Och-Ziff Capital Management Group LLC Reports 2016 First Quarter Results
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NEW YORK, NY -- (Marketwired) -- 05/03/16 -- Och-Ziff Capital Management Group LLC (NYSE: OZM) (the "Company" or "Och-Ziff") today reported GAAP net loss allocated to Class A Shareholders ("GAAP Net Loss") of $69.4 million, or $0.38 per basic and diluted Class A Share, for the 2016 first quarter.
Summary
- Distributable Earnings loss of $142.5 million, or $0.27 per Adjusted Class A Share, for the 2016 first quarter, which includes a reserve taken for the FCPA investigation in the amount of $200.0 million, or $0.39 per Adjusted Class A Share.
- Assets under management totaled $43.2 billion as of March 31, 2016.
- Longer-dated assets under management, which are those subject to initial commitment periods of three years or longer, were $16.4 billion, or 38% of the Company's total assets under management as of March 31, 2016, increasing 2% year-over-year.
- Assets under management in the Company's dedicated credit, real estate and other single-strategy funds were $15.7 billion, comprising 36% of assets under management as of March 31, 2016, increasing 9% year-over-year.
- Estimated assets under management totaled $42.0 billion as of May 1, 2016.
"The global markets have been challenging to date, but this is not the first time we have navigated an environment like this," said Dan Och, Chairman and Chief Executive Officer of Och-Ziff. "Over time, we believe a proven investment process, a diversified platform of products spanning geographies and asset classes and the flexibility to adapt to changing markets will deliver attractive results for investors in our funds and our firm."
GAAP NET INCOME (LOSS) ALLOCATED TO CLASS A SHAREHOLDERS
On January 1, 2016, the Company adopted new consolidation accounting guidance that resulted in the deconsolidation of the majority of previously consolidated funds, including all CLOs. The deconsolidation resulted in a significant decrease in the amount of income of consolidated Och-Ziff funds, expenses of consolidated Och-Ziff funds, and net gains of consolidated Och-Ziff funds in our GAAP consolidated statement of comprehensive income (loss). Management fees and incentive income from the previously consolidated funds are also no longer eliminated in consolidation.
For the 2016 first quarter, Och-Ziff reported GAAP Net Loss of $69.4 million, or $0.38 per basic and diluted Class A Share, compared to GAAP net income allocated to Class A Shareholders of $25.9 million, or $0.15 per basic and $0.14 per diluted Class A Share, for the 2015 first quarter. The year-over-year decrease was primarily driven by the $200.0 million FCPA investigation reserve accrual taken in the first quarter of 2016. In addition, lower incentive income and management fees and higher non-compensation expenses, partially offset by lower income taxes and lower compensation and benefits also contributed to the year-over-year decrease.
Throughout this press release, the Company presents financial measures that are not prepared in accordance with GAAP. For a discussion of these non-GAAP measures, please see the section titled "Non-GAAP Financial Measures" at the end of this press release.
DISTRIBUTABLE EARNINGS (NON-GAAP)
For the 2016 first quarter, Och-Ziff reported a Distributable Earnings loss of $142.5 million, or $0.27 per Adjusted Class A Share. Excluding the $200.0 million FCPA investigation reserve accrual taken in the first quarter of 2016, Distributable Earnings were $57.5 million, or $0.11 per Adjusted Class A Shares, compared to Distributable Earnings of $126.7 million, or $0.25 per Adjusted Class A Share, for the 2015 first quarter. The year-over-year decrease excluding the reserve was due to lower incentive income and management fees, as well as higher operating expenses. Please see the "Economic Income (Non-GAAP)" section of this press release for a discussion of the drivers affecting the Company's Economic Income. The adoption of the new consolidation guidance referenced above had no impact on Economic Income or Distributable Earnings.
Distributable Earnings is a non-GAAP measure. For reconciliations of Distributable Earnings to the respective GAAP Net Income for the periods discussed above, please see Exhibit 2 that accompanies this press release. Additionally, please see the section titled "Non-GAAP Financial Measures" at the end of this press release, including the definitions of Distributable Earnings, Adjusted Income Taxes and Adjusted Class A Shares.
ASSETS UNDER MANAGEMENT
(dollars in March 31, March 31,
billions) 2016 2015
----------- -----------
Multi-strategy
funds $ 27.5 $ 33.9
Credit
Opportunistic
credit funds 5.2 5.2
Institutional
Credit
Strategies 7.2 5.9
Real estate funds 2.1 2.1
Other 1.2 1.3
Total $ 43.2 $ 48.3
Year-Over-Year Change
--------------------------------------------------------
Distributions
(dollars in Inflows / / Other Appreciation /
billions) (Outflows) Reductions (Depreciation) Total %
------------ -------------- --------------- ------- ----
Multi-strategy
funds $ (4.3) $ - $ (2.0) $ (6.4) -19%
Credit
Opportunistic
credit funds 0.7 (0.5) (0.2) - -%
Institutional
Credit
Strategies 1.4 - - 1.4 24%
Real estate funds 0.2 (0.2) - - -%
Other - - (0.1) (0.1) -9%
Total $ (2.0) $ (0.7) $ (2.3) $ (5.1) -11%
Totals may not sum due to rounding. Please see Exhibit 4 for detailed information.
As of March 31, 2016, assets under management totaled $43.2 billion, a decrease of $5.1 billion, or 11%, from March 31, 2015, which was driven by capital net outflows of $2.0 billion and $725.9 million of distributions to investors and other reductions in the Company's closed-end opportunistic credit and real estate funds. Also contributing to the decline was performance-related depreciation of $2.3 billion. During the month of March, the Company had approximately $65.7 million of intra-month capital net outflows, which are included in the $43.2 billion of assets under management as of March 31, 2016.
Assets under management decreased to an estimated $42.0 billion as of May 1, 2016. This decrease reflected estimated performance-related appreciation of approximately $258.8 million in April and capital net outflows of approximately $1.5 billion, which was comprised of approximately $1.2 billion of capital net outflows on April 1, 2016 and approximately $287.1 million of capital net outflows from April 2, 2016 to May 1, 2016.
Please see detailed assets under management and fund information on Exhibits 4 through 6 that accompany this press release.
Multi-strategy funds
Assets under management in Och-Ziff's multi-strategy funds totaled $27.5 billion as of March 31, 2016, decreasing 19%, or $6.4 billion, year-over-year. This change was driven by net capital outflows of $4.3 billion, primarily in the OZ Master Fund, the Company's largest multi-strategy fund, as well as performance-related depreciation of $2.0 billion.
For the first quarter of 2016, the OZ Master Fund, the Company's largest multi-strategy fund, generated a gross return of -3.0% and a net return of -3.4%. On a gross basis, U.S. long/short equity special situations was the largest contributor to the performance-related depreciation, partially offset by positive performance in merger arbitrage, credit-related strategies and convertible and derivative arbitrage.
