Attached files
file | filename |
---|---|
8-K - FORM 8-K - Fortress Investment Group LLC | d674349d8k.htm |
Fortress Investment Group LLC
2014 Credit Suisse Financial Services Forum
February 2014
Exhibit 99.1
All information contained herein is qualified in its entirety by the disclaimer on the next page of
this document. |
Disclaimer
1 |
2
We
believe
a
highly
diversified,
global
asset
manager
delivering
top-
tier investment performance will create extraordinary opportunities
for earnings growth and value creation.
-
Wes Edens, Fortress Co-Founder, Co-Chairman & Head of
Private Equity |
Fortress Today
3
Distressed & Undervalued
Assets
Operationally Intense,
Complex Transactions
Opportunistic Lending
Situations and Securities
Global Macro
Convex Asia
Endowment-Style
Affiliated Manager
Platform (Asia Macro)
(1)
Core-Based Fixed Income
Sector-Based Fixed Income
Short & Long Duration
High Yield
Emerging Markets Debt
Growth Equities
Three large, non-correlated alternative businesses complemented by a highly scalable
traditional asset management platform
Stable, recurring earnings base with significant incentive income
upside potential Core strategies provide foundation for organic
strategic growth Increasing scale of permanent equity platform
provides high multiple, perpetual fee-based earnings
Substantial balance sheet value relative to share price
Financial Services /
Mortgage Servicing
Transportation &
Infrastructure
Senior Living & Care
Permanent Equity Vehicles
Private Equity
$14.9B of AUM
Liquid Markets
$6.9B of AUM
Credit
$12.6B of AUM
Logan Circle
$23.6B of AUM
(1)
In January 2014, Fortress announced the launch of a new affiliated manager platform pursuant to which
Fortress takes a non-control economic interest in a fund manager and earns fees for
infrastructure, technology and related services, with Fortress Asia Macro Fund (FAMF) as
the first fund to join the platform.
(2)
Based on annualized YTD 2013 results.
On
pace
for
highest
full
year
of
distributable
earnings
since
2007
(2) |
Strong YTD 2013 Results Reflect Strength of Earnings Model
4
(1)
Reflects the nine month period from January 1, 2013 through September 30, 2013 for
Management Fees and Incentive Income. As of September 30, 2013 for AUM, Gross Unrecognized Incentive
Income and Net Cash & Investments.
(2)
Reflects the nine month period from January 1, 2012 through September 30, 2012 for
Management Fees and Incentive Income. As of September 30, 2012 for AUM, Gross Unrecognized Incentive
Income and Net Cash & Investments.
(3)
Includes $1.2 billion of Private Equity Castle equity eligible for incentive.
(4)
Based on 495 million dividend paying shares outstanding as of September 30,
2013. (5)
Net Cash & Investments, which is a non-GAAP financial measure, means cash
& cash equivalents plus investments less debt outstanding, as described in Fortresss third quarter 2013 earnings
release.
The
release
is
available
in
the
Public
Shareholders
News
section
of
Fortresss
website,
www.fortress.com.
For
a
reconciliation
of
GAAP
Book
Value
Per
Share
to
Net
Cash
&
Investments
Per Share please see Appendix slide #6.
(6)
FIG stock price as of February 7, 2014.
$ millions
YTD 2013
(1)
YTD 2012
(2)
YoY
Fee-Paying AUM
$57,971
$51,475
+13%
Eight
consecutive
quarters
of
over
$1
billion
in
new alternative capital raised
Management Fees
$397
$348
+14%
$27.4
billion
of
AUM
in
permanent
equity
or
long-term investment structures
Incentive Income
$357
$164
+118%
$18.8 billion
(3)
of incentive-eligible NAV above
incentive income thresholds
Gross Unrecognized
Incentive Income
$807
$543
+49%
$1.63 per share
(4)
of gross embedded incentive
income yet to impact DE
Net Cash &
Investments
(5)
$1,575
$1,243
+27%
$3.18 per share
(4)
of Net Cash & Investments
represents 40%
of FIGs share price
(6)
Financial performance and embedded value point to substantial
momentum
and
valuation upside potential |
5
Key Investment Themes
(1)
In January 2014, Fortress announced the launch of a new affiliated manager platform
pursuant to which Fortress takes a non-control economic interest in a fund manager and earns fees for
infrastructure, technology and related services, with Fortress Asia Macro Fund
(FAMF) as the first fund to join the platform. (2)
Source: Cambridge Associates, September 2013.
(3)
Net Cash & Investments, which is a non-GAAP financial measure, means cash
& cash equivalents plus investments less debt outstanding, as described in Fortresss third quarter 2013 earnings
release.
The
release
is
available
in
the
Public
Shareholders
News
section
of
Fortresss
website,
www.fortress.com.
For
a
reconciliation
of
GAAP
Book
Value
Per
Share
to
Net
Cash
&
Investments
Per Share please see Appendix slide #6.
Highly diversified and scalable core investment platforms
Meaningful growth potential from permanent capital vehicles and
sector-specific funds Opportunities
for
strategic
additions
to
Liquid
Markets
affiliated
manager
platform
(1)
Logan Circle build-out into broader traditional asset
manager Strong investment performance across businesses
Strong full year 2013 absolute returns in flagship liquid and credit
hedge funds Top-tier
Credit
PE
fund
performance
(2)
; all flagship Credit funds above preferred thresholds
Significant value appreciation in legacy PE buyout funds
Substantial, underappreciated balance sheet value
Zero debt obligations outstanding
$1.6
billion
of
Net
Cash
&
Investments
on
the
balance
sheet
(3)
Potential for increased shareholder distributions from realization
events 1
2
3 |
6
Highly Diversified Business Model
With Scalable Investment Platforms
1 |
7
Diversified Business Model Continuing to Build From Core
Strategies Permanent
Equity
Newcastle
Eurocastle
New Residential
FTAI
(2)
New Media
(1)
Private Equity
Credit PE
Credit Hedge
Liquid Markets
Logan Circle
General Buyout
Funds (I-V)
MSR Funds (I-II)
Credit
Opps.
(I-II)
Infrastructure
(3)
Italian NPLs
(3)
Real Assets
Net Lease
Life Settlements
DBSO
Worden Funds
Value Recovery
Funds
Macro
Endowment Style
Convex Asia
Asia Macro
(5)
Core-Based
Fixed Income
Short & Long
Duration
High Yield
Emerging
Markets Debt
Growth Equities
(1)
The spin-off of Newcastles (NCT) media assets into New Media Investment
Group Inc. (New Media) has been approved by Newcastles Board of Directors and is expected to be completed with the
distribution
of
shares
of
common
stock
of
New
Media
(NYSE:
NEWM)
on
or
about
February
13,
2014.
