Great Elm Group's Q3 2025: Unpacking Contradictions in Revenue, AUM Growth, and Real Estate Strategies
Earnings DecryptMonday, May 19, 2025 9:08 am ET
2min read
Asset under management and revenue growth, real estate revenue and management fees, net income and market uncertainty, growth strategy and asset under management, real estate platform expansion and progress are the key contradictions discussed in Great Elm Group's latest 2025Q3 earnings call.
Asset and Revenue Growth:
- Great Elm Group, Inc.'s fee-paying assets under management (AUM) reached approximately $565 million, representing a 15% increase over the prior year period.
- Revenue for the quarter grew by 15% year-over-year to $3.2 million.
- The growth was primarily driven by BDC Great Elm Capital Corp.'s issuance of equity and debt, which contributed to a significant increase in fee-paying AUM at GECC, and strong performance in real estate project management fees and rental income.
Great Elm Capital Corp. (GECC) Performance:
- GECC delivered record total investment income of $12.5 million in Q1 2025, with net investment income exceeding its recently increased quarterly distribution.
- GECC's base management fees grew over 40% year-over-year to $1.3 million.
- The growth is attributed to increased capital base, which expanded fee-paying AUM, leading to higher recurring management fees and incentive fee potential.
Real Estate and Construction Expansion:
- Great Elm Group launched Monomoy Construction Services by acquiring Greenfield CRE, a leading construction management company, creating an integrated full-service construction business.
- This acquisition expanded the company's real estate capabilities and added accretive revenue opportunities.
- The integration of Greenfield with Monomoy's existing assets enables the company to offer an expanded range of services and strengthen its overall real estate value proposition to investors and clients.
Share Repurchase and Liquidity:
- Great Elm Group executed on its $20 million share buyback program, repurchasing approximately 4.8 million shares for $8.7 million at an average cost of $1.84 per share, representing approximately a 15% discount to the quarter-end book value per share of $2.14.
- The company ended the quarter with approximately $32 million in cash to facilitate continued growth across its asset management platforms.
- This strategic move enhances shareholder value and positions the company to capitalize on attractive investment opportunities when market volatility presents.
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Asset and Revenue Growth:
- Great Elm Group, Inc.'s fee-paying assets under management (AUM) reached approximately $565 million, representing a 15% increase over the prior year period.
- Revenue for the quarter grew by 15% year-over-year to $3.2 million.
- The growth was primarily driven by BDC Great Elm Capital Corp.'s issuance of equity and debt, which contributed to a significant increase in fee-paying AUM at GECC, and strong performance in real estate project management fees and rental income.
Great Elm Capital Corp. (GECC) Performance:
- GECC delivered record total investment income of $12.5 million in Q1 2025, with net investment income exceeding its recently increased quarterly distribution.
- GECC's base management fees grew over 40% year-over-year to $1.3 million.
- The growth is attributed to increased capital base, which expanded fee-paying AUM, leading to higher recurring management fees and incentive fee potential.
Real Estate and Construction Expansion:
- Great Elm Group launched Monomoy Construction Services by acquiring Greenfield CRE, a leading construction management company, creating an integrated full-service construction business.
- This acquisition expanded the company's real estate capabilities and added accretive revenue opportunities.
- The integration of Greenfield with Monomoy's existing assets enables the company to offer an expanded range of services and strengthen its overall real estate value proposition to investors and clients.
Share Repurchase and Liquidity:
- Great Elm Group executed on its $20 million share buyback program, repurchasing approximately 4.8 million shares for $8.7 million at an average cost of $1.84 per share, representing approximately a 15% discount to the quarter-end book value per share of $2.14.
- The company ended the quarter with approximately $32 million in cash to facilitate continued growth across its asset management platforms.
- This strategic move enhances shareholder value and positions the company to capitalize on attractive investment opportunities when market volatility presents.
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