Fortress Credit Group is leaving its iconic San Francisco location near the Embarcadero by the end of the year with much of its talent moving south of the city and to Texas, sources told Buyouts.
Fortress is among a group of big asset managers whose talent scattered away from financial hubs as a result of the remote-work environment spurred by the health crisis last year. This includes private equity firms, like Thoma Bravo, which opened an office in Miami, as well as corporations like Oracle and Hewlett Packard, which are relocating to Texas from Silicon Valley.
Fortress Credit’s lease on its real estate on the top floor of 1 Market Plaza expires at year end, sources said. Fortress’s credit chief Pete Briger opened the San Francisco office in 2010.
Instead of re-upping, the firm will open a Menlo Park office and expand its already-growing presence in Irving, Texas, sources said.
“[Fortress has had] a longstanding presence in the Dallas/Fort Worth area … there’s around 70 people today; [the firm] expects that to grow over the next couple years to about 100 or over 100,” one of the sources said. “There will be new space [the firm is] moving into to accommodate that.”
Two of the Credit group’s leaders, Drew McKnight and Joshua Pack, will be in the Dallas office (Dallas Morning News reported in January that a trust associated with Pack purchased a 12,957 square-foot mansion for $22.5 million).
McKnight is a managing partner and co-CIO of Drawbridge Special Opportunities Fund, Fortress Lending Fund and Fortress Credit Opportunities Fund V. Pack is listed as co-CIO and managing partner of the credit funds.
Briger, who launched Fortress’s $34 billion credit business in 2002, will move to the Menlo Park satellite office. He’ll be joined by Thomas Pulley, CIO in global real estate, and Eran Zur, managing director in the firm’s intellectual property finance group.
No one is being forced to relocate, and the Credit group will continue to have a presence in other financial hub locations in New York and Chicago. Some of the decisions to relocate to Texas are related to tax considerations, as well as the pace of re-opening of work and schools from the pandemic lockdown, sources said.
The Texas operation isn’t growing because other areas are shrinking, the source said. Rather, the credit group itself is growing as it’s raised significantly more capital and is hiring more employees.
The firm late last year closed its Credit Opportunities Fund V Expansion on $7 billion to take advantage of dislocation caused by the pandemic market turmoil. The fund was targeting over $3 billion, sources said.
Update: This report was updated to include additional fundraising information.