available for loans in the 60-65% LTV range Carve veout Guarant ntees Not required Required Cash Managemen ment Structure ure Not required Required

Market Opportunity Within Real Estate

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Strategic Portfolio Construction1

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Freddie Mac K-Series Multifamily & Seniors Housing Direct Lending Multifamily, Commercial Office & Seniors Housing Opportunistic Various Property Types Investment Strategy B-Pieces on pools of fixed and floating first-mortgage loans originated by Freddie Mac First-mortgage lending Commercial real estate mezzanine loans, preferred equity and CMBS / CRE CLO investments Role in the Portfolio Target Returns1 Attractive current return, longer duration and liquidity Attractive total return and current yield Liquidity and total return 11% - 13% Gross ss 9% - 11% Net

Freddie ie Mac K-Serie ries 50% Direct Lending nding 40% 40% Opport rtun unist istic ic 10%

that are outside the control of the General Partner. Investors should bear in mind that no assurance can be given that Bridge Debt III will achieve its investment objectives or its target returns. Investors should refer to the Bridge Debt III Confidential Private Placement Memorandum and Limited Partnership Agreement for investment scope and limits. The General Partner forecasts a six-year average hold period.

TARGET T PORTFOLIO IO

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Bridge Debt Strategies Fund II: Portfolio Composition

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• Portfolio secured largely by low-beta, recession-resistant Multifamily collateral
• Focused on steady, predictable income and capital preservation

assurance can be given that the Fund will achieve its investment allocation objectives. The General Partner strongly recommends referring to the Private Placement Memorandum and Limited Partnership Agreement for details regarding the Fund, including investment scope and limits.

Multifami amily 76% 76% Office 13% Mixed d Use 7% 7% Senior Housi sing 4% 4% Other 1% 1%

Bridge Debt Strategies Fund II

INVESTME TMENT NT BY SECTOR1

Private & Confidential – Not For Distribution

Senior Loan

First Mortgage Lending Opportunity

• Floating-rate first

rst-mortga

• rtgage loans on

multifamily, seniors housing and office properties are desirable for borrowers seeking transitional financing

• We focus on deals below
• w $50

50 million

• n in

size that typically go un-serviced by competing private debt funds and traditional lenders

• The credit and capital markets expertise
• f the Bridge Debt team coupled with

the broader Bridge real estate management infrastructure create a powerful combination to confidently lend in our chosen markets

• A warehouse line may be used to

leverage returns on first-mortgage loans

• Securitization options (CLOs) may be

utilized if it makes sense

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0.00% 2.50% 5.00% 7.50% 10.00% 12.50% 15.00% 17.50% 20.00% 22.50% 25.00% Spread (Over LIBOR) Levered Yield

Bridge e Debt Strategies Histori

• rical Direct Lending

g – Spreads and Yields

Private & Confidential – Not For Distribution

Freddie Mac K-Series: Overview

Bridge ge is a prefe ferr rred ed purch chaser ser of the e K-Ser Series es Multifa family CMBS B-Pieces ces

Freddie Mac is the largest and most respected multifamily lender

• Freddie Mac’s mission is to provide liquidity, stability and affordability to the U.S. housing market
• K-Series is the paradigm of successful market facilitation

Freddie Mac is a demanding lender

• Insists on conservative Loan to Value (LTV) and high Debt Service Coverage Ratios (DSCRs)
• Selective on asset inclusion
• Eliminates borrowers that have histories of defaults

Why Freddie Mac K-Series CMBS?

• Bridge believes that favorable technicals and the strong outlook for the multifamily sector make multifamily-backed bonds an

attractive asset

• Bridge believes multifamily exposure and lower spread volatility provide good diversification
• Freddie Mac borrowers typically have extensive management experience, high liquidity and net worth and strong credit histories
• Similar credit metrics to highly rated debt securities but with better yield

K-Series B-pieces historically have double-digit yields and very low default risk

• K-Series CMBS are backed by a portfolio of multifamily loans originated by Freddie Mac
• B-pieces have had very low historical loss rates and deliver outsized yields

K-Series B-pieces have significant upside

• Seasoned B-Pieces can be sold at premiums and create significant gains at dispositions
• B-Pieces can be modestly leveraged to increase returns by 200+ bps
• Potential fee income from assumptions on underlying loans in the pool can enhance yields by 50+ bps

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Private & Confidential – Not For Distribution