Credit
Assets under management in Och-Ziff's dedicated credit products totaled $12.4 billion as of March 31, 2016, increasing $1.4 billion, or 12%, year-over-year. This change was driven by capital net inflows of $2.1 billion, partially offset by $505.3 million of distributions and other reductions in the Company's closed-end opportunistic credit funds and $180.1 million of performance-related depreciation.
Opportunistic credit
Och-Ziff's opportunistic credit funds seek to generate risk-adjusted returns by capturing value in mispriced investments across disrupted, dislocated and distressed corporate, structured and private credit markets globally.
Assets under management in the Company's opportunistic credit funds totaled $5.2 billion as of March 31, 2016, essentially unchanged year-over-year. This was due to $662.5 million of capital net inflows, primarily into the Customized Credit Focused Platform, partially offset by $505.3 million of distributions and other reductions related to the Company's closed-end opportunistic credit funds. Also contributing to the decrease was $170.7 million of performance-related depreciation.
For the first quarter of 2016, the OZ Credit Opportunities Master Fund, the Company's global opportunistic credit fund, generated a gross return of 1.3% and a net return of 1.0%. On a gross basis, performance was driven by the fund's U.S. portfolio.
Institutional Credit Strategies
Institutional Credit Strategies ("ICS") is the Company's asset management platform that invests in performing credits, including leveraged loans, high-yield bonds, private credit/bespoke financing and investment grade credit via CLOs and other customized solutions for clients.
Assets under management in ICS totaled $7.2 billion as of March 31, 2016, increasing $1.4 billion, or 24%, year-over-year. The increase was primarily driven by three CLOs that closed in the year-over-year period. ICS managed 13 CLOs as of March 31, 2016.
Real estate funds
Assets under management in Och-Ziff's real estate funds totaled $2.1 billion as of March 31, 2016, increasing $9.5 million year-over-year. The increase was driven by Och-Ziff Real Estate Credit Fund I, partially offset by distributions and other reductions from Och-Ziff Real Estate Fund II. Since inception, the net IRR for Och-Ziff Real Estate Fund II (for which the investment period ended in 2014) was 22.6% through March 31, 2016. Since inception, the net IRR for Och-Ziff Real Estate Fund I (for which the investment period ended in 2010) was 15.6% through March 31, 2016.
ECONOMIC INCOME (NON-GAAP)
In addition to analyzing the Company's results on a GAAP basis, management also reviews the Company's results on an "Economic Income" basis. Economic Income excludes certain adjustments that are required for presentation of the Company's results on a GAAP basis, but that management does not consider when evaluating operating performance in any given period. The adoption of the new consolidation guidance referenced above had no impact on Economic Income.
For reconciliations of Economic Income and its components to the respective GAAP measures, please see Exhibits 2 and 3 that accompany this press release. Additionally, please see the discussion of "Non-GAAP Financial Measures" at the end of this press release.
Economic Income Revenues (Non-GAAP)
Economic Income revenues for the 2016 first quarter were $175.5 million, a 24% decrease from $229.6 million for the 2015 first quarter. Management fees were $144.4 million, a 12% decrease from $163.8 million for the prior-year period. Incentive income was $30.6 million, 53% lower than the $65.3 million for the prior-year period.
The year-over-year decrease in management fees was driven primarily by lower assets under management in the Company's multi-strategy funds, partially offset by higher assets under management in the Company's ICS products. This change in mix also resulted in a lower year-over-year average management fee rate. The year-over-year decrease in incentive income was driven primarily by lower tax distributions taken to cover tax liabilities on incentive income that has been accrued on certain longer-term assets under management, but that will not be realized until the end of the relevant commitment period.
The average management fee rate was 1.31% for the 2016 first quarter. The Company's average management fee will vary from quarter to quarter based on the mix of products that comprise its assets under management.
Compensation and Benefits (Non-GAAP)
Compensation and benefits for the 2016 first quarter totaled $33.8 million, a slight increase from $33.3 million for the 2015 first quarter. Salaries and benefits were $30.0 million, 8% higher than $27.8 million in the prior-year period. Bonus expense for the 2016 first quarter totaled $3.8 million, 31% lower than $5.5 million for the prior-year period.
The ratio of salaries and benefits to management fees was 21% for the 2016 first quarter, compared to 17% for the 2015 first quarter. These increases were the result of lower year-over-year management fees, as well as higher expense levels.
Non-Compensation Expenses (Non-GAAP)
Non-compensation expenses for the 2016 first quarter totaled $257.1 million, or $57.1 million excluding the $200.0 million FCPA investigation reserve accrual taken in the 2016 first quarter, compared to $40.3 million in the prior-year period. The $16.8 million year-over-year increase excluding the reserve accrual was primarily due to increased legal expenses relating to the investigation.
The ratio of non-compensation expenses excluding the reserve accrual to management fees was 40% for the 2016 first quarter, compared to 25% for the 2015 first quarter.
Economic Income (Non-GAAP)
Economic Income for the first quarter of 2016 was a net loss of $115.3 million, or net income of $84.7 million excluding the $200.0 million FCPA investigation reserve accrual, compared to net income of $155.9 million for the first quarter of 2015. The $71.3 million year-over-year decrease excluding the reserve was driven by lower incentive income and management fees, as well as higher operating expenses.
CAPITAL
As of March 31, 2016, the number of Class A Shares outstanding was 181,352,699. For purposes of calculating Distributable Earnings per Share, the Company assumes that all the interests held by its executive managing directors in the Company's principal operating subsidiaries (the "Och-Ziff Operating Group") (collectively, "Partner Units"), as well as Class A Restricted Share Units ("RSUs") outstanding during the applicable period, have been converted on a one-to-one basis into Class A Shares ("Adjusted Class A Shares"). For the first quarter ended March 31, 2016, the total weighted-average Adjusted Class A Shares outstanding was 518,318,632.
DIVIDEND
The Board of Directors of Och-Ziff did not declare a 2016 first-quarter dividend.
Dan Och, Chairman and Chief Executive Officer of Och-Ziff, and Joel Frank, Chief Financial Officer, will host a conference call today, May 3, 2016, at 8:30 a.m. Eastern Time to discuss the Company's 2016 first quarter results. The call can be accessed by dialing +1-888-713-4215 (in the U.S.) or +1-617-213-4867 (international), passcode 13283107. A simultaneous webcast of the call will be available on the Public Investors page of the Company's website (www.ozcap.com).
For those unable to listen to the live broadcast, a replay will be available shortly after the call by dialing +1-888-286-8010 (in the U.S.) or +1-617-801-6888 (international), passcode 75452259. A webcast replay will also be available on the Company's website as noted above.
Non-GAAP Financial Measures
Management evaluates Economic Income for the Och-Ziff Funds segment, the Company's only reportable operating segment under GAAP, and for the Company's Other Operations. Economic Income for the Company equals the sum of Economic Income for the Och-Ziff Funds segment and the Company's Other Operations.
