FILE NO. 811-10127
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 13, 2000
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
(X) REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
FORTRESS BROOKDALE INVESTMENT FUND LLC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(NUMBER, STREET, CITY, STATE, ZIP CODE)
(212) 798-6100
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
THE CORPORATION TRUST COMPANY
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
MICHAEL K. HOFFMAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
FOUR TIMES SQUARE
NEW YORK, NEW YORK 10036
FORM N-2
CROSS REFERENCE SHEET
as required by Rule 495(a)
<TABLE>
<CAPTION>
Part A
Item No. Caption Prospectus Caption
-------- ------- ------------------
<S> <C> <C> <C>
1. Cover Page............................................... Not Applicable
2. Inside Front and Outside Back Cover Page................. Not Applicable
3. Fee Table and Synopsis................................... Fee Table
4. Financial Highlights..................................... Not Applicable
5. Plan of Distribution..................................... Not Applicable
6. Selling Shareholders..................................... Not Applicable
7. Use of Proceeds.......................................... Not Applicable
8. General Description of the Registrant.................... General Description of
the Registrant
9. Management............................................... Management
10. Capital Stock, Long-Term Debt, and Other
Securities............................................... Capital Stock, Long
Term Debt, and Other
Securities
11. Defaults and Arrears on Senior Securities................ Not Applicable
12. Legal Proceedings........................................ Not Applicable
13. Table of Contents of Statement of Additional
Information.............................................. Not Applicable
Part B Statement of
Item No. Additional Information
14. Cover Page............................................... Not Applicable
15. Table of Contents........................................ Not Applicable
16. General Information and History ......................... General Description of
the Registrant
17. Investment Objective and Policies........................ Investment Objective and
Policies
18. Management............................................... Management
19. Control Persons and Principal Holders of
Securities............................................... Control Persons and
Principal Holders of
Securities
20. Investment Advisory and Other Services................... Investment Advisory and
Other Services
21. Brokerage Allocation and Other Practices................. Brokerage Allocation
and Other Practices
22. Tax Status............................................... Tax Status
23. Financial Statements..................................... Not applicable
Part C
Item No.
Information required to be included in Part C is set forth, under the
appropriate item so numbered, in Part C of this registration statement.
</TABLE>
PART A
ITEM 1. COVER PAGE
Not Applicable.
ITEM 2. INSIDE FRONT AND OUTSIDE BACK COVER PAGE
Not Applicable.
ITEM 3. FEE TABLE
3.1 Expense Information
ANNUAL EXPENSES (as a percentage of net assets attributable to the
Shares)
Advisory Fees* 1.50%
Interest Payment on Borrowed Funds 0.03%
Other Expenses** 1.15%
-----------------------------------------------------------
Total Annual Expenses*** 2.68%
<TABLE>
<CAPTION>
Example 1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
You would pay the following
expenses on a $1,000 investment, $28.21 $86.49 $147.33 $311.43
assuming a 5% annual return:
The purpose of the preceding table is to assist the investor in
understanding the various costs and expenses that an investor in Fortress
Brookdale Investment Fund LLC (the "Fund") will bear directly or
indirectly.
* The Advisor is entitled to a special allocation out of the Fund's net
profits equal to a cumulative return of 1.50% per annum of capital
invested in the Fund.
** Other Expenses are based on estimated amounts for the current fiscal
year. The example above should not be considered a representation of
future expenses, which may be higher or lower.
*** Total Annual Expenses are based upon the assumption that the aggregate
amount of capital invested at year end will be $15 million.
</TABLE>
3.2 Not Applicable.
3.3 Not Applicable.
ITEM 4. FINANCIAL HIGHLIGHTS
4.1 Not Applicable.
4.2 Not Applicable.
4.3 Not Applicable.
ITEM 5. PLAN OF DISTRIBUTION
Not Applicable.
ITEM 6. SELLING SHAREHOLDERS
Not Applicable.
ITEM 7. USE OF PROCEEDS
Not Applicable.
