The Fortress Investment Group, a publicly traded alternative asset manager, said on Thursday that its second-quarter earnings rose 16 percent, aided by sales of its private equity investments.
Fortress, which manages a range of hedge funds and other strategies, said its distributable earnings – a pretax measure of the cash that can be given to shareholders – rose to $172 million from $148 million in the period a year earlier. The earnings amounted to 39 cents a share, exceeding the average estimate of 30 cents among analysts surveyed by Thomson Reuters.
Driving the results, Fortress collected investment gains from selling its remaining stakes in two companies it had previously taken public. While Fortress is not primarily a private equity firm, it was able to take advantage of the soaring stock market that has recently helped numerous other companies realize gains from selling their private equity investments.
Fortress sold shares in Brookdale, an operator of assisted living homes for older people, and in Gagfah, a German landlord, realizing $91 million of gains that were recognized as distributable earnings.
The increase in investment income helped make up for higher operating expenses and a lower level of incentive income, which is the profit Fortress gets from its funds, the company said. It announced a dividend of 26 cents a share.
Fortress’s assets under management, bolstered by fresh capital it raised, rose to $63.8 billion as of June 30 from $62.5 billion at the end of March.
The company uses nonstandard metrics to report earnings. According to generally accepted accounting principles, it earned $69 million in the second quarter, compared with a $2 million loss a year earlier.
“Fortress had a terrific second quarter, marked by our second-highest distributable earnings since going public, record assets under management, and our largest-ever quarterly distribution to shareholders,” Randal A. Nardone, the chief executive, said in a statement. Fortress went public in 2007.
“Our results reflect the significant impact that private equity realizations can have on our earnings and distributions,” he added, “and we expect realizations activity to continue to trend up in the coming years.”