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Fortress to Acquire Management of Colony Capital’s Non-Digital Real Estate Funds

June 07, 2021, 08:04 AM
Filed Under: Private Equity

Fortress Investment Group has entered into a definitive agreement with Colony Capital (“Colony”) under which one or more affiliates of Fortress will become General Partner and Manager to Colony’s CDCF series of funds, co-investment vehicles and other non-digital real estate positions, representing approximately $2.7 billion in combined assets under management. Under terms of the agreement, Fortress will acquire certain of Colony’s capital account positions in non-digital real estate, including positions related to a portfolio of approximately 40 positions encompassing over 100 properties in Europe and the U.S. Total consideration is $535 million, subject to customary adjustments.

The transaction represents a comprehensive sale of Colony’s remaining “Other Equity and Debt” (“OED”) portfolio, which was reclassified into discontinued operations last quarter in anticipation of a potential disposition to accelerate Colony’s transition to a fully digital business. Importantly, Fortress provides a “one-stop solution” to resolve Colony’s remaining OED assets in a single transaction, while assuring continued responsible stewardship for CDCF investors by a leading global investment manager focused on optimizing investment values.

The combined OED portfolio is diversified by investment type (senior debt, junior debt and equity), underlying asset class (office, hotels, land, multifamily), geography (U.S., Ireland, Spain, UK and France) and underlying industry (real estate, securities, energy).

“We are thrilled to announce this win-win transaction with Colony and look forward to serving new limited partners as we work to maximize value across a diverse portfolio,” said Fortress Managing Director Noah Shore. “This business and its underlying assets fit perfectly with our existing business and our deep wells of experience and expertise in managing highly complex investments across a full range of asset types, structures, industries and geographies.”

“Fortress is a world-class organization, so I know these assets will be stewarded and managed in the most responsible way going forward, allowing us to maintain our singular focus on building the most compelling digital infrastructure REIT in the world,” said Marc Ganzi, President and CEO of Colony Capital.

The transaction is expected to close in the fourth quarter of 2021, subject to customary closing conditions including regulatory approvals and investor consent requirements.

Moelis & Company LLC is acting as exclusive financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel to Fortress Credit Advisors LLC.

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