Additionally, throughout this press release management has presented certain non-GAAP measures that exclude the effect of the FCPA investigation reserve accrual taken during the first quarter of 2016. These measures are presented to provide a more comparable view of the Company's core operating results year-over-year.
The Company conducts substantially all of its business through the Och-Ziff Funds segment, which provides asset management services to its multi-strategy, opportunistic credit and equity funds, Institutional Credit Strategies and other alternative investment vehicles. The Company's Other Operations are primarily comprised of its real estate business, which provides asset management services to its real estate funds.
The Company's non-GAAP measures should not be considered as alternatives to the Company's GAAP Net Income or cash flow from operations, or as indicative of liquidity or the cash available to fund operations. The Company's non-GAAP measures may not be comparable to similarly titled measures used by other companies.
For reconciliations of the Company's non-GAAP measures to the most directly comparable GAAP measures, please see Exhibits 2 and 3 that accompany this press release.
Economic Income
In addition to analyzing the Company's results on a GAAP basis, management also reviews the Company's results on an "Economic Income" basis. Economic Income excludes the adjustments described below that are required for presentation of the Company's results on a GAAP basis, but that management does not consider when evaluating the operating performance of the Company in any given period. Management uses Economic Income as the basis on which it evaluates the financial performance of the Company and makes resource allocation and other operating decisions. Management considers it important that investors review the same operating information that it uses.
Economic Income is a measure of pre-tax operating performance that excludes the following from the Company's results on a GAAP basis:
- Income allocations to the Company's executive managing directors on their direct interests in the Och-Ziff Operating Group. Management reviews operating performance at the Och-Ziff Operating Group level, where substantially all of the Company's operations are performed, prior to making any income allocations.
- Reorganization expenses related to the Company's IPO, equity-based compensation expenses and depreciation and amortization expenses, as management does not consider these non-cash expenses to be reflective of operating performance. However, the fair value of RSUs that are settled in cash to employees or executive managing directors is included as an expense at the time of settlement.
- Changes in the tax receivable agreement liability and net gains (losses) on investments in Och-Ziff funds, as management does not consider these items to be reflective of operating performance.
- Amounts related to the consolidated Och-Ziff funds, including the related eliminations of management fees and incentive income, as management reviews the total amount of management fees and incentive income earned in relation to total assets under management and fund performance. The Company also defers the recognition of incentive income allocations from the consolidated Och-Ziff funds until all clawback contingencies are resolved, consistent with the revenue recognition policy for the funds the Company does not consolidate.
In addition, expenses related to compensation and profit-sharing arrangements based on fund investment performance are recognized at the end of the relevant commitment period, as management reviews the total compensation expense related to these arrangements in relation to any incentive income earned by the relevant fund.
As a result of the adjustments described above, as well as an adjustment to present management fees net of recurring placement and related service fees (rather than considering these fees an expense), management fees, incentive income, compensation and benefits, non-compensation expenses and net income allocated to noncontrolling interests as presented on an Economic Income basis are also non-GAAP measures.
Distributable Earnings
Distributable Earnings is a non-GAAP measure of after-tax operating performance and equals Economic Income less Adjusted Income Taxes. Adjusted Income Taxes are estimated assuming the conversion of all outstanding Partner Units into Class A Shares, on a one-to-one basis, and include the impact of payments under the tax receivable agreement. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC. Partner Units represent interests in the Och-Ziff Operating Group held by the Company's executive managing directors, including the Och-Ziff Operating Group A Units and Och-Ziff Operating Group D Units. Distributable Earnings per Share is equal to Distributable Earnings divided by the weighted-average number of Adjusted Class A Shares.
Management believes Distributable Earnings provides useful information to investors because it uses Distributable Earnings, among other financial information, to determine the earnings available to distribute as dividends to holders of the Company's Class A Shares and to the Company's executive managing directors with respect to their Partner Units.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect the Company's current views with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as "outlook," "believe," "expect," "potential," "continue," "may," "will," "should," "could," "seek," "approximately," "predict," "intend," "plan," "estimate," "anticipate," "opportunity," "comfortable," "assume," "remain," "maintain," "sustain," "achieve," "see," "think," "position" or the negative version of those words or other comparable words.
Any forward-looking statements contained in this press release are based upon historical information and on the Company's current plans, estimates and expectations. The inclusion of this or other forward-looking information should not be regarded as a representation by the Company or any other person that the future plans, estimates or expectations contemplated by the Company will be achieved. We caution that forward-looking statements are subject to numerous assumptions, estimates, risks and uncertainties, including but not limited to the following: global economic, business, market and geopolitical conditions; U.S. and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy; conditions impacting the alternative asset management industry; the Company's ability to successfully compete for fund investors, assets, professional talent and investment opportunities; the Company's ability to retain its active executive managing directors, managing directors and other investment professionals; the Company's successful formulation and execution of its business and growth strategies; the Company's ability to appropriately manage conflicts of interest and tax and other regulatory factors relevant to its business; and assumptions relating to the Company's operations, investment performance, financial results, financial condition, business prospects, growth strategy and liquidity.
If one or more of these or other risks or uncertainties materialize, or if the Company's assumptions or estimates prove to be incorrect, its actual results may vary materially from those indicated in these statements. These factors are not and should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and risks that are included in the Company's filings with the U.S. Securities and Exchange Commission ("SEC"), including but not limited to the Company's annual report on Form 10-K for the year ended December 31, 2015, dated February 11, 2016, as well as may be updated from time to time in the Company's other SEC filings. There may be additional risks, uncertainties and factors that the Company does not currently view as material or that are not known. The forward-looking statements contained in this press release are made only as of the date of this press release. The Company does not undertake to update any forward-looking statement because of new information, future developments or otherwise.
This press release does not constitute an offer of any Och-Ziff fund.
About Och-Ziff Capital Management Group LLC
Och-Ziff Capital Management Group LLC is one of the largest institutional alternative asset managers in the world, with offices in New York, London, Hong Kong, Mumbai, Beijing, Dubai, Shanghai and Houston. Och-Ziff provides asset management services to investors globally through its multi-strategy funds, dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds and other alternative investment vehicles. Och-Ziff seeks to generate consistent, positive, absolute returns across market cycles, with low volatility compared to the broader markets, and with an emphasis on preservation of capital. Och-Ziff's funds invest across multiple strategies and geographies, consistent with the investment objectives for each fund. The global investment strategies Och-Ziff employs include convertible and derivative arbitrage, corporate credit, long/short equity special situations, merger arbitrage, private investments, real estate and structured credit. As of May 1, 2016, Och-Ziff had approximately $42.0 billion in assets under management. For more information, please visit Och-Ziff's website (www.ozcap.com).