(2)
Fortresss ability to complete an IPO of Fortress Transportation and
Infrastructure Investors LLC (FTAI) is subject to certain conditions, including but not limited to, the SEC declaring the registration
statement relating to the IPO effective and approval of an application to list
FTAIs common stock on the NYSE. (3)
Potential fund strategy or strategy still in fundraising period.
(4)
Japan Opportunity Fund was launched in June 2009; Japan Opportunity Fund II
was launched in December 2011. (5)
In January 2014, Fortress announced the launch of a new affiliated manager platform
pursuant to which Fortress takes a non-control economic interest in a fund manager and earns fees for
infrastructure, technology and related services, with Fortress Asia Macro Fund
(FAMF) as the first fund to join the platform. (6)
Subsequent to September 30, 2013, NCT raised $0.3 billion of permanent equity
capital. 7
10 years
$11.6 billion
1.2%
3
25 years
$6.9 billion
1.4%
Annual
$5.7 billion
2.0%
Monthly/Quarterly
$6.9 billion
1.8%
N/A
$23.6 billion
0.2%
Fund Life
AUM
Avg Mgmt
Fee Rate
Permanent
$3.2 billion
(6)
1.5%
Japan
Opps.
(I-II)
(4)
Credit Opps. III
Launched in last three years, in
fundraising or potential strategy
Real Estate
Affiliated
Manager Platform
Sector-Based
Fixed Income
1 |
Investment Opportunity
Fortress Advantage
Permanent Capital Vehicles
Sector-Focused Funds
Mortgage Servicing Rights
(MSRs)
MSR Fund I & Fund II
Senior Housing & Care
Transportation &
Infrastructure
acquisition of over $15 billion of assets
worldwide since 2002
FTAI
(2)
Infrastructure Fund
(3)
Italian NPLs
Italian NPL Fund
(3)
Total Capital
Raised
(2012
December 2013)
$1.8bn
$2.6bn
(4)
Media
8
Build-out of Permanent Capital Vehicles & Sector PE Funds
Leverage investment and operating experience in core sectors that have large,
addressable markets, attractive supply/demand dynamics, favorable economics
and long duration assets Fund currently raising private
capital or public company with ability to raise additional
equity 1
(1)
Includes senior housing properties currently owned by Newcastle and managed by a FIG senior living
property management subsidiary.
(2)
Fortresss ability to complete an IPO of FTAI is subject to certain conditions, including but not
limited to, the SEC declaring the registration statement relating to the IPO effective and
approval of an application to list FTAIs common stock on the NYSE.
(3)
Potential fund strategy or strategy still in fundraising period. (4)
Includes $1.1 billion raised for MSR Fund II, $0.6 billion raised for MSR Fund I, $0.6 billion raised
for Italian NPL Fund and $0.3 billion raised for WWTAI (now FTAI).
(5)
The spin-off of Newcastles media assets into New Media Investment Group Inc. (New
Media) has been approved by Newcastles Board of Directors and is expected to be
completed with the distribution of shares of common stock of New Media (NYSE: NEWM) on or about
February 13, 2014.
(5) |
9
NCT:
A
$2.0
Billion
REIT
(1)
&
Engine
for
Platform
Diversification
1
Newcastle focused on harvesting value in core real estate investments, strategically
acquiring senior housing properties and making opportunistic investments with
attractive returns Each new permanent capital vehicle has
meaningful growth prospects, which could drive additional management fees and
potential incentive income to Fortress
(1)
Market Capitalization based on share price and shares outstanding as of February 7,
2014. (2)
Newcastle, New Residential and New Media may invest in assets that differ
significantly from its current portfolio and each companys portfolio may change meaningfully over time. Any dividend
declarations
are
at
the
sole
discretion
of
the
respective
companys
Board
of
Directors
and
there
can
be
no
assurance
of
the
amount
or
timing
of
any
future
dividends.
New
Medias
predecessor,
GateHouse Media, Inc., recently emerged from bankruptcy, and there can be no
assurance that it will be able to pay dividends. (3)
The spin-off of Newcastles media assets into New Media has been approved
by Newcastles Board of Directors and is expected to be completed with the distribution of shares of common stock of New
Media (NYSE: NEWM) on or about February 13, 2014.
NCTs
market
cap
was
$8
million
in
2009;
combined
market
cap
of
NCT
&
NRZ
is
currently
$3.5
billion
(1)
Senior Housing, CDOs, Other Debt
Opportunistic REIT with Healthcare Focus
Spun out from NCT in May 2013 Excess MSRs, Servicer Advances, RMBS,
Residential Mortgage Loans Current Market Cap: $1.5 billion
(1)
Residential-focused Mortgage REIT Expected spin-off in February 2014 Local Newspapers, Local Directories, Digital
Marketing Services (Propel)
Dividend-Paying Local Media Owner
(1)
(2)
(3)
(2)
(2)
Current Market Cap: $2.0 billion
|
10
Meaningful Potential DE Upside from Growing Perm. Equity Platform
Total permanent equity capital of $3.2
billion as of September 30, 2013 (1)
There
can
be
no
assurance
that
Fortress
will
achieve
any
given
target
return.
Target
returns
are
subject
to
a
number
of
trends
and
uncertainties,
many
of
which
are
beyond
our
control,
that
could
cause
actual results to differ materially.
(2)
The
hypothetical
assumptions
for
AUM,
management
fees,
incentive
income,
net
returns
and
operating
margins
are
presented
solely
for
illustrative
purposes
and
actual
results
could
differ
materially.
(3)
Assumes
1.5%
management
fee
rate
on
incremental
permanent
equity
capital.
(4)
Assumes 25% incentive fee rate over 10% hurdle. Net returns reflect performance data
after taking into account management fees and expenses. (5)
Assumes 10% appreciation on option grants of 10% of specified AUM. Assumes Fortress
exercises its in-the-money Castle options and sells the resulting shares.
(6)
Assumes 70% operating margin.
(7)
Fund
Management
Distributable
Earnings
is
a
non-GAAP
financial
measure
described
in
Fortresss
third
quarter
2013
earnings
release.
The
release
is
available
in
the
Public
Shareholders
News
section
of Fortresss website, www.fortress.com. For a reconciliation of GAAP Net
Income to Fund Management Distributable Earnings please see Appendix slide #2.
