<TABLE>
<CAPTION>
<S> <C>
FORM 3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION OMB APPROVAL
WASHINGTON, D.C. 20549 OMB NUMBER 3235-0104
INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES EXPIRES:SEPTEMBER 30, 1998
ESTIMATED AVERAGE BURDEN
Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, HOURS PER RESPONSE......0.5
Section 17(a) of the Public Utility Holding Company Act
(Print or Type Responses) of 1935 or Section 30(f) of the Investment Company Act of 1940
- -------------------------------------------------------------------------------------------------------------------------------
1. Name and Address of Reporting Person* 2. Date of Event 4. Issuer Name AND Ticker or Trading Symbol
LFSRI II Alternative Requiring Statement The Fortress Group, Inc. (NASD: FRTG)
Partnership L.P. (Month/Day/Year)
("Alternative") 08/17/98
LFSRI II - CADIM Alternative
Partnership L.P. ("CADIM")
- -------------------------------------------------------------------------------------------------------------------------------
(Last) (First) (Middle) 3. I.R.S. 5. Relationship of Reporting Person(s) to Issuer
Thirty Rockefeller Plaza, 63rd Floor Identification (Check all applicable)
New York, New York 10020 Number of Reporting
------------------------------------- Person, if an entity ______ Director _______ 10% Owner
(City) (State) (Zip) (voluntary) ______ Officer ___X __ Other
<CAPTION>
(give title below) (specify below)
6. If Amendment, Date of Original ______See (1) below.________
(Month/Day/Year)
7. Individual or Joint/Group Filing
(Check Applicable Line)
Form filed by One Reporting Person
X Form filed by More than One Reporting Person
Table I -- Non-Derivative Securities Beneficially Owned
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
1. Title of Security 2. Amount of Securities 3. Ownership 4. Nature of Indirect Beneficial Ownership
(Instr. 4) Beneficially Owned Form: (Instr. 5)
Direct (D) or
(Instr. 4) Indirect (I)
(Instr. 5)
- -----------------------------------------------------------------------------------------------------------
Common Stock 898,845 I See (1) below.
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
(Over)
SEC 1473 (7/97)
</TABLE>
Reminder: Report on a separate line for each class of securities beneficially
owned directly or indirectly.
*If the Form is filed by more than one Reporting Person, see Instruction 5(b)(v)
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a
currently valid OMB control number.
<PAGE>
FORM 3 (continued) Table II -- Derivative Securities Beneficially Owned
(e.g., puts, calls, warrants, options, convertible
securities)
<TABLE>
<S> <C>
- ----------------------------------- ---------------------- ----------------------------------------- ------------------------
1.Title of Derivative Security 2.Date Exercisable and 3.Title and Amount of Securities 4.Conversion or
(Instr. 4) Expiration Date Underlying Derivative Security Exercise Price of
(Month/Day/Year) (Instr. 4) Derivative Security
------------------------------------------------------------------
Date Expiration Amount or
Exercisable Date Title Number of
Shares
- ------------------------------------------------------------------------------------------------------------------------------
Class AA Convertible
Preferred Stock 3/6/98 None Common Stock 6,666,667 $6.00(2)
- ------------------------------------------------------------------------------------------------------------------------------
Warrants 9/30/99 9/30/04 Common Stock 1,000,000 $7.00
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
6. Nature of
5. Ownership Form of Indirect
Derivative Security: Beneficial
Direct (D) or Indirect (I) Ownership
(Instr. 5) (Instr. 5)
- --------------------------------------------------------------------------------------------------------------------------------
Class AA Convertible
Preferred Stock I See (1) below.
- -------------------------------------------------------------------------------------------------------------------------------
Warrants I See (1) below
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Explanation of Responses:
(1) The interest in the Issuer is directly owned by Prometheus Homebuilders LLC
("Prometheus"). Prometheus has three managing members: LF Strategic Realty
Investors II L.P. ("LFSRI II") is a 86.1592% managing member, Alternative is a
10.3806% managing member and CADIM is a 3.4602% managing member. As a
consequence of the foregoing, LFSRI II, Alternative and CADIM each have an
indirect interest in the Issuer.
(2) Subject to certain adjustments as set forth in the Class AA Convertible
Preferred Stock Certificate of Designation.
** Intentional misstatements or omissions of facts constitute Federal Criminal
Violations.
See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a)
Note: File three copies of this Form, one of which must be manually signed.
If space provided is insufficient, See Instruction 6 for procedure.
/s/ Murry N. Gunty 8/27/98
------------------------------- --------------
**Signature of Reporting Person Date
Murry N. Gunty
Principal,
Lazard Freres Real Estate Investors L.L.C.,
as general partner of LFSRI II Alternative Partnership L.P. and
LFSRI II-CADIM Alternative Partnership L.P.,
as two managing members of Prometheus Homebuilders L.L.C.,
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently
valid OMB Number.
<PAGE>
FORM 3 (ATTACHMENT)
REPORTING PERSONS: LFSRI II ALTERNATIVE PARTNERSHIP L.P. AND
LFSRI II-CADIM ALTERNATIVE PARTNERSHIP L.P.
ISSUER NAME: THE FORTRESS GROUP, INC. (NASD: FRTG)
DATE OF EVENT REQUIRING STATEMENT: AUGUST 17, 1998
ADDITIONAL REPORTING PERSONS:
Prometheus Homebuilders LLC
c/o LF Strategic Realty Investors II L.P.
Lazard Freres
Thirty Rockefeller Plaza, 63rd Floor
New York, New York 10020
LF Strategic Realty Investors II L.P.
Lazard Freres
Thirty Rockefeller Plaza, 63rd Floor
New York, New York 10020