EXHIBIT 1
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
2016 2015
-------------- -------------
Revenues
Management fees $ 156,910 $ 165,943
Incentive income 30,587 57,110
Other revenues 579 461
Income of consolidated Och-Ziff funds 366 109,337
-------------- -------------
Total Revenues 188,442 332,851
-------------- -------------
Expenses
Compensation and benefits 54,261 69,918
Reorganization expenses - 4,017
Interest expense 5,386 5,245
General, administrative and other 267,524 49,835
Expenses of consolidated Och-Ziff funds 266 59,888
-------------- -------------
Total Expenses 327,437 188,903
-------------- -------------
Other Income
Net gains on investments in Och-Ziff funds
and joint ventures 249 117
Net gains of consolidated Och-Ziff funds 545 45,885
-------------- -------------
Total Other Income 794 46,002
-------------- -------------
(Loss) Income Before Income Taxes (138,201) 189,950
Income taxes 18,539 25,160
-------------- -------------
Consolidated and Comprehensive Net (Loss)
Income $ (156,740) $ 164,790
============== =============
Allocation of Consolidated and Comprehensive
Net (Loss) Income
Class A Shareholders $ (69,356) $ 25,871
Noncontrolling interests (87,845) 133,353
Redeemable noncontrolling interests 461 5,566
-------------- -------------
$ (156,740) $ 164,790
============== =============
(Loss) Earnings Per Class A Share
Basic $ (0.38) $ 0.15
============== =============
Diluted $ (0.38) $ 0.14
============== =============
Weighted-Average Class A Shares Outstanding
Basic 182,548,852 177,634,861
============== =============
Diluted 182,548,852 180,156,745
============== =============
EXHIBIT 2
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Non-GAAP Measures to the Respective GAAP Measures
(Unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------------
Three Months Ended March 31, 2016
-----------------------------------------
Och-Ziff
Funds Other Total
Segment Operations Company
------------- ------------- -------------
Net (loss) income allocated to
Class A Shareholders-GAAP $ (71,722) $ 2,366 $ (69,356)
Net (loss) income allocated to the
Och-Ziff Operating Group A Units (88,019) - (88,019)
Equity-based compensation, net of
RSUs settled in cash 17,968 574 18,542
Income taxes 18,539 - 18,539
Adjustment for incentive income
allocations from consolidated
funds subject to clawback - - -
Allocations to Och-Ziff Operating
Group D Units 875 - 875
Adjustment for expenses related to
compensation and profit-sharing
arrangements based on fund
investment performance - 1,264 1,264
Reorganization expenses - - -
Changes in tax receivable
agreement liability (145) - (145)
Depreciation and amortization 3,215 187 3,402
Other adjustments (650) 219 (431)
------------- ------------- -------------
Economic Income-Non-GAAP $ (119,939) $ 4,610 (115,329)
============= =============
Adjusted Income Taxes-Non-GAAP(1) (27,189)
-------------
Distributable Earnings-Non-GAAP $ (142,518)
=============
Weighted-Average Class A Shares
Outstanding 182,548,852
Weighted-Average Partner Units 322,644,220
Weighted-Average Class A
Restricted Share Units (RSUs) 13,125,560
-------------
Weighted-Average Adjusted Class A
Shares 518,318,632
=============
Distributable Earnings Per
Adjusted Class A Share-Non-GAAP $ (0.27)
=============
Economic Income-Non-GAAP $ (115,329)
FCPA investigation reserve accrual 200,000
-------------
Economic Income Excluding Reserve-
Non-GAAP 84,671
Adjusted Income Taxes-Non-GAAP(1) (27,189)
-------------
Distributable Earnings Excluding
Reserve-Non-GAAP $ 57,482
=============
Distributable Earnings Per
Adjusted Class A Share Excluding
Reserve-Non-GAAP $ 0.11
=============
Three Months Ended March 31, 2015
-----------------------------------------
Och-Ziff
Funds Other Total
Segment Operations Company
------------- ------------- -------------
Net (loss) income allocated to
Class A Shareholders-GAAP $ 4,462 $ 21,409 $ 25,871
Net (loss) income allocated to the
Och-Ziff Operating Group A Units 80,932 - 80,932
Equity-based compensation, net of
RSUs settled in cash 28,005 791 28,796
Income taxes 25,160 - 25,160
Adjustment for incentive income
allocations from consolidated
funds subject to clawback 2,240 (20,713) (18,473)
Allocations to Och-Ziff Operating
Group D Units 5,697 338 6,035
Adjustment for expenses related to
compensation and profit-sharing
arrangements based on fund
investment performance - 1,419 1,419
Reorganization expenses 4,017 - 4,017
Changes in tax receivable
agreement liability (25) - (25)
Depreciation and amortization 1,964 185 2,149
Other adjustments 211 (144) 67
------------- ------------- -------------
Economic Income-Non-GAAP $ 152,663 $ 3,285 155,948
============= =============
Adjusted Income Taxes-Non-GAAP(1) (29,250)
-------------
Distributable Earnings-Non-GAAP $ 126,698
=============
Weighted-Average Class A Shares
Outstanding 177,634,861
Weighted-Average Partner Units 324,488,916
Weighted-Average Class A
Restricted Share Units (RSUs) 12,589,942
-------------
Weighted-Average Adjusted Class A
Shares 514,713,719
=============
Distributable Earnings Per
Adjusted Class A Share-Non-GAAP $ 0.25
=============
(1) Presents an estimate of income tax expense by assuming the conversion
of all Partner Units into Class A Shares, on a one-to-one basis, as
well as the impact of payments under the tax receivable agreement.
Therefore, all income of the Och-Ziff Operating Group allocated to the
Partner Units is treated as if it were allocated to Och-Ziff Capital
Management Group LLC.
EXHIBIT 3
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Components of Economic Income and Reconciliation of These Non-GAAP Measures
to the Respective GAAP Measures (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Three Months Ended March 31, 2016
--------------------------------------
Och-Ziff
Funds Other Total
Segment Operations Company
------------ ------------ ------------
Management fees-GAAP $ 151,775 $ 5,135 $ 156,910
Adjustment to management fees(1) (12,531) - (12,531)
------------ ------------ ------------
Management Fees-Economic Income
Basis-Non-GAAP 139,244 5,135 144,379
------------ ------------ ------------
Incentive income-GAAP 26,953 3,634 30,587
Adjustment to incentive income(2) - - -
------------ ------------ ------------
Incentive Income-Economic Income
Basis-Non-GAAP 26,953 3,634 30,587
------------ ------------ ------------
Other revenues 572 7 579
------------ ------------ ------------
Total Revenues-Economic Income Basis-
Non-GAAP $ 166,769 $ 8,776 $ 175,545
============ ============ ============
Compensation and benefits-GAAP $ 49,726 $ 4,535 $ 54,261
Adjustment to compensation and
benefits(3) (18,667) (1,838) (20,505)
------------ ------------ ------------
Compensation and Benefits-Economic
Income Basis-Non-GAAP $ 31,059 $ 2,697 $ 33,756
============ ============ ============
Interest expense and general,
administrative and other expenses-
GAAP $ 271,254 $ 1,656 $ 272,910
Adjustment to interest expense and
general, administrative and other
expenses(4) (15,603) (187) (15,790)
------------ ------------ ------------
Non-Compensation Expenses-Economic
Income Basis-Non-GAAP 255,651 1,469 257,120
FCPA investigation reserve accrual (200,000) - (200,000)
------------ ------------ ------------
Non-Compensation Expenses Excl.