(8)
Based on 495 million dividend paying shares outstanding as of September 30,
2013. Assumed Incremental AUM
$1,000
$2,000
$3,000
$10,000
Assumed Revenue
Management
Fees
(3)
$15
$30
$45
$150
$19
$38
$56
$188
Options
(5)
$10
$20
$30
$100
Total Revenue
$44
$88
$131
$438
Assumed
Expenses
(6)
($13)
($26)
($39)
($131)
Fund Mgmt DE
(7)
$31
$61
$92
$306
Fund Mgmt DE/share
(8)
$0.06
$0.12
$0.19
$0.62
Fund Mgmt DE at 15.0% net return
$26
$53
$79
$263
Fund Mgmt DE at 20.0% net return
$35
$70
$105
$350
Hypothetical
Permanent
Equity
Capital
Impact
to
Fortress
Earnings
(millions)
(2)
1
Every $1 billion of incremental permanent equity capital could potentially generate annual
distributable earnings of $26-35 million at a 15-20% target net investment return
(1)
Incentive
Income,
17.5%
net
return
(4) |
11
Recently launched new affiliated manager platform to expand Fortresss footprint
in the liquid hedge fund investment space
Fortress to take a minority, non-control economic interest in high
potential start-up and established hedge fund managers
Funds will be able to leverage Fortresss existing
technology, infrastructure and investor relationships Typical
platform participant will pay fee to Fortress for back-office support and capital raising capabilities
Liquid Markets: Scalability of New Affiliated Manager Platform
Fortress
Asia
Macro
Fund
(FAMF)
to
become
anchor
strategy
for
new
growth
platform
(1)
Asia Macro Funds have $1.8 billion of AUM
(2)
FY 2013 net returns of 17.1%
CIO Adam Levinson to remain as Graticule CIO and is
expected to join FIG Board of Directors
Fortress will retain perpetual minority interest in
Graticule, including economics generated by FAMF
and future Graticule funds
Potential Platform Growth
Fortress Asia Macro business will be rebranded
as Graticule Asset
Management Asia (Graticule) (1)
In January 2014, Fortress announced the launch of a new affiliated manager platform
pursuant to which Fortress takes a non-control economic interest in a fund manager and earns fees for
infrastructure, technology and related services, with Fortress Asia Macro Fund
(FAMF) as the first fund to join the platform. (2)
Combined
AUM
for
Fortress
Asia
Macro
Ltd,
Fortress
Asia
Macro
LP
and
Fortress
Asia
Macro
Managed
Accounts
as
of
September
30,
2013.
FAMF / Graticule
Multi-Manager / Multi-Strat
Global L/S Equity
Fixed-Income Relative Value
Anchor Strategy
Potential New Strategies
Intend to add one or
two managers each
year
Focused on smaller
managers ($25mm
500mm in AUM)
1 |
12
Logan Circles AUM has more than doubled to $23.6 billion since acquisition in
2010 All Logan
Circle
fixed
income
strategies
currently
in
the
market
raising
new
capital
Recently launched new growth equities business; team that previously
managed $20 billion currently raising capital for
four new equity strategies with substantially higher fee rates
(60bps) Logan Circle: Focus on Organic Growth and Strategic
Expansion Hypothetical Annual Impact to DE from Assumed Logan
Circle AUM Growth (1)
Established, highly scalable global platform with potential to
generate substantial fee earnings (1)
The hypothetical assumptions for AUM growth, management fees, and operating margins
are presented solely for illustrative purposes and actual results could differ materially.
(2)
Fund
Management
Distributable
Earnings
is
a
non-GAAP
financial
measure
described
in
Fortresss
third
quarter
2013
earnings
release.
The
release
is
available
in
the
Public
Shareholders
News
section of Fortresss website, www.fortress.com. For a reconciliation of GAAP
Net Income to Fund Management Distributable Earnings please see Appendix slide #2.
(3)
Based on 495 million dividend paying shares outstanding as of September 30,
2013. CORE FIXED INCOME
Assumed AUM
(millions)
$30,000
$40,000
$50,000
Assumed Mgmt Fee Rate (bps)
15
16
17
Gross Annual Mgmt Fees
$45
$64
$85
Assumed Operating Margin
20%
30%
40%
Fund Mgmt DE
(2)
$9
$19
$34
Fund Mgmt DE/share
(3)
$0.02
$0.04
$0.07
NEW GROWTH EQUITIES
Assumed AUM
(millions)
$5,000
$10,000
$20,000
Assumed Mgmt Fee Rate (bps)
60
60
60
Gross Annual Mgmt Fees
$30
$60
$120
Assumed Operating Margin
20%
30%
40%
Fund Mgmt DE
(2)
$6
$18
$48
Fund Mgmt DE/share
(3)
$0.01
$0.04
$0.10
1 |
Strong Investment Performance is
the Cornerstone of Growth &
Value Creation
13
2 |
14
Investment Performance Snapshot
For additional investment performance disclosure please see Appendix slide #1.
(1)
As of September 30, 2013.
Fortress Macro Funds FY 2013 net returns of
14.1% Fortress Asia Macro
Funds FY 2013 net returns of 17.1%
Fund performance drives new capital formation, higher incentive income
and earnings growth DBSO
LP
and
DBSO
Ltd
FY
2013
net
returns
of
18.4%
and
15.6%,
respectively
FCO,
FCO
II
and
FJOF
annualized
ITD
net
returns
of
25.9%,
18.4%
and
20.6%,
respectively
(1)
PE
Fund
YTD
2013
NAV
appreciation
of
17.2%
(1)
Over
$6
billion
of
value
created
since
the
beginning
of
2012
(1)
13
of
16
LCP
fixed
income
strategies
outperformed
respective
benchmarks
YTD
in
2013
(1)
All
16
LCP
fixed
income
strategies
have
outperformed
respective
benchmarks
since
inception
(1)
2
Credit
Private Equity
Liquid Markets
Logan Circle
Strong
YTD
investment
performance
has
led
to
$357
million
of
incentive
income
in
the
first
nine
months
of
2013,
a
28%
increase
compared
to
full
year
2012 |
15
Performance Drives...Substantial Embedded Value Yet to Impact DE
$807
million,
or
$1.63
per
share
(1)
,
of
gross
unrecognized
incentive
income
$706
million,
or
$1.43
per
share
(1)
,
of
gross
unrecognized
incentive
income
from
Credit
Funds
$90
million
in
gross
unrecognized
incentive
income
from
in-the-money
options
for
PE
Castles
(2)
(1)
Based on 495 million dividend paying shares outstanding as of September 30,
2013. (2)
Unrecognized Incentive Income for Private Equity Castles includes incentive income
that would have been recorded in Distributable Earnings if Fortress had exercised all of its in-the-money Newcastle,
New Residential and Eurocastle options and sold all of the resulting shares at their
September 30, 2013 closing price. (3)
The Incentive Eligible NAV Above Incentive Threshold presented for Hedge Funds
excludes sidepocket investments. The Incentive Eligible NAV Above Incentive Income Threshold presented for Private
Equity Funds and Credit Private Equity Funds represents total fund NAV. Includes
$1.2 billion of Private Equity Castle equity eligible for incentive as of September 30, 2013.