Origination Year Total Originations ($mm) Average Initial LTV Average Initial DSCR Credit Losses ($mm) Credit Losses 1994 439 68% 1.48x 0.5 0.114% 1995 1,082 75% 1.39x

• 0.3
• 0.028%

1996 1,349 73% 1.42x 0.000% 1997 1,651 73% 1.52x

• 2.9
• 0.176%

1998 2,799 71% 1.68x 5.1 0.182% 1999 4,942 69% 1.78x 7.5 0.152% 2000 4,164 70% 1.52x 9.2 0.221% 2001 6,291 69% 1.79x 8.8 0.140% 2002 6,254 69% 1.84x 12.1 0.193% 2003 6,338 68% 2.06x 4.6 0.073% 2004 7,575 72% 1.81x 5.8 0.077% 2005 8,805 70% 1.82x

• 2
• 0.023%

2006 11,465 67% 1.70x 50.1 0.437% 2007 18,034 68% 1.57x 37.9 0.210% 2008 17,548 68% 1.61x 52.8 0.301% 2009 14,836 69% 1.74x 1.3 0.009% 2010 12,891 69% 1.65x 5.2 0.040% 2011 18,555 69% 1.70x 1.8 0.010% 2012 25,947 68% 1.95x 0.000% 2013 24,403 67% 1.97x 9.9 0.041% 2014 25,936 69% 2.12x 0.000% 2015 42,856 70% 2.06x 0.000% 2016 51,551 70% 2.00x 0.000% 2017 62,992 69% 1.85x 0.000% 2018 14,308 69% 1.82x 0.000% Total 393,011 69% 69% 1.87x 207.4 0.053%

• The worst loan vintage for Freddie Mac loans was 2006, which had only

0.44% of losses through Q2 20171

• Assuming current deals show similar losses to the 2006 vintage, post-loss

yields on B-pieceswould be ~ 80 bps less than pre-loss yields2

• Assuming losses are 3x the 2006 experience, the post-loss yield on the B-

piece would drop approximately 250 bps

Freddie Mac K-Series: Historical Performance

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1994) loans, negotiated transactions/structured deals, and loans included in K0001 and K002. The MLPD is provided for information purposes only and is not intended to provide any prediction regarding the future performance of loans or securities owned or guaranteed by Freddie Mac. Figures for 2017 are estimates based on available data from the Freddie Mac Multifamily Securitization Overview published December 2017. In 2017, there was ~$56.7 billion of loan issuance of which there are currently zero loans in delinquency. 2Assumes a 7-year term, 7.5% tranche thickness, and 10.9% pre-loss yield.

68% 75% 73% 73% 71% 69% 70% 69% 69% 68% 72% 70% 67% 68% 68% 69% 69% 69% 68% 68% 69% 70% 70% 70%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Avera erage ge Initia tial Loan to Value e for Freddie e Mac Loans Conserv ervat ative e Underw rwri riting g Tran anslate ates Into

• Low Defaul

ult Rate

Private & Confidential – Not For Distribution $51 $31 $43 $89 $50 $104 $468 $392 $204 $24 $180 $311 $52 $75 $237 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 2014 2015 2016 2017 2018 2019

Invested Capital ($mm)

Total K-Series Acquisitions1

Fixed Floating Single-Borrower Other 1 3 11 17 6 2

Deal Type # of Deals Total Capital Invested ($mm) Average Yield at Inception3 Average Yield ITD3 Fixed 8 $263.4 10.8% 19.1% Floating 13 $1,167.8 11.6% 16.2% Single-borrower 14 $566.6 7.9% 11.1% Other 5 $311.5 14.5% 17.8% Total 40 40 $2,3 ,309.4 .4 10.9 .9% 15.5%

Bridge Freddie Mac K-Series Portfolio

allocation that may be included in the Fund’s B-piece investments. 3Prospective Investors should bear in mind that past performance is not necessarily indicative of future results and that Bridge Debt III may not achieve its objectives and may achieve substantial losses.