Reserve-Economic Income Basis-Non-
GAAP $ 55,651 $ 1,469 $ 57,120
============ ============ ============
Net gains on investments in Och-Ziff
funds and joint ventures-GAAP $ 83 $ 166 $ 249
Adjustment to net gains on
investments in Och-Ziff funds and
joint ventures(5) (83) (166) (249)
------------ ------------ ------------
Net Gains on Joint Ventures-GAAP $ - $ - $ -
============ ============ ============
Net (loss) income allocated to
noncontrolling interests-GAAP $ (88,021) $ 176 $ (87,845)
Adjustment to net income allocated to
noncontrolling interests(6) 88,019 (176) 87,843
------------ ------------ ------------
Net Loss Allocated to Noncontrolling
Interests-Economic Income Basis-Non-
GAAP $ (2) $ - $ (2)
============ ============ ============
Three Months Ended March 31, 2015
--------------------------------------
Och-Ziff
Funds Other Total
Segment Operations Company
------------ ------------ ------------
Management fees-GAAP $ 161,168 $ 4,775 $ 165,943
Adjustment to management fees(1) (2,100) - (2,100)
------------ ------------ ------------
Management Fees-Economic Income
Basis-Non-GAAP 159,068 4,775 163,843
------------ ------------ ------------
Incentive income-GAAP 57,110 - 57,110
Adjustment to incentive income(2) 6,660 1,513 8,173
------------ ------------ ------------
Incentive Income-Economic Income
Basis-Non-GAAP 63,770 1,513 65,283
------------ ------------ ------------
Other revenues 452 9 461
------------ ------------ ------------
Total Revenues-Economic Income Basis-
Non-GAAP $ 223,290 $ 6,297 $ 229,587
============ ============ ============
Compensation and benefits-GAAP $ 64,810 $ 5,108 $ 69,918
Adjustment to compensation and
benefits(3) (34,028) (2,548) (36,576)
------------ ------------ ------------
Compensation and Benefits-Economic
Income Basis-Non-GAAP $ 30,782 $ 2,560 $ 33,342
============ ============ ============
Interest expense and general,
administrative and other expenses-
GAAP $ 54,439 $ 641 $ 55,080
Adjustment to interest expense and
general, administrative and other
expenses(4) (14,586) (189) (14,775)
------------ ------------ ------------
Non-Compensation Expenses-Economic
Income Basis-Non-GAAP 39,853 452 40,305
FCPA investigation reserve accrual - - -
------------ ------------ ------------
Non-Compensation Expenses Excl.
Reserve-Economic Income Basis-Non-
GAAP $ 39,853 $ 452 $ 40,305
============ ============ ============
Net gains on investments in Och-Ziff
funds and joint ventures-GAAP $ 117 $ - $ 117
Adjustment to net gains on
investments in Och-Ziff funds and
joint ventures(5) (117) - (117)
------------ ------------ ------------
Net Gains on Joint Ventures-GAAP $ - $ - $ -
============ ============ ============
Net (loss) income allocated to
noncontrolling interests-GAAP $ 126,489 $ 6,864 $ 133,353
Adjustment to net income allocated to
noncontrolling interests(6) (126,497) (6,864) (133,361)
------------ ------------ ------------
Net Loss Allocated to Noncontrolling
Interests-Economic Income Basis-Non-
GAAP $ (8) $ - $ (8)
============ ============ ============
(1) Adjustment to present management fees net of recurring placement and
related service fees, as management considers these fees a reduction in
management fees, not an expense. The impact of eliminations related to
the consolidated Och-Ziff funds is also removed.
(2) Adjustment to exclude the impact of eliminations related to the
consolidated Och-Ziff funds.
(3) Adjustment to exclude equity-based compensation, as management does not
consider these non-cash expenses to be reflective of the operating
performance of the Company. However, the fair value of RSUs that are
settled in cash to employees or executive managing directors is
included as an expense at the time of settlement. Further, expenses
related to compensation and profit-sharing arrangements based on fund
investment performance are recognized at the end of the relevant
commitment period, as management reviews the total compensation expense
related to these arrangements in relation to any incentive income
earned by the relevant fund. Distributions to the Och-Ziff Operating
Group D Units are also excluded, as management reviews operating
performance at the Och-Ziff Operating Group level, where substantially
all of the Company's operations are performed, prior to making any
income allocations.
(4) Adjustment to exclude depreciation, amortization and changes in the tax
receivable agreement liability, as management does not consider these
items to be reflective of the operating performance of the Company.
Additionally, recurring placement and related service fees are
excluded, as management considers these fees a reduction in management
fees, not an expense.
(5) Adjustment to exclude net gains on investments in Och-Ziff funds, as
management does not consider these gains to be reflective of the
operating performance of the Company
(6) Adjustment to exclude amounts allocated to the executive managing
directors on their interests in the Och-Ziff Operating Group, as
management reviews the operating performance of the Company at the Och-
Ziff Operating Group level. The Company conducts substantially all of
its activities through the Och-Ziff Operating Group. Additionally, the
impact of the consolidated Och-Ziff funds, including the allocation of
earnings to investors in those funds, is also removed.
EXHIBIT 4
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Summary Of Changes In Assets Under Management(1) (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Three Months Ended March 31, 2016
-----------------------------------------------
Distributions
December 31, Inflows / / Other
2015 (Outflows) Reductions
--------------- --------------- ---------------
Multi-strategy funds $ 29,510,248 $ (1,054,252) $ -
Credit
Opportunistic credit funds 5,383,629 (60,316) (141,000)
Institutional Credit
Strategies 7,241,680 5,379 -
Real estate funds 2,048,559 75,039 (54,293)
Other 1,310,745 (43,372) -
--------------- --------------- ---------------
Total $ 45,494,861 $ (1,077,522) $ (195,293)
=============== =============== ===============
Three Months Ended March 31,
2016
-------------------------------
Appreciation /
(Depreciation)
(2) March 31, 2016
--------------- ---------------
Multi-strategy funds $ (944,866) $ 27,511,130
Credit
Opportunistic credit funds (3,785) 5,178,528
Institutional Credit
Strategies (4,255) 7,242,804
Real estate funds (1,435) 2,067,870
Other (55,647) 1,211,726
--------------- ---------------
Total $ (1,009,988) $ 43,212,058
=============== ===============
Three Months Ended March 31, 2015
-----------------------------------------------
Distributions
December 31, Inflows / / Other
2014 (Outflows) Reductions
--------------- --------------- ---------------
Multi-strategy funds $ 34,100,390 $ (1,461,319) $ -
Credit
Opportunistic credit funds 5,098,600 398,253 (362,930)
Institutional Credit
Strategies 5,166,734 688,052 -
Real estate funds 2,022,399 54,513 (14,292)
Other 1,146,292 113,932 (1)
--------------- --------------- ---------------
Total $ 47,534,415 $ (206,569) $ (377,223)
=============== =============== ===============
Three Months Ended March 31,
2015
-------------------------------
Appreciation /
(Depreciation)
(2) March 31, 2015
--------------- ---------------
Multi-strategy funds $ 1,233,571 $ 33,872,642
Credit
Opportunistic credit funds 58,066 5,191,989
Institutional Credit
Strategies 2,613 5,857,399
Real estate funds (4,254) 2,058,366
Other 69,608 1,329,831
--------------- ---------------
Total $ 1,359,604 $ 48,310,227
=============== ===============
(1) Includes amounts invested by the Company, its executive managing
directors, employees and certain other related parties for which the
Company charged no management fees and received no incentive income for
the periods presented. Amounts presented in this table are not the
amounts used to calculate management fees and incentive income for the
respective periods.
