Allow Fortress To Reintroduce Itself: The Distress Specialist Is Expanding Its Game

Fortress Investment Group made its name investing when markets fell apart. Now, with the commercial real estate cycle turning, the investment giant is building a business that no longer depends on the next crisis.

“We've come out of the shadows as this distressed and opportunistic investor and tried to paint a broader brush,” Fortress Chief Operating Officer of Real Estate Equity David Hammerman said in an interview with Bisnow. “And all of that DNA is still there. We are still very, from my perspective, sophisticated, savvy. We like complicated, tough situations.”

Most recently, the investment manager announced the launch of Fortress Real Estate Exchange, a 1031 exchange platform that targets investments in multifamily properties and senior and student housing through Delaware statutory trusts.

The platform aims to give the baby boomer generation — sitting on approximately $90T of net worth with an estimated $2T to $4T concentrated in investment properties and second homes — a tax-efficient way to transfer their wealth. 

The core-focused real estate platform isn’t a traditional offering for Fortress, but Hammerman said the skills required to make it successful are central to the firm’s expertise. 

“With DSTs, there isn't distress, but there still is a complicated capital structure because of how they're put together,” Hammerman said. “What we're hoping to package is simple and safe assets that are cash-flowing into those structures, and then manage them well.”

In less than a year, Fortress has boosted its assets under management by 8% to $54B. Yet the firm’s true evolution isn't necessarily how much it has grown its balance sheet — it's how dramatically it has amplified the ways it puts that capital to work.

In 2024, Mubadala Investment Co. acquired SoftBank’s majority stake in Fortress. The deal reinforced Fortress’ independence, giving management control over the board while supporting its fundraising and giving it access to the global network, a sovereign wealth fund of Abu Dhabi.

That year, Fortress raised approximately $11B of investable capital, at the time calling it its most successful fundraising year ever. That included more than $1B raised via Fortress Private Wealth Solutions, a business launched in December 2022. It also revamped its fundraising team to expand its client base. 

That was followed by a geographic expansion that spanned the UK, Europe and the Middle East, along with a $1B strategic partnership with Mubadala in April 2025.

In the U.S., Fortress is a household name, if your household happens to work in commercial real estate. As it pushes into new lines of business, the firm has found itself reintroducing its brand to investors who know it for something else — or don't know it at all.

“We definitely get a bunch of questions of, ‘Who is Fortress? I've never heard of you guys,’ and it's definitely humbling when that happens,” Hammerman said. “But when else do we have the opportunity to tell our story and really focus on asset management?”

Among Fortress’ distinguishing features is its staffing model, according to Hammerman. The firm employs roughly two asset managers for every investment professional. The ratio is necessary when working out distressed assets but translates over to those that are more stable. 

Overall, Fortress’ equity business revolves around investments in which the company believes operating fundamentals will defy inflation and outpace ordinary growth, Hammerman said. That is especially important when the economy could “go through another bout of runaway inflation.” 

Rising oil prices, which may trickle down to consumer costs across the economy, have renewed inflation concerns. Bond yields have pushed higher, fueling expectations that the Federal Reserve could keep interest rates elevated — or raise them further.

“We really want to get to a place where we're earning our return through operations and being able to improve the property,” Hammerman said.

Senior housing has been a bet that Fortress has been making for several years now, including through its acquisitions of Brookdale Senior Living and Holiday Retirement in the 2000s. It continued to lean into the market, even when greater investor enthusiasm cooled in the 2010s before rebounding in recent years.

The strategy is an example of how Fortress has used its background of identifying distress to build up large portfolios when others were afraid to take chances, this time with the goal of holding the properties for the longer term after the market shifts. 

In San Francisco, while doom loop theories circled, Fortress went on a real estate buying spree, scooping up more than a dozen rental buildings over two years. It ended last year by buying a $348M loan backed by nearly 900 apartments in the city for $220M.

There, the tides have already begun to turn, thanks to a surge in artificial intelligence companies opening up shop. 

“We were hoping that the market opportunity to acquire would last a lot longer than it did,” Hammerman said. “The reality is, the market did what we hoped it was going to do. It just did it two or three years faster than we had anticipated.”

When it comes to office assets, Fortress has stuck to the lending side of the equation. The equity risk is still too great, with many markets continuing to experience elevated vacancy rates, uncertain rent growth and expensive tenant improvement demands. As a result, Fortress has only done two “special situation” office equity deals since the pandemic, Hammerman said.

“We are still going to do one-off, idiosyncratic deals,” Hammerman said. “It's our nature.”

Fortress similarly paid $50M for a 525-key hotel in Chicago — a 39% discount from the property’s 2015 price. The transaction made sense financially, but it doesn’t mean the company is going all in on the market the same way that it did in San Francisco, Hammerman said.

“Within real estate equity, the thing that we have been very focused on has been making a transition from a view that all distress is good,” Hammerman said. “Distress is a great way to get into a transaction, but there needs to be a prize at the end of the rainbow.”

Fortress is continuing to look for its next big bet. In doing so, it’s training its team to stay nimble, tapping into its specialty as a creative lender willing to take risks. 

“You can't keep playing the same song you were playing a month ago,” Hammerman said. “If you look five years from now, we will have invested in three, four or five different things that really the unifying theme is, hopefully, Fortress identified it a little bit before the rest of the market did.”