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Fortress closes second Japan distress fund at $1.6b

  • Andrew Woodman
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Fortress Investment Group has closed its second distress fund, Fortress Japan Opportunity Fund II, at its hard cap of JPY130 billion ($1.65 billion). It is the successor fund to Fortress Japan Opportunity Domestic Fund (FJOF) which closed in June 2010 at $800 million.

The funds, which focus on real estate-related debt and other assets in Japan, seek to capitalize on the dynamics related to deleveraging by financial institutions and near-term debt maturities.

As of September 30, FJOF has made 23 investments, with Fortress estimating that the fund's portfolio will achieve a gross IRR of over 34%. The second fund has already made 10 investments with approximately JPY30 billion of net invested capital. It is expected to be fully invested over the next 24 months.

"We believe the environment remains historically attractive for disciplined, opportunistic investments in Japanese real estate-related debt and other assets," Thomas Pulley, Fortress Japan's chief investment officer, said in a statement. "We anticipate that deleveraging and the disposition of non-core assets will remain at heightened levels in the coming years, and that significant opportunities will result for select managers."

Founded in 1998, Fortress Investment Group has more than $50 billion in assets under management.

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