(2) Appreciation (depreciation) reflects the aggregate net capital
appreciation (depreciation) for the entire period and is presented on a
total return basis, net of all fees and expenses (except incentive
income on unrealized gains attributable to investments in certain funds
that the Company, as investment manager, determines lack a readily
ascertainable fair value, are illiquid or otherwise should be held
until the resolution of a special event or circumstance that could
reduce returns on these investments at the time of realization), and
includes the reinvestment of all dividends and other income. Management
fees and incentive income vary by product.
EXHIBIT 5
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information(1) (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Assets Under Management
as of March 31,
-------------------------
2016 2015
------------ ------------
Multi-strategy funds
OZ Master Fund(2) $ 22,576,072 $ 27,698,583
OZ Asia Master Fund 1,156,795 1,345,004
OZ Europe Master Fund 861,950 1,076,861
OZ Enhanced Master Fund 1,055,923 1,243,367
Och-Ziff European Multi-Strategy UCITS Fund 277,361 305,586
Other funds 1,583,029 2,203,241
------------ ------------
27,511,130 33,872,642
------------ ------------
Credit
Opportunistic credit funds:
OZ Credit Opportunities Master Fund 1,499,382 1,551,706
Customized Credit Focused Platform 2,466,215 1,792,721
Closed-end opportunistic credit funds 756,196 1,283,467
Other funds 456,735 564,095
------------ ------------
5,178,528 5,191,989
Institutional Credit Strategies 7,242,804 5,857,399
------------ ------------
12,421,332 11,049,388
------------ ------------
Real estate funds 2,067,870 2,058,366
Other 1,211,726 1,329,831
------------ ------------
Total $ 43,212,058 $ 48,310,227
============ ============
Returns for the Three
Returns for the Three Annualized Returns
Months Ended March 31, Since Inception
--------------------------- Through March 31,
2016 2015 2016
------------- ------------- -------------------
Gross Net Gross Net Gross Net
------ ------ ------ ------ ------ ------
Multi-strategy funds
OZ Master Fund(2) -3.0% -3.4% 5.2% 3.8% 17.0%(2) 11.9%(2)
OZ Asia Master Fund -2.7% -3.2% 6.9% 5.4% 9.7% 5.6%
OZ Europe Master Fund -2.0% -2.4% 5.6% 4.3% 11.8% 7.7%
OZ Enhanced Master Fund -5.3% -5.8% 8.8% 6.6% 9.3% 5.2%
Och-Ziff European Multi-
Strategy UCITS Fund -4.5% -4.9% 5.8% 5.3% 4.6% 1.8%
Other funds n/m n/m n/m n/m n/m n/m
Credit
Opportunistic credit funds:
OZ Credit Opportunities
Master Fund 1.3% 1.0% 0.9% 0.8% 16.0% 11.5%
Customized Credit Focused
Platform 0.5% 0.4% 1.9% 1.4% 18.4% 13.9%
Closed-end opportunistic See the following page for information on the
credit funds Company's closed-end opportunistic credit
funds.
Other funds n/m n/m n/m n/m n/m n/m
Institutional Credit See the following page for information on the
Strategies Company's institutional credit strategies.
Real estate funds See the second following page for information
on the Company's real estate funds.
Other n/m n/m n/m n/m n/m n/m
Total
n/m not meaningful
Please see the last page of this Exhibit 5 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.
EXHIBIT 5
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information - continued (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Assets Under Management
as of March 31,
-----------------------
2016 2015
----------- -----------
Closed-end Opportunistic Credit Funds (Investment
Period)
OZ European Credit Opportunities Fund (2012-2015) $ 175,664 $ 335,707
OZ Structured Products Domestic Fund II (2011-
2014)(7) 257,261 402,703
OZ Structured Products Offshore Fund II (2011-
2014)(7) 237,353 338,434
OZ Structured Products Offshore Fund I (2010-
2013)(7) 22,976 32,530
OZ Structured Products Domestic Fund I (2010-
2013)(7) 14,240 15,104
Other funds 48,702 158,989
----------- -----------
$ 756,196 $ 1,283,467
=========== ===========
Inception to Date as of March 31, 2016
----------------------------------------------------
IRR
-------------------
Total
Total Invested Gross
Commitments Capital(3) Gross(4) Net(5) MOIC(6)
----------- ----------- --------- --------- --------
Closed-end
Opportunistic Credit
Funds (Investment
Period)
OZ European Credit
Opportunities Fund
(2012-2015) $ 459,600 $ 305,487 16.9% 12.7% 1.4x
OZ Structured Products
Domestic Fund II
(2011-2014)(7) 326,850 326,850 18.2% 13.9% 1.7x
OZ Structured Products
Offshore Fund II
(2011-2014)(7) 304,531 304,531 14.8% 11.0% 1.5x
OZ Structured Products
Offshore Fund I (2010-
2013)(7) 155,098 155,098 23.9% 19.1% 2.1x
OZ Structured Products
Domestic Fund I (2010-
2013)(7) 99,986 99,986 22.8% 18.1% 2.0x
Other funds 298,250 268,250 n/m n/m n/m
----------- -----------
$ 1,644,315 $ 1,460,202
=========== ===========
n/m not meaningful
Please see the last page of this Exhibit 5 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.
