Fortress credit feeds earnings

The alternative asset manager is still tendering for $100 million in shares and management declined to say if they would follow up a recent share repurchase with further buybacks.

Fortress reported record Q4 pre-tax distributable earnings of $139 million led by strong performance in its private equity credit funds which accounted for $62 million. 

On a full-year basis, distributable earnings fell from $446 million in 2014 to $391 million for 2015. 

The listed alternative investment manager has seen its share price fall substantially over recent months, in line with the sector. Like others, it has sought to stem the tide by repurchasing stock and management said it bought back 56.8 million shares in November using $100 million in cash and a $156 million two-year promissory note to finance the transaction. 

Those purchases are being followed up by a $100 million tender offer that closes in the coming weeks. The modified Dutch auction sees the firm offer $4.25-$4.75 per class A share. 

Asked if a follow-up to the tender offer was likely, management said no decision had been made. 

The firm raised $9 billion in 2015 of which $8.6 billion was in long-term or permanent structures. The alternative manager’s three flagship real estate debt funds also closed: the $5 billion Fortress Credit Opportunities Fund IV; the $1.1 billion Fortress Japan Opportunity Fund III; and the $1 billion global vehicle, Fortress Real Estate Opportunities Fund II. 

Peter Briger, Fortress co-chairman and head of credit, said that while the supply of distressed opportunities had increased, he was still not sure if there were many opportunities for the firm to deploy its dry powder. “It’s a year for strategy and a year to be disciplined,” he said. 

Fortress’s fee-paying assets under management stood at $70.5 billion at the end of December, while dry powder had reached $7.5 billion.