Fortress reports $171M net loss

Intrawest's parent company releases 2nd-quarter financials

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— Fortress Investment Group reported a $171 million net loss for the second quarter, which ended June 30. The company saw a net loss of $250 million in the second quarter of 2008.

The private-equity and hedge fund manager is the parent company of Intrawest, which is the parent company of Steamboat Ski and Resort Corp. Some Fortress funds are invested in development at the base area of Mount Werner in Steamboat Springs.

Fortress released its financial report Wednesday. The company reported that its net loss attributable to shareholders was $45 million, or 41 cents per share. That compares with a loss of 67 cents per share in the second quarter of 2008.

Excluding compensation for principals, Fortress' net second-quarter income was $66 million. The company announced in June that it wouldn't pay second-quarter dividends.

Fortress' losses improved compared with the first quarter, when it reported a net loss of $287 million.

Fortress Chairman and CEO Wesley Edens spoke about the results during a conference call with analysts this week.

"For the second quarter, it was our strongest quarter in the past year," Edens said. "First of all, our assets under management ended the quarter at $31 billion, up $4.5 billion, or 17 percent, from the $26.5 billion that we closed at the end of the first quarter. The increase is primarily a result of positive investment performance across all three businesses and the closing of the management of a large credit hedge fund."

Fortress ran into issues in December, finding itself in a position where it had to hold back redemptions from some of its funds. Investors requested $3.5 billion of their money in November and December. The amount would have wiped out the funds, so Fortress suspended redemptions.

News has improved for the company. Fortress raised $219.5 million in net proceeds by selling 46 million shares in a common stock offering in May. The company used half of that to pay down debt, Edens said.

"As of today, we have approximately $410 million in outstanding debt and approximately $100 million in cash, so net debt just a shade over $300 million, which puts our balance sheet liquidity in a real place of strength," Edens said.

Daniel Mudd, former chief executive officer of mortgage giant Fannie Mae, will take over from Edens as CEO on Tuesday. Fortress also elected a new board member, George Wellde.

Fortress was trading at $5.11 per share, up 26 cents, when the stock market closed Thursday.

Comments

Jamie Morgan 5 years ago

Did I read this incorrectly or did they actually make a 2Q profit of $66,000,000 without principals compensation? That is over $200,000,000 in principals compensation for the 2Q--what did I miss here?

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Blythe Terrell 5 years ago

You didn't miss anything, Jamie. Those figures are what Fortress reported.

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Scott Wedel 5 years ago

What is tricky about looking at Fortress and how it relates to SB is that Fortress is an asset manager. their funds investors own the assets while Fortress takes money for managing the assets.

Honestly, I cannot find the fund that includes Intrawest in order to see if the fund is doing well or needs to raise cash.

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