Assets Under Management
as of March 31,
-----------------------
Initial
Closing Date Deal Size 2016 2015
----------------- ----------- ----------- -----------
Institutional Credit
Strategies
CLOs:
OZLM I July 19, 2012 $ 510,700 $ 498,801 $ 468,752
OZLM II November 1, 2012 560,100 515,767 517,366
OZLM III February 20, 2013 653,250 612,179 613,652
OZLM IV June 27, 2013 600,000 541,469 543,245
OZLM V December 17, 2013 501,250 469,582 470,831
OZLM VI April 16, 2014 621,250 598,395 593,085
OZLM VII June 26, 2014 824,750 796,872 796,315
OZLM VIII September 9, 2014 622,250 596,764 596,858
OZLM IX December 22, 2014 510,208 496,009 494,244
OZLM XI March 12, 2015 510,500 491,528 490,977
OZLM XII May 28, 2015 565,650 548,328 -
OZLM XIII August 6, 2015 511,600 496,471 -
OZLM XIV December 21, 2015 507,420 495,798 -
----------- ----------- -----------
7,498,928 7,157,963 5,585,325
Other funds n/a n/a 84,841 272,074
----------- ----------- -----------
$ 7,498,928 $ 7,242,804 $ 5,857,399
=========== =========== ===========
EXHIBIT 5
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information - continued (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Assets Under Management
as of March 31,
-----------------------
2016 2015
----------- -----------
Real Estate Funds (Investment Period)
Och-Ziff Real Estate Fund I (2005-2010)(7) $ 33,122 $ 44,470
Och-Ziff Real Estate Fund II (2011-2014)(7) 346,558 413,938
Och-Ziff Real Estate Fund III (2014-2019)(13) 1,450,927 1,441,630
Och-Ziff Real Estate Credit Fund I (2015-2019)(13) 130,150 -
Other funds 107,113 158,328
----------- -----------
$ 2,067,870 $ 2,058,366
=========== ===========
Inception to Date as of March 31, 2016
------------------------------------------------------------
Total Investments
------------------------------------------------
Gross
Total Invested Total IRR Net Gross
Commitments Capital(9) Value (10) (11) IRR(5) MOIC(12)
----------- ----------- ----------- ------- ------- --------
Real Estate
Funds
(Investment
Period)
Och-Ziff Real
Estate Fund I
(2005-2010)(7) $ 408,081 $ 385,183 $ 787,967 25.2% 15.6% 2.0x
Och-Ziff Real
Estate Fund II
(2011-2014)(7) 839,508 731,170 1,298,308 35.0% 22.6% 1.8x
Och-Ziff Real
Estate Fund
III (2014-
2019)(13) 1,500,000 308,364 342,346 n/m n/m n/m
Och-Ziff Real
Estate Credit
Fund I (2015-
2019)(13) 172,450 22,419 26,483 n/m n/m n/m
Other funds 219,626 69,374 110,952 n/m n/m n/m
----------- ----------- -----------
$ 3,139,665 $ 1,516,510 $ 2,566,056
=========== =========== ===========
Inception to Date as of March 31, 2016
----------------------------------------
Realized/Partially Realized
Investments(8)
----------------------------------------
Gross
Invested IRR Gross
Capital Total Value (11) MOIC(12)
----------- ----------- ------- --------
Real Estate Funds (Investment
Period)
Och-Ziff Real Estate Fund I (2005-
2010)(7) $ 359,360 $ 780,524 28.1% 2.2x
Och-Ziff Real Estate Fund II (2011-
2014)(7) 548,630 1,067,358 39.9% 1.9x
Och-Ziff Real Estate Fund III
(2014-2019)(13) - - n/m n/m
Och-Ziff Real Estate Credit Fund I
(2015-2019)(13) 22,419 26,483 n/m n/m
Other funds - - n/m n/m
----------- -----------
$ 930,409 $ 1,874,365
=========== ===========
Unrealized Investments as of
March 31, 2016
----------------------------------
Invested Gross
Capital Total Value MOIC(12)
----------- ----------- ----------
Real Estate Funds (Investment Period)
Och-Ziff Real Estate Fund I (2005-
2010)(7) $ 25,823 $ 7,443 0.3x
Och-Ziff Real Estate Fund II (2011-
2014)(7) 182,540 230,950 1.3x
Och-Ziff Real Estate Fund III (2014-
2019)(13) 308,364 342,346 n/m
Och-Ziff Real Estate Credit Fund I (2015-
2019)(13) - - n/m
Other funds 69,374 110,952 n/m
----------- -----------
$ 586,101 $ 691,691
=========== ===========
n/m not meaningful
Please see the last page of this Exhibit 5 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.
EXHIBIT 5
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information - Footnotes
----------------------------------------------------------------------------
(1) The return information reflected in these tables represents, where
applicable, the composite performance of all feeder funds that comprise
each of the master funds presented. Gross return information is
generally calculated using the total return of all feeder funds, net of
all fees and expenses except management fees and incentive income of
such feeder funds and master funds and the returns of each feeder fund
include the reinvestment of all dividends and other income. Net return
information is generally calculated as the gross returns less
management fees and incentive income (except incentive income on
unrealized gains attributable to investments in certain funds that the
Company, as investment manager, determines lack a readily ascertainable
fair value, are illiquid or otherwise should be held until the
resolution of a special event or circumstance ("Special Investments")
that could reduce returns on these investments at the time of
realization). Return information also includes realized and unrealized
gains and losses attributable to Special Investments and initial public
offering investments that are not allocated to all investors in the
feeder funds. Investors that were not allocated Special Investments
and/or initial public offering investments may experience materially
different returns. The performance calculation for the OZ Master Fund
excludes realized and unrealized gains and losses attributable to
currency hedging specific to certain investors investing in OZ Master
Fund in currencies other than the U.S. Dollar.
(2) The annualized returns since inception are those of the Och-Ziff Multi-
Strategy Composite, which represents the composite performance of all
accounts that were managed in accordance with the Company's broad
multi-strategy mandate that were not subject to portfolio investment
restrictions or other factors that limited the Company's investment
discretion since inception on April 1, 1994. Performance is calculated
using the total return of all such accounts net of all investment fees
and expenses of such accounts, except incentive income on unrealized
gains attributable to Special Investments that could reduce returns in
these investments at the time of realization, and the returns include
the reinvestment of all dividends and other income. For the period from
April 1, 1994 through December 31, 1997, the returns are gross of
certain overhead expenses that were reimbursed by the accounts. Such
reimbursement arrangements were terminated at the inception of the OZ
Master Fund on January 1, 1998. The size of the accounts comprising the
composite during the time period shown vary materially. Such
differences impacted the Company's investment decisions and the
diversity of the investment strategies followed. Furthermore, the
composition of the investment strategies the Company follows is subject
to its discretion, has varied materially since inception and is
expected to vary materially in the future. As of March 31, 2016, the
gross and net annualized returns since the OZ Master Fund's inception
on January 1, 1998 were 13.0% and 8.7%, respectively.
(3) Represents funded capital commitments net of recallable distributions
to investors.
(4) Gross internal rate of return ("IRR") for the Company's closed-end
opportunistic credit funds represents the estimated, unaudited,
annualized return based on the timing of cash inflows and outflows for
the fund as of March 31, 2016, including the fair value of unrealized
investments as of such date, together with any appreciation or
depreciation from related hedging activity. Gross IRR does not include
the effects of management fees or incentive income, which would reduce
the return, and includes the reinvestment of all fund income.