(4)
Unrecognized Incentive Income presented above includes the impact of sidepocket
investments on Hedge Funds. Unrecognized Incentive Income for Private Equity Funds, Credit Private Equity Funds
and
Hedge
Fund
sidepocket
and
redeeming
capital
account
(RCA)
investments
has
not
been
recognized
in
Distributable
Earnings
and
will
be
recognized
when
realized;
Undistributed
Incentive
Income
for
other Hedge Fund investments was recognized in Distributable Earnings when earned.
Gross Unrecognized
Incentive Income
(4)
(millions)
Incentive Eligible
NAV Above Incentive
Threshold
(3)
Gross Unrecognized
Incentive Income
(4)
Credit PE Funds
$8,247
$612
Credit Hedge Funds
$4,794
$94
PE Funds
$737
$5
PE Castles
$1,196
$90
(2)
Liquid Hedge Funds
$3,831
$6
Total
$18,805
$807
Incentive Eligible NAV
Above Incentive Threshold
(3)
(billions)
(millions)
$16.3
$18.8
YE2012
3Q2013
$649
$807
YE2012
3Q2013
2 |
16
Performance Drives...Significant Credit Incentive Income
(1)
Annualized five-year net returns represent managements unaudited return
estimates from January 1, 2009 through December 31, 2013. 2
Credit Hedge and Credit PE Fund performance has resulted in substantial recognized and
unrecognized incentive income
Based
on
annualized
YTD
2013
results,
Credit
business
on
pace
for
record
full
year
of
incentive
income
Annualized
five-year
net
returns
of
19.3%
an
20.3%
for
DBSO
LP
and
DBSO
Ltd,
respectively
(1)
Gross Recognized Credit Incentive Income
(millions) $196
$199
$243
$78
$130
$141
$118
$69
$102
FY 2011
FY 2012
YTD 2013
Credit Hedge Funds
Credit PE Funds |
17
Performance Drives...Carry Potential in Main PE Funds
2
Legacy
PE
funds
have
potential
to
generate
substantial
fees
over
next
three
to
five
years
$11.4 billion of value created since trough in 1Q 2009
Completed IPO of Springleaf (NYSE: LEAF) in 4Q 2013 at $17 per share,
representing a 10x multiple of invested capital (1)
For additional investment performance disclosure please see Appendix slide #1.
(2)
Multiple
equals
current
NAV
plus
inception
to
date
distributions,
divided
by
the
lesser
of
capital
committed
or
equity
invested.
For
purposes
of
calculating
the
gross
multiple,
equity
invested
excludes
capital
called
for
management
fees
and
other
expenses.
The
inclusion
of
such
amounts
would
reduce
the
gross
multiple.
Gross
multiple
is
not
an
accurate
indicator
of
the
Companys
proximity
to
incentive income thresholds and is different from the statistic which would be
computed based on the Companys periodic 34 Act reporting, which reports net amounts.
(3)
Florida includes Florida East Coast Railway and Flagler.
(4)
Includes Fund III Co, Fund IV Co, Fund V Co, FHIF, FECI, FRIC, FRID, FICO,
GAGACQ-Co and FFPF. (5)
Includes MSR Funds I & II and WWTAI (now FTAI).
PE Fund (vintage)
Current
Fund NAV
YTD
2013 Current Gross
NAV Appreciation
(1)
Multiple
(2)
Select Investments
Fund
II
(2002)
$0.1bn
7.8%
1.8x
GAGFAH*
Fund
III
(2004)
$2.8bn
45.5%
1.7x
Nationstar*, GAGFAH*
Fund
IV
(2006)
$4.4bn
23.7%
1.5x
Nationstar*, Florida
(3)
, Holiday
Fund
V
(2007)
$4.4bn
14.6%
1.3x
Florida
(3)
, CW Financial, Springleaf*, Penn Gaming*
Total Main Funds
$11.7bn
24.4%
1.6x
Co-investments
(4)
$5.6bn
5.0%
1.1x
Florida
(3)
, Holiday
Sector Funds
(5)
$0.6bn
13.0%
1.1x
MSRs, Transportation & Infrastructure Assets
Total PE Funds
$17.9bn
17.2%
1.4x
*Publicly traded company |
2
18
(1)
Represents Fortress Macro Onshore Fund LP, Fortress Macro Fund Ltd, Fortress Macro
MA1, Fortress Redwood Fund Ltd , Fortress Macro managed accounts, Drawbridge Global Macro Fund LP and
Drawbridge Global Macro Intermediate Fund LP.
(2)
Net returns are for Fortress Macro Fund Ltd only and exclude certain other funds,
which may have returns that are materially lower than those presented above. FY 2013 performance data are based on
managements
unaudited
return
estimates
for
performance
from
January
1,
2013
to
December
31,
2013.
(3)
The incentive income figures presented above are gross of profit-sharing
expenses. Macro Fund
(1)
Incentive Income
(3)
Performance Drives...Macro Fund Flows & Incentive Income
Macro Fund
(1)
Capital Raised
+58%
+36%
Continued
strong
Macro
Fund
(1)
performance
can
substantially
alter
earnings
dynamics
(billions)
(millions)
Macro
Hedge
Fund
(1)
performance
can
drive
meaningful
AUM
and
earnings
growth
Fortress
Macro
Fund
net
returns
of
14.1%
for
FY
2013
(2)
$0.6
FY 2012
YTD 2013
$1.0
$53
$72
FY 2012
YTD 2013 |
Substantial & Underappreciated
Value on Balance Sheet
19
3 |
20
Balance Sheet in Strongest Position Since IPO...