ITEM 8. GENERAL DESCRIPTION OF THE REGISTRANT
8.1 General. The Fund was formed as a limited liability company
under the laws of the State of Delaware on August 30, 2000, and is a
non-diversified closed-end management investment company. The Fund is
authorized to issue up to $100,000,000 in common limited liability company
interests in the Fund designated as "Shares" and up to $100,000 in
preferred limited liability company interests in the Fund known as
"Preferred Interests."
The Fund expects to call all the capital committed by the
holders of the Shares on the closing of the Fund to make investments in
accordance with its investment objectives and policies and to fund its
expenses. In the event that all capital is not called at the closing, the
Fund may draw down capital not called at the initial closing from the
holders of the Shares from at any time and in any amount on not less than
10 business days' prior written notice in accordance with the terms of the
Limited Liability Company Agreement of the Fund (the "Agreement").
Investors who fail to pay a capital call within 5 business days after
receiving a notice of default from the Fund will be liable to the Fund for
interest on the amount in default at the prime rate plus 2% per annum, up
to the highest rate permitted by law.
Unless terminated earlier, the Fund shall terminate on the
earlier to occur of (1) the first anniversary of the termination of
Fortress Brookdale Acquisition LLC ("FBA") (other than by merger or other
combination of Brookdale Living Communities, Inc. with or into FBA or any
of its affiliates, or (2) approval of 75% of the holders of the then
outstanding Shares and 75% of the holders of the then outstanding Preferred
Interests.
8.2 Investment Objectives and Policies. The investment objective
of the Fund is to seek to capital appreciation and income by indirectly
investing in Brookdale Living Communities, Inc. ("Brookdale") by acquiring,
owning, holding and selling or otherwise transferring limited liability
company interests in FBA. FBA holds 100% of the Shares of Brookdale. No
assurance can be given that the Fund will achieve its investment
objectives.
Brookdale is a provider of senior independent and assisted
living services to the elderly through its facilities located in urban and
suburban areas of major metropolitan markets.
FBA is a Delaware limited liability company formed for the
purpose of (i) acquiring, purchasing, owning, holding and disposing of
(directly or indirectly through one or more wholly-owned subsidiaries)
securities and notes convertible into securities of Brookdale, and (ii)
forming one or more wholly-owned subsidiaries for the purpose investing or
merging with Brookdale.
The Fund's investment objective and the following investment
restrictions are fundamental and cannot be changed without the approval of
the holders of a majority of the Fund's outstanding voting securities
(defined in the 1940 Act as the lesser of (a) more than 50% of the
outstanding Shares and Preferred Interests, voting together as a single
class or (b) 67% or more of the Shares and Preferred Interests represented
at a meeting at which more than 50% of the outstanding Shares and Preferred
Interests, treated as a single class, are represented). If a percentage
restriction on investment or use of assets set forth below is adhered to at
the time a transaction is effected, later changes in percentage resulting
from changing market values will not be considered a deviation from policy.
The Fund may not:
(1) borrow money or issue senior securities except in
compliance with the 1940 Act;
(2) make loans of money or property to any person, except
as may be consistent with the Fund's investment
objectives and policies;
(3) underwrite the securities of other issuers, except to
the extent that in connection with the disposition of
portfolio securities or the sale of its own Shares,
Preferred Interests or securities of its subsidiaries
the Fund may be deemed to be an underwriter;
(4) purchase real estate or interests therein to the extent
that as a result of such investments the Fund would not
be (a) an investment company by virtue of Section
3(c)(5)(C) of the 1940 Act or (b) a regulated
investment company under the Code;
(5) purchase or sell commodities or commodity contracts for
any purposes except as, and to the extent, permitted by
applicable law without the Fund becoming subject to
registration with the Commodity Futures Trading
Commissions as a commodity pool; or
(6) invest in excess of 25% of its capital in assets in any
industry other than the real estate and real estate
financial products industry, including mortgage loans
and other Real Estate-Related Assets (as defined
below), except that Fund may invest without limit in
securities backed by the credit the United States of
America or agencies or instrumentalities thereof.