(5) Net IRR is calculated as described in footnotes (4) and (11), but is
reduced by all management fees and for the real estate funds other
fund-level fees and expenses not adjusted for in the calculation of
gross IRR. Net IRR is further reduced by accrued and paid incentive
income, which will be payable upon the distribution of each fund's
capital in accordance with the terms of the relevant fund. Accrued
incentive income may be higher or lower at such time. The net IRR
represents a composite rate of return for a fund and does not reflect
the net IRR specific to any individual investor.
(6) Gross multiple of invested capital ("MOIC") for the Company's closed-
end opportunistic credit funds is calculated by dividing the sum of the
net asset value of the fund, accrued incentive income, life-to-date
incentive income and management fees paid and any non-recallable
distributions made from the fund by the invested capital.
(7) These funds have concluded their investment periods, and therefore the
Company expects assets under management for these funds to decrease as
investments are sold and the related proceeds are distributed to the
investors in these funds.
(8) An investment is considered partially realized when the total amount of
proceeds received, including dividends, interest or other distributions
of income and return of capital, represents at least 50% of invested
capital.
(9) Invested capital represents total aggregate contributions made for
investments by the fund.
(10) Total value represents the sum of realized distributions and the fair
value of unrealized and partially realized investments as of March 31,
2016. Total value will be impacted (either positively or negatively) by
future economic and other factors. Accordingly, the total value
ultimately realized will likely be higher or lower than the amounts
presented as of March 31, 2016.
(11) Gross IRR for the Company's real estate funds represents the estimated,
unaudited, annualized return based on the timing of cash inflows and
outflows for the aggregated investments as of March 31, 2016, including
the fair value of unrealized and partially realized investments as of
such date, together with any unrealized appreciation or depreciation
from related hedging activity. Gross IRR is not adjusted for estimated
management fees, incentive income or other fees or expenses to be paid
by the fund, which would reduce the return.
(12) Gross MOIC for the Company's real estate funds is calculated by
dividing the value of a fund's investments by the invested capital,
prior to adjustments for incentive income, management fees or other
expenses to be paid by the fund.
(13) This fund recently launched and has only invested a small portion of
its committed capital; therefore, IRR and MOIC information is not
presented, as it is not meaningful.
EXHIBIT 6
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Longer-Term Assets Under Management (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
As of March 31, 2016, approximately 38% of the Company's assets under management were subject to initial commitment periods of three years or longer. The Company earns incentive income on these assets based on the cumulative investment performance generated over this commitment period. The table below presents the amount of these assets under management, as well as the amount of incentive income accrued at the fund level but for which the commitment period has not concluded. These amounts have not yet been recognized in our revenues, as the Company recognizes incentive income at the end of the commitment period when amounts are no longer subject to clawback. Further, these amounts may ultimately not be recognized as revenue by the Company in the event of future losses in the respective funds.
March 31, 2016
---------------------------------
Longer-Term Accrued
Assets Under Unrecognized
Management Incentive
---------------- ----------------
Multi-strategy funds $ 2,774,875 $ 5,823
Credit
Opportunistic credit funds 4,095,105 98,768
Institutional Credit Strategies 7,204,081 -
Real estate funds 2,067,870 127,178
Other 271,371 -
---------------- ----------------
$ 16,413,302 $ 231,769
================ ================
The Company recognizes incentive income on its longer-term assets under management in multi-strategy funds and open-end opportunistic credit funds at the end of their respective commitment periods, which are generally three to five years. The Company expects the commitment period with respect to approximately 5% and 17% of the longer-term assets under management in the multi-strategy funds to mature during the second quarter of 2016 and the remainder of 2016, respectively. The Company does not expect the commitment period for a significant amount of longer-term assets under management in its open-end opportunistic credit funds to expire during the second quarter of 2016; however, the Company does expect the commitment period with respect to approximately 10% of the longer-term assets under management to mature during the remainder of 2016. Incentive income related to assets under management in the Company's closed-end opportunistic credit funds and its real estate funds is generally recognized at or near the end of the life of each fund. These funds generally begin to make distributions after the conclusion of their respective investment period, as presented in the tables in Exhibit 5. However, these investment periods may generally be extended for an additional one to two years.
EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Financial Supplement (Unaudited)
As of April 1, 2016
----------------------------------------------------------------------------
OZ Master Fund by Investors by Type(1)
Investment Strategy
Long/Short Equity Pensions
Special Situations 58% 35%
Merger Arbitrage 14% Private Banks 16%
Structured Credit Corporate,
Institutional and
10% Other 12%
Convertible and Fund-of-Funds
Derivative Arbitrage 9% 12%
Corporate Credit Foundations and
7% Endowments 12%
Private Investments 2% Related Parties 7%
Family Offices and
Individuals 6%
Assets Under Management Investors by Geography(1)
by Geography(2)
North America 71% North America 74%
Europe 18% Europe 15%
Asia 11% Asia and Other 11%
(1) Presents the composition of the Company's fund investor base across its
funds excluding investors in its CLOs.
(2) The North American exposure includes the United States, Canada, Central
America and South America. The European exposure includes Africa and
the Middle East. The Asian exposure includes Australia and New Zealand.
EXHIBIT 8
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Assets Under Management Trends (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Assets Under Management as of
-----------------------------------------
March 31, December 31, December 31,
2016 2015 2014
------------- ------------- -------------
Total Assets Under Management $ 43,212,058 $ 45,494,861 $ 47,534,415
Year-over-Year Change -11% -4% 18%
Longer-Term Assets Under
Management(1) $ 16,413,302 $ 16,842,321 $ 15,150,049
% of Total Assets Under Management 38% 37% 32%
Assets Under Management by Product
Multi-strategy funds 64% 65% 72%
Credit
Opportunistic credit funds 12% 12% 11%
Institutional Credit Strategies 17% 16% 11%
Real estate funds 5% 5% 4%
Other 2% 2% 2%
------------- ------------- -------------
Total assets under management in
credit, real estate and other
funds 36% 35% 28%
Assets Under Management as
of
---------------------------
December 31, December 31,
2013 2012
------------- -------------
Total Assets Under Management $ 40,238,812 $ 32,603,930
Year-over-Year Change 23% 13%
Longer-Term Assets Under
Management(1) $ 10,640,836 $ 6,947,746
% of Total Assets Under Management 26% 21%
Assets Under Management by Product
Multi-strategy funds 79% 85%
Credit
Opportunistic credit funds 11% 7%
Institutional Credit Strategies 6% 3%
Real estate funds 2% 3%
Other 2% 2%
------------- -------------
Total assets under management in
credit, real estate and other
funds 21% 15%
(1) Longer-term assets under management are those subject to initial
commitment periods of three years or longer. Please see Exhibit 6 for
additional information.
Investor Relations Contact:
Tina MadonManaging DirectorHead of Public Markets Investor RelationsOch-Ziff Capital Management Group [email protected] Relations Contact:Joe SnodgrassManaging DirectorHead of Corporate [email protected]
Source: Och-Ziff Capital Management Group LLC
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