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Money Management

Och-Ziff AUM down for quarter, year

Robert S. Shafir, the CEO of Och-Ziff Capital.

Och-Ziff Capital Management Group's assets under management totaled $32.3 billion as of March 31, down 0.6% from the end of the previous quarter and down 1.5% from a year earlier, the company's earnings release Thursday showed.

Och-Ziff's report said the decline in total assets under management for the year-long period ended March 31 was primarily driven by net outflow and distributions totaling $3.3 billion from its multistrategy hedge funds.

Across all asset classes, in the year ended March 31, Och-Ziff experienced net inflow of $100 million, fund distributions of $1 billion and investment appreciation of $400 million for a total decline of $500 million in AUM.

The net outflow for the year ended March 31 includes about $558 million paid to former Och-Ziff executive managing directors due to redemptions associated with the firm's realignment of employee-held shares in the company, Och-Ziff said in the earnings report.

For the quarter ended March 31, Och-Ziff's funds experienced total net outflow of $923 million, distributions of $155 million and market gains of $873 for a decline in AUM of $205 million, according to the earnings report.

For the same quarter a year earlier, the funds' net inflow was $381 million, distributions totaled $398 and market appreciation was $425 million resulting in an AUM gain of $408 million.

CEO Robert S. Shafir said Och-Ziff is "off to a solid start this year" and is making progress in restructuring the firm to better align its interests with its clients, employees and investors, during an earnings conference call Thursday.

The level of interaction with investment consultants and investors is "dramatically higher than it was six months ago," Mr. Shafir said, adding "We are optimistic about flows this year. Our conversations with investors are going well and several consultants and bank platforms have upgraded us. It's a sign that they like our changes."

Mr. Shafir reminded analysts on the call that "the sales cycle is long" for institutional investors, adding "getting gatekeeper approval is the first step, but getting investors to pull the trigger takes longer."

Mr. Shafir said the firm expects to see stronger inflows late in the second half of this year.

Assets managed in Och-Ziff's institutional credit funds were down 0.7% to $13.4 billion from the fourth quarter 2018 but up 19.6% from the previous-year quarter.

The firm's multistrategy hedge funds totaled $10.3 billion as of March 31, a decrease of 1% from the prior quarter and down 22.6% from the same quarter a year earlier.

Opportunistic credit funds managed by Och-Ziff were flat quarter-to-quarter with aggregate assets of $5.8 billion and an increase of 7.4% over the year-earlier quarter.

Och-Ziff's real estate funds totaled $2.7 billion as of March 31, a 3.8% rise over the prior quarter and up 8% over the year.

Assets managed by Och-Ziff in other miscellaneous funds totaled $200 million, down 33.3% from the prior quarter and down 50% from March 31, 2018.

For the quarter ended March 31, Och-Ziff experienced a net gain of $37 million and net revenue of $123 million.

The firm also announced in the earnings release that it changed its tax classification to a corporation from a partnership effective April 1 and changed its corporate form to a Delaware corporation effective Thursday.