“Investment performance in 2012 was strong across our Credit private equity and hedge fund strategies," said Pete Briger, Fortress co-Chairman and Credit business co-CIO. "Looking at investment opportunities today, we believe the Credit markets continue to price in far too much optimism and that actual risk exceeds perceived risk by a substantial margin. Over the longer-term, we believe the market should present more compelling opportunities further into the current cycle. The opportunity set that we see in the near- or medium-term will depend in large part on our broad sourcing capabilities and the extent to which European financial institutions accelerate their pace of deleveraging. We will remain patient and opportunistic investors, focused on generating outstanding risk-adjusted returns for our limited partners.”
- Fund portfolio investment valuations increased 3.9% in the fourth quarter of 2012, bringing full year 2012 appreciation to 25.4%
- Raised $77 million of capital in the fourth quarter, bringing total alternative and permanent equity capital raised in full year 2012 to $1.1 billion
- Subsequent to year end, raised $764 million of permanent equity capital for Newcastle Investment Corp.
- Subsequent to year end, Newcastle announced plans to spin off all of its investments in mortgage servicing rights (“MSRs”) and other residential assets into a new publicly traded residential-focused mortgage REIT
- Subsequent to year end, announced plans to sell remaining interest in SeaCube Container Leasing (NYSE: BOX)
(See supplemental data on page 18 for more detail on Private Equity results)
The Private Equity business, which includes Private Equity Funds and Castles, had pre-tax DE of $31 million in the fourth quarter of 2012, up slightly from $29 million in the fourth quarter of 2011. Full year 2012 pre-tax DE was $115 million, down $3 million from full year 2011, largely due to lower Private Equity Fund management fees that resulted from changes in the basis on which these fees are calculated in three funds, partially offset by increased Private Equity Fund incentive income. The majority of this incentive income was attributable to an $8 million reversal of previously recognized claw-back reserves recorded for Fund II.