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• Bridge was the largest counterparty to Freddie Mac in

K-Series B-Piece transactions in 2017 and 2018

• 40 K-Series investments to date totaling over $2.3

billion in invested capital, nearly all through a direct placement process with Freddie Mac

• Zero credit losses on K-Series investments to date
• Robust pipeline of opportunities across multiple

Freddie Mac products

Sample Capital Stack2

AAA AAA BBB BBB-BB BB B-Piec iece Equity ity 66% 66% 2% 2% 26% 6% 6% 90% 2.5% 7.5% Equity ity

Private & Confidential – Not For Distribution

B-Piece Buyer # Deals2 Original Balance % Total 1 Bridge Investment Group 14 14 $11,776,400,000 17.3% 2 Kayne Anderson 8 $8,418,300,000 12.4% 3 Berkshire Group 6 $6,398,100,000 9.4% 4 Related Cos. 6 $6,274,100,000 9.2% 5 Blackstone 4 $3,957,000,000 5.8% 6 Harbor Group International 5 $3,614,100,000 5.3% 7 Axonic Capital 9 $3,369,000,000 5.0% 8 NexPoint Advisors 3 $2,965,000,000 4.4% 9 Priderock Capital 3 $2,883,400,000 4.2% 10 Other (16) 32 $18,328,900,000 27.0% Total 75 75 $67,984,300,000 100.0%

2018 Cumulative League Table 1

K-Series League Table

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Bridge ge was s the e top purcha chaser ser of Freddie e Mac K-Series eries B-Pieces eces in 2018

Private & Confidential – Not For Distribution

Bridge Freddie Mac K-Series Buying History

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• Since 2014, Bridge has consistently

purchased K-Series deals at competitive

• r outsized yields
• When compared to the benchmark

floating rate deals, Bridge has bought numerous deals at pricing premiums

• Bridge has been able to generate

additional yield on K-Series B-Pieces by selling at tighter yields after seasoning or re-securitizing the bonds

0% 5% 10% 15% 20% 25% 3/25/2014 6/25/2014 9/25/2014 12/25/2014 3/25/2015 6/25/2015 9/25/2015 12/25/2015 3/25/2016 6/25/2016 9/25/2016 12/25/2016 3/25/2017 6/25/2017 9/25/2017 12/25/2017 3/25/2018 6/25/2018 9/25/2018 12/25/2018

Yield at Inception

Freddie Mac K-Series Yield Comparison1

Bridge Investment Group KF Deal Pricing

Private & Confidential – Not For Distribution $0 $200 $400 $600 $800 $1,000 $1,200 1Q 2Q 3Q 4Q 5Q 6Q 7Q 8Q

Capital Deployed ($mm)

Bridge Debt II and III Deployment to Date

BDS II BDS III

Bridge Debt Strategies Performance

• Bridge Debt I is currently delivering a 13.8% gross IRR / 8.5% net IRR and approximately 12.5% annualized distribution
• Bridge Debt II fully deployed all capital in the first 18 months following the fund’s initial closing and has delivered

approximately 10.0% annualized distribution

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Proceeds and Unrealized Values. Return Multiple is Implied Value divided by Total Investment. IRR calculations are based on actual daily cash flows plus Unrealized Values at the Fund level; IRR figures may differ for Limited Partners. Bridge Debt II realized investments include 27 loans realized and secured into BDS 2018-FL1 CRE CLO and 19 loans realized and secured into BDS 2018-FL2. 2For additional performance summary information for this fund, including current net return information, please see the appendices to the Confidential Private Placement Memorandum for Bridge Debt III. 3Prospective Investors should bear in mind that past performance is not necessarily indicative of future results and that Bridge Debt III may not achieve its objectives and may achieve substantial losses. Investment Funds

• No. of

Realized Unrealized Total Investment Realized Unrealized Implied Implied Return Net Gross Investments Investments Investments Investment At Cost Proceeds Values Value Gain/(Loss) Multiple IRR IRR Bridge Debt I1 21 8 13 $120,811,839 $64,211,574 $93,447,478 $53,243,256 $146,690,734 $25,878,895 1.21x 8.5% 13.8% Bridge Debt II1 96 49 48 971,941,135 971,941,135 84,959,164 984,828,534 1,069,787,698 97,846,563 1.10x 8.8% 13.2% Bridge Debt III1,2,3 17

• 17

159,516,390 159,516,390

• 161,389,384

161,389,384 1,872,994 1.01x 6.0% 9.8% Total Debt Strategies 134 56 78 $1,252,269,364 $1,195,669,099 $178,406,642 $1,199,461,174 $1,377,867,816 $125,598,452 1.10x 8.7% 13.2%

Private & Confidential – Not For Distribution

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Bridge Debt Strategies: Asset Snapshot

Emerald Suites, Las Vegas, NV BDS III One Financial Plaza, Providence, RI BDS III The Reserve at The Ballpark, Atlanta, GA BDS III 1 Light Street, Baltimore, MD BDS II The Breakers, Houston, TX BDS III Greenbrier Apartments, Raleigh, NC BDS III Vaughn Place, Washington, DC BDS III