3
Net Cash & Investments increased 37% YoY to $3.18 per share
$603
million of embedded gains that would be recognized in earnings if
investments were liquidated at current values $311
million
of
cash
&
cash
equivalents
and
no
outstanding
debt
obligations
as
of
September
30,
2013
Net Cash & Investments
(1)
(millions)
Outstanding Debt Obligations
(millions)
(per share)
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$0
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
4Q08
4Q09
4Q10
4Q11
4Q12
3Q13
Net Cash & Investments
Per Share
$0
$100
$200
$300
$400
$500
$600
$700
$800
4Q08
4Q09
4Q10
4Q11
4Q12
3Q13
Total Debt
(1)
Net Cash & Investments, which is a non-GAAP financial measure, means cash & cash
equivalents plus investments less debt outstanding, as described in Fortresss third quarter 2013
earnings release. The release is available in the Public Shareholders News section
of Fortresss website, www.fortress.com. For a reconciliation of GAAP Book Value Per Share to Net
Cash & Investments Per Share please see Appendix slide #6. |
21
...With Considerable Upside Potential
(1)
GAGFAH, Newcastle, New Residential and Eurocastle shares.
(2)
Brookdale, Eurocastle, GAGFAH, Gatehouse, Walker & Dunlop, Penn Gaming and
Nationstar shares. (3)
Investments in GAGACQ, FRID, FRIC, FHIF and FECI.
(4)
Hedge Funds include Credit Hedge Fund and Liquid Hedge Fund Investments and related
sidepockets. (5)
Current Assets includes cash and direct investments in public stock.
Balance Sheet
As of Sept. 30, 2013
($ millions)
Carrying
Value
% of
Total
Cash & Cash Equivalents
311
20%
Direct Public Stock
(1)
80
5%
Cash & Direct Equity Investments
391
25%
Public Stock of Portfolio Cos
(2)
161
10%
Private
Co-Investment
in
Portfolio
Cos
(3)
430
27%
Direct Investment in PE Funds
216
14%
Direct Investment in Credit PE Funds
145
9%
Private Equity Fund Investments
952
60%
Liquid Capital
120
8%
Sidepocket Investments
104
6%
Hedge Fund Investments
(4)
224
14%
Other Direct Investments
8
1%
Total Cash & Investment Assets
1,575
100%
Potential for increased distributions from balance sheet realization events
Nearly 80% of balance sheet assets in cash, direct equity or 2007 or
earlier vintage funds $807 million of private equity fund
investments with meaningful upside potential Total Cash &
Investments by Vintage or Type (millions) 3
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Current
Assets
Pre 2006
2006
2007
Post 2007
Hedge Funds
Total
(5) |
22
Summary |
23
Strong YTD 2013 Results With Significant Upside Potential
2007
2008
2009
2010
2011
2012
LTM
3Q2013
(2)
Annual
Average
(3)
Annual
High
(3)
Credit
61
35
44
168
138
126
177
95
168
PE & Castles
312
81
137
145
118
115
123
151
312
(4)
Liquid
161
102
28
64
14
45
108
69
161
Logan Circle
n/a
n/a
n/a
(15)
(17)
(10)
(10)
(14)
(10)
Total
(5)
524
216
208
358
253
277
398
301
631
Per share
(6)
$1.24
$0.48
$0.42
$0.69
$0.48
$0.52
$0.80
$0.61
$1.28
($ millions)
Fund Management Distributable Earnings
By Business
(1)
Growth opportunities across every business can meaningfully alter earnings
dynamics New fund launches, growth of existing platforms and
strategic additions can drive higher management fee revenues
Hedge
fund
performance
and
increased
PE
realization
activity
can
drive
higher
incentive
income
Balance
sheet
gains
and
dispositions
can
drive
higher
investment
income
(1)
Fund
Management
Distributable
Earnings
is
a
non-GAAP
financial
measure
described
in
Fortresss
third
quarter
2013
earnings
release.
The
release
is
available
in
the
Public
Shareholders
News
section of Fortresss website, www.fortress.com. For a reconciliation of GAAP
Net Income to Fund Management Distributable Earnings please see Appendix slide #2.
(2)
Reflects the twelve month period from October 1, 2012 through September 30,
2013. (3)
Does not include LTM 3Q2013 results.
(4)
Fortress
has
reserved
$57
million
of
net
clawback
liabilities
in
respect
of
DE
previously
distributed.
(5)
Total Fund Management DE for 2007, 2008, 2009 and 2010 includes unallocated expenses
of $9 million, $2 million, $1 million and $4 million, respectively. (6)
Based
on
reported
weighted
average
dividend
paying
shares
outstanding
in
applicable
period
for
2007,
2008,
2009,
2010,
2011
and
2012.
Based
on
495
million
dividend
paying
shares
outstanding
as
of
September 30, 2013 for LTM 3Q2013, Annual Average and Annual High.
|
24
Substantial
Cash
Generation
Supports
Shareholder
Distributions
(1)
Increased base quarterly dividend by 20% to $0.06 per share in 4Q
2012 (1)
Any
dividend
declarations
or
share
buybacks
may
be
subject
to
approval
by
FIGs
Board
of
Directors
and
there
can
be
no
assurance
of
the
amount
or
timing
of
any
future
dividends
or
share
buybacks.
(2)
Repurchased
51.3
million
shares
in
4Q
2012
for
a
total
purchase
price
of
$180
million.
534
million
shares
outstanding
at
time
of
purchase.
(3)
Represents
the
period
from
4Q
2011
through
3Q
2013.
Shareholder
Distributions
Over
Last
Eight
Quarters
(per
dividend
paying
share)
(3)
(2)
$0.00
$0.25
$0.50
$0.75
$1.00
$1.25
Base Quarterly Distributions
Share Repurchase
Total
Have distributed nearly 70% of post-tax DE over last eight quarters in the form of base quarterly
dividends and 4Q 2012 share repurchase
(2) |
25
Significant Discount to Traditionals: Room For Multiple Expansion
(1)
Traditional
Asset
Managers
defined
as
S&P
500
Asset
Management
and
Custody
Trust
Banks
Sub
Industry
Index
from
Bloomberg.
(2)
FIG stock price as of February 7, 2014.
(3)
Net Cash & Investments, which is a non-GAAP financial measure, means cash
& cash equivalents plus investments less debt outstanding, as described in Fortresss third quarter 2013 earnings
release.
The
release
is
available
in
the
Public
Shareholders
News
section
of
Fortresss
website,
www.fortress.com.
For
a
reconciliation
of
GAAP
Book
Value
Per
Share
to
Net
Cash
&
Investments
Per Share please see Appendix slide #6.
(4)
2013 consensus earnings estimates per Bloomberg.
