EXCLUSIVE: Fortress hits $1.1bn hard cap for FJOF III

The New York-based private equity firm has hit the hard cap for a Japanese real estate fund for the third time with the close of Fortress Japan Opportunity Fund III.

New York-based private equity firm Fortress Investment Group has once again reached the fundraising hard cap for its latest Japanese real estate investment fund.

PERE can reveal the firm has hit its cap of $1.1 billion for Fortress Japan Opportunity Fund (FJOF) III, the third in a series of opportunistic real estate funds focused exclusively on the Japanese market.

The successful raising follows hard caps of $1.47 billion hit for FJOF II in December 2012 and $871 million for FJOF I in June 2010.

Fortress raises its funds in yen and dollars. The depreciating yen has meant that while the yen amount raised for FJOF III compares with that raised previously for FJOF II, the dollar amount is comparatively less.

Nonetheless, the raising further rubberstamps Fortress’ dominant position in the Japanese private equity real estate market. The firm has managed to attract significant investment for its third fund from a range of institutional investors as a result of the strong performances of the first two funds.

Indeed, while consistently targeting gross annual returns of 20 percent from investments made via the fund series, FJOF was generating a net return of 32.3 percent as of the end of September, while FJOF II, was tracking 23.5 percent up to the same date, according to numbers from Fortress’ third quarter earnings which were published last week.

The firm’s strategy in the country is to target the deleveraging of financial institutions as well as their non-core assets, and investments in assets subject to near-term real estate debt maturities. Particular to FJOF III, meanwhile, has been a number of investments in Japanese hospitality properties.

It is understood that about $140 million of the fund’s equity has been deployed to date.

Fortress declined to comment.