Fortress’ private equity Q3 earnings drop 78%

The firm’s private equity funds grew AUM and management fee income, but booked pre-tax distributable earning of $18m, down from $82m in the same period last year.

Fortress Investment Group, a publicly listed US hedge and private equity fund manager, reported a 78 percent third quarter drop in private equity fund pre-tax distributable earnings to $18 million, compared to the $82 million earned during the same period last year.

However, the firm’s management fee income from its private equity funds grew by 26 percent to $44 million. Meanwhile, incentive fees for the quarter were in the red by $16 million relative to a gain of $84 million last year.

The funds’ assets under management saw a 6.4 percent year-over-year increase to $13.7 billion.

The firm’s private equity portfolio companies have $118 million of remaining debt coming to maturity this year and $3 billion coming to maturity in 2009. Of the debt maturing in 2009, more than half is held by a single undisclosed portfolio company.

Fortress’s publicly-traded private equity affiliates, referred to as Castles by the firm, generated earnings of $4 million in the most recent quarter, down 20 percent from the same period in 2007.

The Castles saw assets under management remain stable at $3.3 billion year-over-year, while management fee income increased by $1 million to $13 million.

Fortress’s stock price remained roughly stable following the third quarter earnings statement. The stock closed yesterday at $3.24 per share, down 81.5 percent percent from the same time last year.