Private & Confidential – Not For Distribution

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Bridge ge Debt t Strategi tegies es is a defen ensive sive portf rtfol

• lio
• focused

used on capital tal preserv servati tion

• n

It may be categor egorized zed by the e following: g: 1. 1. All-Weat Weather er strategy egy 2. 2. Deliver ering stea eady, dy, predi edict ctable e income

• Strong risk-adjusted returns (9-11% net) with 80-90% in current coupon distributed quarterly

3. 3. Modera erate te risk profil file e

• Secured by low-beta, recession-resistant multifamily assets
• Direct Lending: Rigorous credit underwriting leveraging Bridge Asset & Property Management platforms
• Freddie K-Series: Double layer of protection with strict Freddie underwriting criteria in addition to rigorous

Bridge underwriting process and requirements

• Structural protections commonly associated with illiquid credit (prepayment penalties etc.)

4. 4. Medium um term liquidity ty of six years 5. 5. Diversi rsified fied portfoli rtfolio

• across sub-strategies (Direct Lending / Freddie Mac K-Series) and geography

Conclusion

Private & Confidential – Not For Distribution

Partnership: p: Bridge Debt Strategies Fund III LP (“Bridge Debt III”) General Partner: Bridge Debt Strategies Fund III GP LLC (“General Partner”) Investment Manage ger: Bridge Debt Strategies Fund Manager LLC (“Bridge Debt Manager”) Partnership p Size: $1.5 billion, although the General Partner reserves the right to accept aggregate Capital Commitments lower or higher than this amount Minimum um Commitment: $1 million, although lesser amounts may be accepted by the General Partner in its sole discretion General Partner Commitment: The lesser of $10 million or 1% of total Capital Commitments to the Partnership Commitment Period: d: Three years from the Initial Closing Targe get Return urn: 11-13% gross IRR/ 9-11% net IRR Term: Six years from the Initial Closing, but may be extended at the discretion of the General Partner for up to two consecutive one-year periods Quarterly y Distribu butions 100% of profits expected to be distributed quarterly Prefe ferred Return: 8% Carried Interest: 15% Catch-up: up: 50% to the Fund’s Limited Partners and 50% to the General Partner Manage gement Fee: 1.5% (1.25% for investments > $25 million; 1.0% for investments > $50 million)

Summary of Fund Terms1

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Placement Memorandum and Limited Partnership Agreement of the Fund.

Private & Confidential – Not For Distribution

Notice to Prospective Investors

The information contained herein (the “Materials”) on Bridge Debt Strategies Fund III LP ( the “Fund”) is being furnished on a confidential basis to a limited number of “accredited investors” (the “Recipients”, and each a “Recipient”) in one-on-one presentations. THE MATERIALS ARE FOR THE EXCLUSIVE USE OF THE PERSONS TO WHOM THEY ARE ADDRESSED AND THEIR ADVISERS. IF THE RECIPIENT HAS NOT RECEIVED THE MATERIALS FROM BRIDGE DEBT MANAGER (OR AN ENTITY AUTHORIZED BY BRIDGE DEBT MANAGER AS CONFIRMED BY BRIDGE DEBT MANAGER IN WRITING), THE DELIVERY IS UNAUTHORIZED, AND THE RECIPIENT SHOULD RETURN THE MATERIALS TO BRIDGE DEBT MANAGER IMMEDIATELY. By retaining the Materials, the Recipient acknowledges to Bridge Debt Manager that the Materials are, amongst other information, proprietary information belonging solely to Bridge Debt Strategies Fund III GP LLC. The Materials are provided to the Recipient on a confidential basis and shall not be copied, reproduced or distributed, in whole or in part, to any other person or be used by any person without the express written consent of Bridge Debt Strategies Fund III GP LLC. The Recipient will keep permanently confidential all information contained herein not already in the public domain. Bridge Debt Manager and its affiliates do not accept any responsibility whatsoever or liability for any direct, indirect or consequential loss or damage suffered or incurred by the Recipient or any other person or entity however caused (including but not limited to negligence) in any way in connection with the information contained in the Materials or the authenticity, accuracy, or completeness of such information in the Materials. The Materials are being provided solely for information purposes and are not, shall not be construed as, and do not constitute an offer, solicitation, invitation or recommendation by Bridge Debt III to sell or issue to or a solicitation to subscribe for or buy any interest in or assets from Bridge Debt III, its affiliates, or any of its investee companies, nor shall any securities in or assets of Bridge Debt III or any other entity be offered, issued or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities

• r equivalent laws and regulations of such jurisdiction. Any offer or solicitation will only be made pursuant to the Confidential Private Placement Memorandum of the Fund, as amended

and/or supplemented from time to time (the “PPM”), which qualifies in its entirety the information set forth herein, includes risk factors and other material information, and should be read carefully prior to investment in the Fund for a description of the merits and risks of an investment in the Fund. Any decision to invest in the Fund should be made after reviewing the PPM, conducting such investigations as the Recipient deems necessary and consulting the Recipient’s own legal, accounting, tax and other advisors in order to make an independent determination of the suitability and consequences of an investment in the Fund. Neither the Fund nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and nothing contained herein should be relied upon as a promise or representation as to past or future performance of the Fund or any other entity. Prospective investors are advised that past performance is not necessarily indicative of future results, and there can be no assurance that the Fund will achieve comparable results to any performance data provided herein. Prospective investors are encouraged to contact Bridge to discuss the procedures and methodologies used to calculate the investment returns and other information provided herein. Target returns are provided in order to help prospective investors understand the Fund’s investment strategy in comparison to other investment strategies and the Fund’s process for evaluating potential investment opportunities, including certain investment characteristics, investment terms, and risk-return profiles it generally needs to believe are present or the investment is capable of attaining in order to pursue the opportunity. Targeted portfolio characteristics and return profiles are provided for informational purposes only, are not indicative of future results, and are not guarantees. There can be no assurance that any investment will have these characteristics or terms, that targeted returns will be met, or that investor capital will not be lost. While Bridge believes the information presented herein is reasonable under current circumstances, actual realized returns for any investment and the Fund overall will depend

• n a variety of factors, all of which may differ from the assumptions on which any projections contained herein are based.

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Private & Confidential – Not For Distribution

Notice to Prospective Investors

Unless otherwise stated all internal rates of return, including target or projected rates of return, are presented on a “gross” basis (i.e., they do not reflect the management fees, “carried interest,” taxes (whether borne by investors or entities through which they participate in investments), broken-deal expenses, transaction costs and other expenses to be borne by investors in the Fund, which in the aggregate are expected to be substantial). The net internal rates of return and net return multiples contained herein are calculated after management fees, “carried interest,” taxes and other expenses (but before taxes or withholdings incurred by the limited partners directly or indirectly through withholdings by the Fund). The distribution or possession of the Materials in or from certain jurisdictions may be restricted by law. Persons in possession of the Materials are required by Bridge Debt III to inform themselves about any such restrictions and to observe such restrictions. Bridge Debt III does not accept any liability to any person in relation to the distribution or possession of the Materials in or from any jurisdiction. Any inquiries concerning the Materials should be directed to Bridge Debt III marked for the attention of Dean A. Allara at +1 (650) 579-1350 or d.allara@bridgeig.com in confidence. Investment in Bridge Debt III involves a high degree of risk (including the possible loss of a substantial part, or even the entire amount of an investment) and potential conflicts of interest that prospective investors should carefully consider before purchasing any interests. There can be no assurance that Bridge Debt III’s investment objectives will be achieved or that investors will receive a return of their capital. In addition, investment results may vary substantially on a monthly, quarterly or annual basis. Investment in Bridge Debt III is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks and lack of liquidity inherent in an investment in Bridge Debt III. Investors should pay particular attention to the information under the caption “Risks Factors and Conflicts of Interest” in the PPM. Any projections, including financial projections, contained in these Materials are estimated predictions of future performance. There can be no assurance that actual performance will meet or even approach such projections. Projections are inherently uncertain, actual events are difficult to predict and may depend upon factors that are beyond Bridge Debt III’s control and accordingly, there can be no assurance that such projections can be realized or that actual results of operations will not be materially lower or inferior than those described herein. Any information regarding the prior performance is provided for illustrative purposes only and may not be indicative of Bridge Debt III’s future performance. This presentation includes financial projections and other forward-looking statements that involve risk and uncertainty. Sentences or phrases that use words such as "expects", "believes", "anticipates", "hopes", "plans", "may", "can", "will", "projects," and others, are often used to indicate forward-looking statements, but their absence does not mean a statement is not forward-

• looking. Such statements reflect Bridge Debt III”s current opinion and are designed to help readers understand Bridge Debt III’s thinking. By their very nature, however, such statements are

subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

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