Fortress Investment Group, the New York-based firm, has closed its latest Japan fund at its hard cap of ¥130 billion ($1.65 billion).
The company said Fortress Japan Opportunity Fund II (FJOF II) was focusing on real estate-related debt and other assets, seeking “to capitalize on dynamics related to significant deleveraging by financial institutions and near-term debt maturities”. It highlighted supply demand gaps, limited credit availability, price distortions, volatility and sales of non-core or distressed real estate related assets as opportunities.
Fortress’ fund is twice the size of predecessor, the Fortress Japan Opportunity Domestic Fund (FJOF), which closed in June 2010 at its cap of approximately $800 million. That vehicle made 23 investments by the end of September. The firm estimates it is on course to deliver a gross IRR of more than 34 percent. Meanwhile, FJOF II has made 10 investments so far totaling around ¥30 billion.
“We are very pleased with the success to date of our first Japan Opportunity fund, and we believe the environment remains historically attractive for disciplined, opportunistic investments in Japanese real estate-related debt and other assets,” said Thomas Pulley, chief investment officer of Fortress Japan. He added: “We anticipate that deleveraging and the disposition of non-core assets will remain at heightened levels in the coming years, and that significant opportunities will result for select managers.”
Peter Briger, Fortress co-chairman and head of the company’s credit and real estate business, added: “In Japan, and more broadly around the globe, we see a substantial opportunity set that continues to align with the capabilities and experience of our Credit and Real Estate team. We remain patient and opportunistic investors, but believe that the coming years will present significant opportunities to provide solutions for a range of counterparties and attractive returns for our investors.”