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$730 Million Buys Assets From DigitalBridge, BrightSpire Capital for Fortress Investment Group

Fortress Investment Group affiliates have completed previously announced transactions with DigitalBridge Group and BrightSpire Capital, with total consideration of $730 million.

“We have a long and extremely productive history working with the DigitalBridge and BrightSpire teams and could not be more pleased with their partnership in closing these highly complex and large-scale transactions on such ambitious timetables,” said Fortress Managing Director Noah Shore. “The acquired assets fit perfectly with our experience and expertise, and we are thrilled to welcome an exceptional group of new limited partners to Fortress.”

Under terms of the DigitalBridge transaction, affiliates of Fortress are now general partner and manager to DigitalBridge’s DCVR series of funds, co-investment vehicles and other non-digital real estate positions, representing $2.7 billion in combined assets under management at the time of the agreement’s announcement, according to Fortress. It said that the assets are diversified by investment type (senior debt, junior debt and equity), underlying asset class (office, hotels, land, multifamily), geography (United States, Ireland, Spain, United Kingdom and France) and underlying industry (real estate, securities, energy). Fortress said that it provided a one-stop solution to DigitalBridge as it sought to resolve virtually all of its remaining Other Equity and Debt assets in a single transaction, while assuring continued responsible stewardship for DCVR investors by a leading global investment manager.

“We are incredibly pleased to deliver on our commitment to finalize this deal by the end of the year,” said Jacky Wu, chief financial officer of DigitalBridge. “I want to thank our partners at Fortress and the entire team at DigitalBridge who worked on this complex series of transactions for their tireless work over the past six months to bring it to the finish line.”

Under terms of the BrightSpire acquisition, Fortress has acquired five historical development or non-accrual assets for gross proceeds of $223 million.

“This sale accelerates our business plan to simplify the portfolio and effectively concludes BrightSpire’s portfolio rotation,” said Andy Witt, chief operating officer of BrightSpire Capital.

Founded in 1998, Fortress said it manages $54.2 billion of assets as of Sept. 30 on behalf of 1,800 institutional clients and private investors worldwide across a range of credit and real estate, private equity and permanent capital investment strategies.

Fortress said that DigitalBridge is a global digital infrastructure real estate investment trust (REIT). With a heritage of more than 25 years investing in and operating businesses across the digital ecosystem including cell towers, data centers, fiber, small cells, and edge infrastructure, Fortress said, the DigitalBridge team manages a $40 billion portfolio of digital infrastructure assets on behalf of its limited partners and shareholders.

According to Fortress, BrightSpire Capital, formerly Colony Credit Real Estate, is one of the largest publicly traded commercial real estate (CRE) credit REITs, focused on originating, acquiring, financing and managing a diversified portfolio consisting primarily of CRE debt investments and net leased properties predominantly in the United States.

“CRE debt investments primarily consist of first mortgage loans, which we expect to be the primary investment strategy,” a statement from Fortress reads.

Colony Capital Sells Other Equity & Debt (OED) Portfolio, Reaps $535 Million

Colony Capital has agreed to sell the bulk of its Other Equity & Debt (OED) portfolio of real estate assets to Fortress Investment Group for $535 million.

“This transaction is a watershed moment for us, a big step towards our finish-the-mission goal as we rotate to a fully-digital business,” said Marc Ganzi, president and CEO of Colony Capital. “Not only are we freeing up over a half-billion dollars to redeploy into digital, we’re simplifying our business, making it easier to manage and to understand. Fortress is a world-class organization, so I know these assets will be stewarded in the most responsible way going forward, allowing us to maintain our singular focus on building the most compelling digital infrastructure real estate investment trust (REIT) in the world.”

Marc Ganzi, president and CEO of Colony Capital.

Colony Capital describes itself as a global digital infrastructure REIT and describes Fortress as a diversified global investment manager. In a prepared statement, Colony Capital said the OED portfolio sale advances several of its strategic goals:

  • Boost digital firepower: Over $500 million of capital available to fuel high-quality digital investments, harvested at levels in line with net carrying values.
  • Simplification: Substantial reduction in organizational complexity generates estimated overhead cost savings of over $18 million, allows enhanced focus on digital, and simplifies investor analysis.
  • Enhance liquidity, reduce leverage: The OED portfolio sale increases corporate liquidity to over $1.2 billion on a pro forma basis, while at the same time reducing consolidated investment-level debt by $945 million.

Fortress Managing Director Noah Shore said that the OED portfolio is a perfect fit with his company’s business and what he called its deep wells of experience and expertise in managing highly complex investments across a full range of asset types, structures, industries and geographies.

According to a statement from Colony Capital, the transaction will result in digital assets under management accounting for 80 percent of the company’s pro forma assets under management, with its wellness infrastructure segment and ownership stake in the publicly listed shares of Colony Credit Real Estate, which are not included in the sale, along with a small number of OED assets constituting its remaining material legacy assets.

“Combined with other monetizations to date, at closing, the Colony Capital will have generated approximately $790 million in total monetizations year-to-date, which would exceed the high end of the company’s 2021 monetization target of $400-600 million,” the statement reads. “As importantly, the OED portfolio sale resolves the material ownership of its OED assets in a single transaction, while assuring their continued responsible stewardship by a leading global investment manager, Fortress, focused on optimizing their value.”

Prior to the closing of this transaction, Colony’s non-digital European investment management platform will be privatized and will continue to provide sub advisory and management services to the relevant OED entities.

Source: Colony Capital