(5)
Trailing two-year CAGR of DEPS for FIG and EPS for Traditional Asset Managers.
Based on annualized YTD 2013 results for FIG and FY 2013 results for Traditional Asset Managers.
(6)
Based on FIGs stock price as of February 7, 2014 and annualized YTD 2013
dividend with no consideration given for potential 4Q top-up dividend. Annualized dividend yield for Traditional Asset
Managers sourced from Bloomberg.
(7)
Based on YTD 2013 operating margin for FIG. FY 2013 Traditional Asset Manager
operating margin sourced from Bloomberg. Earnings
Growth
(5)
Dividend
Yield
(6)
Operating
Margin
(7)
3.0%
FIG
1.8%
Trad. Asset
Managers
(1)
39%
FIG
27%
Trad. Asset
Managers
(1)
(1)
Price / Earnings Multiple Calculation (per share)
Superior Valuation Metrics to Traditionals
Current
FIG
Stock
Price
(2)
$7.89
Less:
Net
Cash
&
Investments
(3)
$3.18
Stock Price ex. B/S Value
$4.71
2013 Consensus DEPS
(4)
$0.75
Price / Earnings Ratio
10.5x
Price / Earnings Ratio (ex. B/S Value)
6.3x
Traditional Asset Manager Price / Earnings Ratio
(1)
16.1x
Implies FIG is trading at a ~60% discount to Traditionals
32%
10%
FIG
Trad. Asset
Managers
Fortress
trades
at
a
~60%
discount
to
traditional
asset
managers
(1)
(net
of
balance
sheet
value)
despite superior earnings growth and operating fundamentals
At
a
traditional
asset
manager
multiple
of
16x
earnings,
FIG
would
trade
at
over
$12.00
per
share
with
no
credit
for
embedded value and future growth |
Appendix
26 |
27
Appendix Slide #1
Liquid Hedge Funds
Net returns are for Fortress Macro Fund Ltd and Fortress Asia Macro Fund Ltd only
and exclude certain other funds, which may have returns that are materially
lower than those presented above. Net returns reflect performance data after taking into account management fees and expenses
borne
by
such
funds
and
incentive
allocations,
as
applicable.
FY
2012
data
reflect
audited
returns,
while
FY
2013
performance
data
are
based
on
managements
unaudited
return
estimates
for
performance
from
January
1,
2013
to
December
31,
2013.
Such
data
may
change
upon
completion
of
the month-end and year-end valuation procedures, and any such changes could
be material. Credit Hedge Funds
Net
returns
are
for
Drawbridge
Special
Opportunities
Fund
LP
and
Drawbridge
Special
Opportunities
Fund
Ltd
only
and
exclude
certain
other
funds,
which may have returns that are materially lower than those presented above. Net
returns reflect performance data after taking into account management
fees
and
expenses
borne
by
the
above
referenced
funds,
and
incentive
allocations,
as
applicable.
Performance
data
for
FY
2013
are
based
on
managements
unaudited
estimates,
as
of
the
date
hereof,
for
performance
of
the
above
referenced
funds
from
January
1,
2013
to
December 31, 2013. Such data may change upon completion of the month-end and
year-end valuation procedures, and any such changes could be
material
Private Equity Funds
Percentages exclude certain other funds included in the Private Equity segment,
which, if included, could materially reduce the percentages presented.
Percentages represent the aggregate performance of multiple funds rather than any single fund. For additional detail regarding historical
performance
of
individual
funds,
which
presents
fund
performance
as
internal
rates
of
return,
please
see
Managements
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operation
in
our
quarterly
report
on
Form
10-Q
for
the
period
ending
September
30,
2013.
FY
2012
data
reflect
audited returns, while YTD 2013 data reflects unaudited return estimates through
September 30, 2013. Such data may change upon completion of the
month-end and year-end valuation procedures, and any such changes could be material.
Credit PE Funds
Net returns are for Fortress Credit Opportunities Funds I, Credit Opportunities
Fund II and Japan Opportunity Fund only and exclude certain other funds,
which may have returns that are materially lower than those presented above. Net returns represent net annualized internal rates of return to
limited partners after management fees and incentive allocations, and are computed
on an inception-to-date basis consistent with industry standards.
Annualized inception-to-date data reflects managements unaudited return estimates through September 30, 2013. Such data may
change upon completion of the month-end and year-end valuation procedures,
and any such changes could be material. |
2010
2011
2012
GAAP Net Income (Loss)
(782)
$
(1,117)
$
219
$
Principals' and Others' Interests in (Income) Losses of Consolidated
Subsidiaries 497
685
(141)
GAAP Net Income (Loss) Attributable to Class A Shareholders
(285)
$
(432)
$
78
$
Private Equity incentive income
38
44
(2)
Hedge Fund incentive income
3
-
-
Reserve for clawback
-
(5)
8
Distributions of earnings from equity
method investees 15
11
6
Losses (earnings) from equity method
investees (87)
(34)
(142)
Losses (gains) on options
(2)
5
(6)
Losses (gains) on other Investments
(1)
23
(41)
Impairment of investments
(5)
(4)
(1)
Adjust income from the receipt of
options -
(13)
(22)
Mark-to-market of contingent consideration in
business combination (1)
(3)
-
Amortization of intangible assets
and impairment of goodwill 1
22
-
Employee, Principal and director
compensation, primarily equity based 218
235
219
Principals' forfeiture agreement expense (expired in 2011)
952
1,051
-
Adjust non-controlling
interests related to Fortress Operating Group units (507)
(691)
133
Tax receivable agreement liability reduction
(22)
(3)
9
Taxes
55
36
39
Pre-tax Distributable Earnings
372
$
242
$
278
$
Investment Loss (income)
(34)
(8)
(16)
Interest Expense
20
19
15
Fund Management DE
358
$
253
$
277
$
GAAP Revenues
950
$
859
$
970
$
Adjust management fees
2
(1)
-
Adjust incentive income
44
41
5
Adjust income from the receipt of
options -
(13)
(22)
Other revenues
(156)
(179)
(196)
Segment Revenues
840
$
707
$
757
$
Twelve Months Ended December 31,
28
Appendix Slide #2
Reconciliation of GAAP Net Income (Loss) to Pre-tax Distributable Earnings and
Fund Management DE (dollars in millions) |
September 30,
2012
June 30,
2013
September 30,
2013
GAAP Net Income (Loss)
7
$
(2)
$
101
$
166
$
Principals' and Others' Interests in (Income) Losses of Consolidated
Subsidiaries (6)
-
(59)
(111)
GAAP Net Income (Loss) Attributable to Class A Shareholders
1
$
(2)
$
42
$
55
$
Private Equity incentive income
14
34
2
58
Hedge Fund incentive income
46
133
(6)
186
Reserve for clawback
-
-
1
3
Distributions of earnings from
equity method investees 2
5
3
12
Losses (earnings) from equity method
investees (48)
(24)
(57)
(117)
Losses (gains) on options
6
5
(3)
(27)
Losses (gains) on other Investments
(4)
(2)
4
(9)
Impairment of investments
(1)
(1)
-
(1)
Adjust income from the receipt of
options (9)
(10)
-
(36)
