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MONEY MANAGEMENT

Fortress ends 2016 with AUM down 1%

Fortress Investment Group’s assets under management were $69.6 billion as of Dec. 31, down 1% from both Sept. 30 and a year earlier, the alternative investment firm’s fourth-quarter earnings released on Tuesday show.

In 2016, Fortress raised a total of $1.3 billion in capital, with $437 million raised in the three months ended Dec. 31. The firm had $6.9 billion in dry powder as of Dec. 31.

Subsequent to the earnings period in the report, on Feb. 14, Fortress announced it is being acquired by SoftBank Group Corp. in an all-cash transaction. The deal is expected to close in the second half of 2017. Fortress is expected to operate as an independent business within SoftBank.

Fortress’ private equity and permanent capital AUM was $13.5 billion on Dec. 31, down 3% from Sept. 30 and down 15% from Dec. 31, 2015. Fortress’ credit business AUM was $18.1 billion as of Dec. 31, down 1% from three months earlier and flat from Dec. 31, 2015. Liquid markets AUM was $4.6 billion as of Dec. 31, up 1% from Sept. 30 but down 15% from a year earlier. Logan Circle Partners, Fortress’ fixed-income business, reported $33.4 billion in AUM as of Dec. 31, flat from Sept. 30 but up 7% from Dec. 31, 2015.

GAAP net income was $165 million for the quarter and $181 million for the year ended Dec. 31, compared to $116 million and $182 million for the fourth quarter and year ended Dec. 31, 2015, respectively.

Revenues were $438 million for the quarter and $1.2 billion for the year ended Dec. 31. By comparison, revenues were $415 for the quarter and flat at $1.2 billion for the year ended Dec. 31, 2015. Expenses were $280 million for the quarter and $951 million for the year ended Dec. 31, compared to $242 million for the quarter and $1.1 billion for the year ended Dec. 31, 2015. Fortress had other income of $23 million for the quarter ended Dec. 31 but a loss of other income of $4 million for the year, compared to $116 million for the quarter and $182 million in other income for the year ended Dec. 31, 2015.

Management fees were $133 million in the quarter ended Dec. 31, down from $148 million in the year-over-year quarter. The decrease was primarily due to lower management fees from liquid hedge funds and private equity funds, partially offset by higher management fees from the permanent capital vehicles, the earnings report said. Management fees were $551 million in the full year ended Dec. 31, down from $582 million in 2015. The decrease was primarily due to lower management fees from the liquid hedge funds and private equity funds, offset by higher management fees from the credit hedge funds, credit private equity funds and permanent capital vehicles.

Incentive income in the quarter was $133 million, relatively flat from $132 million in the quarter ended Dec. 31, 2015. The slight uptick was mainly due to higher incentive income from the credit hedge funds and permanent capital vehicles, partially offset by lower incentive income from the credit private equity funds. Incentive income in the year ended Dec. 31 was $441 million, up from $436 million in the year ended Dec. 31, 2015. The year-over-year increase was due to higher incentive income from the credit hedge funds, partially offset by lower incentive income from the permanent capital vehicles.