Fortress Investment Group has held a first closing of more than $550 million for its second Japan-focused real estate opportunity fund, PERE can reveal.
The New York-based investment firm was unavailable for comment but is understood to have held the closing in December last year after raising the capital from an array of US and Japanese investors.
Among the investors in the first closing for the Fortress Japan Opportunity Fund II was Cleveland-based investment and advisory firm The Townsend Group, which is believed to have committed $160 million.
Townsend declined to confirm the amount invested but did confirm it was participating in the vehicle. Its Asia principal Nick Wong said: “Theirs is the right strategy for Japan at this moment. They will put the capital to work very soon and have a strong pipeline.”
The commitment follows Towsend's backing of Hong Kong-based CITIC Capital’s CITIC Capital China Retail Properties Investment Fund, which was announced last November. CITIC held a first closing of $225 million for the fund for which it aimes to corral $600 million in total.
Fortress has crafted a reputation for itself as extractors of value from non-performing and distressed assets in the country, particularly in the debt space, since cementing its market presence with the $800 million closing of the Fortress Japan Opportunity Domestic Fund in June 2010. The majority of that capital has been invested.
Among the high profile deals executed by the firm, led by Japan head Thomas Pulley, was the controlling investment into one-time Japanese private equity real estate giant KK daVinci Holdings, via a $230 million corporate debt held previously by BNP Paribas. The firm also recapitalised Invincible Investment, a Tokyo-based REIT, and its asset manager, as well as 2,000 loans with a face value of approximately $2.5 billion, including loans from units of collapsed Wall Street bank Lehman Brothers.
Having already returned a significant amount of the fund’s equity, as of last September the fund was projecting IRRS of north of 30 percent.
The second Japan fund is expected to attract approximately $1 billion of equity in all and generate IRRs of between 17 and 20 percent. PERE reported in November that Fortress had raised an initial $200 million ahead of the first closing.