Amortization of intangible assets and impairment of
goodwill -
-
-
-
Employee, Principal and director
compensation, primarily equity based 49
13
6
34
Adjust non-controlling interests related to
Fortress Operating Group units 4
(4)
58
105
Tax receivable agreement liability reduction
-
-
-
8
Taxes
4
1
15
42
Pre-tax Distributable Earnings
64
$
148
$
65
$
313
$
Investment Loss (income)
(4)
(6)
(13)
(24)
Interest Expense
3
2
1
5
Fund Management DE
63
$
144
$
53
$
294
$
GAAP Revenues
181
$
223
$
232
$
699
$
Adjust management fees
-
-
-
-
Adjust incentive income
60
167
(3)
247
Adjust income from the receipt of options
(9)
(10)
-
(36)
Other revenues
(51)
(53)
(51)
(156)
Segment Revenues
181
$
327
$
178
$
754
$
Three Months Ended
Nine Months Ended
September 30,
2013
29
Appendix Slide #3
Reconciliation of GAAP Net Income (Loss) to Pre-tax Distributable Earnings and
Fund Management DE (dollars in millions) |
30
Appendix Slide #3A
Distributable earnings is Fortresss
supplemental measure of operating performance used by management in analyzing segment and overall
results. It reflects the value created which management considers
available for distribution during any period. As compared to generally accepted
accounting principles (GAAP) net income,
distributable earnings excludes the effects of unrealized gains (or losses) on illiquid investments,
reflects contingent revenue which has been received as income to the
extent it is not expected to be reversed, and disregards expenses which do
not require an outlay of assets, whether currently or on an accrued
basis. Distributable earnings is reflected on an unconsolidated and pre-tax
basis, and, therefore, the interests in consolidated subsidiaries
related to Fortress Operating Group units (held by the principals) and income tax
expense are added back in its calculation. Distributable
earnings is not a measure of cash generated by operations which is available for
distribution nor
should it be considered in isolation or as an alternative to cash
flow or net income in accordance with GAAP and it is not
necessarily indicative of liquidity or cash available to fund the
Companys operations. For a complete discussion of distributable earnings and its
reconciliation to GAAP, as well as an explanation of the calculation
of distributable earnings impairment, see note 10 to the financial statements
included in the Companys Quarterly Report on Form 10-Q for
the quarter ended September 30, 2013. Fortresss management uses distributable earnings:
in its determination of periodic distributions to equity
holders;
in making operating decisions and assessing the performance of each
of the Companys core businesses;
for planning purposes, including the preparation of annual operating
budgets; and
as a valuation measure in strategic analyses in connection with the
performance of its funds and the performance of its employees. Growing distributable earnings is a key component to the
Companys business strategy and distributable earnings is the supplemental measure
used by management to evaluate the economic profitability of each of
the Companys businesses and total operations. Therefore, Fortress believes
that it provides useful information to investors in evaluating its
operating performance. Fortresss definition of distributable earnings is not based
on any definition contained in its amended and restated operating
agreement. Fund management DE is equal to pre-tax distributable
earnings excluding our direct investment-related results. It is comprised of Segment
Revenues net of Segment Expenses and
Principal Performance Payments. Fund management DE and its components are used by
management to analyze and measure the performance of our investment
management business on a stand-alone basis. Fortress defines segment
operating margin to be equal to fund management DE divided by segment
revenues. The Company believes that it is useful to provide investors
with the opportunity to review our investment management business
using the same metrics. Fund management DE and its components are
subject to the same limitations as pre-tax distributable
earnings, as described above. |
31
Appendix Slide #4
(1)
Includes both fully vested and nonvested restricted Class A shares.
(2)
Includes both fully vested and nonvested Fortress Operating Group RPUs.
Reconciliation of Weighted Average Class A Shares Outstanding (Used for Basic EPS) to
Weighted Average Dividend Paying Shares and Units Outstanding (Used for
DEPS) 2010
2011
2012
Weighted Average Class A Shares Outstanding (Used for Basic EPS)
165,446,404
186,662,670
214,399,422
Weighted average fully vested restricted Class A share units with dividend
equivalent rights (4,450,465)
(4,082,385)
(3,194,380)
Weighted average fully vested restricted Class A shares
(174,203)
(480,777)
(737,309)
Weighted Average Class A Shares Outstanding
160,821,736
182,099,508
210,467,733
Weighted average restricted Class A shares
(1)
339,533
522,365
749,007
Weighted average fully vested restricted Class A share units which are entitled to
dividend equivalent payments
4,450,465
4,082,385
3,194,380
Weighted average nonvested restricted Class A share units which are entitled to
dividend equivalent payments
19,695,924
13,994,757
6,609,155
Weighted average Fortress Operating Group units
302,123,167
304,832,761
299,559,853
Weighted average Fortress Operating Group RPUs
(2)
31,000,000
22,563,471
12,817,851
Weighted Average Class A Shares Outstanding (Used for DEPS)
518,430,825
528,095,247
533,397,979
Weighted average vested and nonvested restricted Class A share units which are not
entitled to dividend equivalent payments
26,436,872
23,439,170
18,419,024
Weighted Average Fully Diluted Shares and Units Outstanding (Used for Diluted
DEPS) 544,867,697
551,534,417
551,817,003
Twelve Months Ended December 31,
Dividend paying shares and units represents the number of
shares and units outstanding at the end of the period which were entitled to receive
dividends or related distributions. The Company believes it is useful
for investors in computing the aggregate amount of cash required to make a current
per share distribution of a given amount per share. It excludes
certain potentially dilutive equity instruments, primarily non-dividend paying restricted
Class A share units, and, therefore, is limited in its usefulness in
computing per share amounts. Accordingly, dividend paying shares and units should be
considered only as a supplement and not an alternative to GAAP
basic and diluted shares outstanding. The Companys calculation of dividend paying
shares and units may be different from the calculation used by other
companies and, therefore, comparability may be limited. |
32
Appendix Slide #5
(1)
Includes both fully vested and nonvested restricted Class A shares.
(2)
Includes both fully vested and nonvested Fortress Operating Group RPUs.
Reconciliation of Weighted Average Class A Shares Outstanding (Used for Basic EPS) to
Weighted Average Dividend Paying Shares and Units Outstanding (Used for
DEPS) Weighted Average Class A Shares Outstanding (Used for Basic EPS)
239,404,587
220,641,776
234,750,585
212,297,285
Weighted average fully vested restricted Class A share units with dividend
equivalent rights
(982,225)
(2,519,869)
(2,821,011)
(4,068,945)
Weighted average fully vested restricted Class A shares
(952,016)
(828,211)
(909,641)
(706,787)
Weighted Average Class A Shares Outstanding
237,470,346
217,293,696
231,019,933
207,521,553
Weighted average restricted Class A shares
1
952,016
828,211
909,641
722,413
Weighted average fully vested restricted Class A share units which are entitled to
dividend equivalent payments
982,225
2,519,869
2,821,011
4,068,945
Weighted average nonvested restricted Class A share units which are entitled to
dividend equivalent payments
5,744,629
6,434,147
4,759,829
6,667,917
Weighted average Fortress Operating Group units
249,534,372
299,397,765
249,534,372
301,815,314
Weighted average Fortress Operating Group RPUs
2
-
10,333,334
3,255,189
13,652,069
Weighted Average Class A Shares Outstanding (Used for DEPS)
494,683,588
536,807,022
492,299,975
534,448,211
Weighted average vested and nonvested restricted Class A share units which are
not entitled to dividend equivalent payments
14,766,136
16,426,317
15,761,068
19,212,189
Weighted Average Fully Diluted Shares and Units Outstanding (Used for
Diluted DEPS)
509,449,724
553,233,339
508,061,043
553,660,400
Three Months Ended September 30,
Nine Months Ended September 30,
2013
2012
2013
2012
Dividend paying shares and units represents the number of
shares and units outstanding at the end of the period which were entitled to receive
dividends or related distributions. The Company believes it is useful
for investors in computing the aggregate amount of cash required to make a current
per share distribution of a given amount per share. It excludes
certain potentially dilutive equity instruments, primarily non-dividend paying restricted
Class A share units, and, therefore, is limited in its usefulness in
computing per share amounts. Accordingly, dividend paying shares and units should be
considered only as a supplement and not an alternative to GAAP
basic and diluted shares outstanding. The Companys calculation of dividend paying
shares and units may be different from the calculation used by other
companies and, therefore, comparability may be limited. |
33
Appendix Slide #6
Reconciliation of GAAP Book Value Per Share to Net Cash and Investments Per
Share (dollars and shares in thousands)
GAAP
Book Value
Net Cash and
Investments
GAAP
Book Value
Net Cash and
Investments
GAAP
Book Value
Net Cash and
Investments
Cash and Cash equivalents
311,114
$
311,114
$
104,242
$
104,242
$
253,731
$
253,731
$
Investments
1,263,392
1,263,392
1,211,684
1,211,684
1,169,306
1,169,306
Investments in options¹
100,123
-
38,077
-
30,316
-
Due from Affilitates
165,801
-
280,557
-
289,889
-
Deferred Tax Asset
370,944
-
402,135
-
379,372
-
Other Assets
146,259
-
124,798
-
102,787
-
Assets
2,357,633
1,574,506
2,161,493
1,315,926
2,225,401
1,423,037
Debt Obligations Payable
-
$
-
$
149,453
$
149,453
$
180,528
$
180,528
$
Accrued Compensation and Benefits
305,361
-
146,911
-
222,719
-
Due to Affiliates
343,495
-
357,407
-
345,009
-
Deferred Incentive Income
287,182
-
231,846
-
245,957
-
Other Liabilities
99,850
-
59,226
-
81,193
-
Liabilities
1,035,888
-
944,843
149,453
1,075,406
180,528
Net
1,321,745
$
1,574,506
$
1,216,650
$
1,166,473
$
1,149,995
$
1,242,509
$
GAAP
Basic Shares
Dividend Paying
Shares and Units
GAAP
Basic Shares
Dividend Paying
Shares and Units
GAAP
Basic Shares
Dividend Paying
Shares and Units
Class A Shares
238,613
238,613
217,458
217,458
219,361
219,361
Restricted Class A Shares
956
956
828
828
828
828
Fortress Operating Group Units
249,535
249,535
249,535
249,535
298,724
298,724
Fully Vested Class A Shares - Dividend Paying
-
21
-
556
-
637
Nonvested Class A Shares - Dividend Paying
-
5,745
-
6,434
-
6,434
Fortress Operating Group RPUs
-
-
-
10,333
-
10,333
Shares Outstanding
489,104
494,870
467,821
485,144
518,913
536,317
Per Share
2.70
$
3.18
$
2.60
$
2.40
$
2.22
$
2.32
$
As of
December 31, 2012
As of
September 30, 2013
As of
September 30, 2012
Net cash and investments represents cash and cash equivalents plus investments less debt outstanding.
The Company believes that net cash and investments is a useful supplemental measure because it
provides investors with information regarding the Companys net investment assets. Net cash and investments excludes certain assets
(investments in options, due from affiliates, deferred tax asset, other assets) and liabilities (due
to affiliates, accrued compensation and benefits, deferred incentive income and other
liabilities), its utility as a measure of financial position is limited. Accordingly, net cash and investments should be considered only as a supplement and not an
alternative to GAAP book value as a measure of the Companys financial position. The
Companys calculation of net cash and investments may be different from the calculation
used by other companies and, therefore, comparability may be limited.
(1)
The definition of net cash and investments has been modified to exclude investments in options. The
intrinsic value of options in equity method investees totaled $90 million at quarter end and is
included in our undistributed, unrecognized incentive income. This value represents incentive income that would have been recorded in
Distributable Earnings if Fortress had exercised all of its in-the-money Newcastle, New
Residential and Eurocastle options and sold all of the resulting shares at their September 30,
2013 closing price and differs from the fair value derived from option pricing models included in the table above. All prior periods have been recast to
reflect this change
|
Fortress Investment Group LLC
1345 Avenue of the Americas
New York, NY 10105
Contact:
Gordon Runté, Managing Director of Investor Relations and Corporate
Communications +1 212 798 6082
grunte@fortress.com |