Real Estate-Related Assets shall include (i) mortgage loans
and non-mortgage receivables; (ii) securities secured by or evidencing
interests in assets described in clause (i); (iii) fee or leasehold
interests in real properties, whether improved or unimproved, whether
commercial, residential or multifamily; (iv) debt interests (whether
secured or unsecured, recourse or non-recourse, senior or subordinated,
convertible or otherwise), equity interests (whether preferred or common)
and derivative interests in entities (whether in the form of partnerships,
limited liability companies, trusts, corporations or otherwise) the assets
of which consist primarily of assets described in clauses (i), (ii) or
(iii) hereof, or in entities that otherwise have substantial assets of the
type described in clauses (i), (ii) or (iii) hereof or in entities that
provide services to or management in connection with any other asset
included in this paragraph; (v) options, including without limitation,
rights of first refusal, rights of first offer, and puts or calls with
respect to in any of the foregoing; and (f) hedging the investment risks
relating to any of the foregoing.
8.3 Risk Factors.
General. Investment in the Fund may involve certain risk
factors and special considerations, including those arising from the Fund's
investment securities, policies and practices and from the Fund's
investment strategy.
Non-Diversified Status. As a result of concentrating its
investments indirectly in securities of Brookdale, the Fund will be a
non-diversified investment company and, therefore, much more susceptible
than a more widely diversified fund to any single economic, political or
regulatory occurrence. In particular, declines in real estate values,
adverse local and basic economic conditions, and poor performance by
Brookdale may affect the value of the Fund's holdings as well as the
ability of the Fund to conduct its operations.
General Real Estate Risks. Real property investments are
subject to varying degrees of risk. Real estate values are affected by a
number of factors, including changes in the general economic climate, local
conditions (such as an oversupply of space or a reduction in demand for
space), the quality and philosophy of management, competition based on
rental rates, attractiveness and location of the properties, financial
condition of tenants, buyers and sellers of properties, quality of
maintenance, insurance and management services and changes in operating
costs. Real estate values are also affected by such factors as government
regulations (including those governing usage, improvements, zoning and
taxes), interest rate levels, the availability of financing and potential
liability under changing environmental and other laws.
Additionally, all real estate and real estate-related
investments are subject to the risk that a general downturn in the national
or local economy within the United States will depress real estate prices.
The Fund may be unsuccessful in structuring its investments to minimize any
detrimental impact that a recession may have on its investments and as a
result the Fund may suffer significant losses.
Risks of the Assisted Care Industry. Senior assisted living
facilities are subject to varying degrees of federal, state and local
regulation and licensing by local and state health and social service
agencies and other regulatory authorities. Brookdale's success will depend
upon its ability to obtain such regulations and requirements and to acquire
and maintain required licenses. In addition, the long-term care industry is
highly competitive and the assisted living segment is becoming increasingly
competitive. Brookdale can give no assurances that it will not encounter
increased competition which could have a material and adverse effect on its
revenues and earnings.
Liquidity and Valuation. The Fund's investments are subject to
legal or other restrictions on transfer and are such that no liquid market
presently exists. In addition, illiquid securities, such as the Fund's
investments, may be difficult, or require a substantial period of time to
sell and may be salable only at a discount from comparable, more liquid
investments. Illiquid securities may also be more difficult to value.
Key Personnel of the Advisor. The Fund's success may depend
significantly on the skill and acumen of key employees at the Advisor or
its affiliates. If Wesley Edens or any other key employee should cease to
participate in the Fund's business, the Fund might be adversely affected.
8.4 Other Policies. Consistent with its investment objective, the
Fund may also invest in (a) United States government and agency obligations
with maturities of not more than one year and one day from the date of
acquisition, (b) commercial paper with maturities of not more than six
months and one day from the date of acquisition and having a rating
assigned to such commercial paper by Standard & Poor's Ratings Services, a
Division of the McGraw-Hill Companies, Inc. ("S&P") or Moody's Investor
Service, Inc. ("Moody's") (or, if neither such organization shall rate such
commercial paper at such time, by any nationally recognized statistical
rating organization in the United States of America) equal to one of the
two highest commercial paper ratings assigned by such organization, it
being understood that as of the date hereof such ratings by S&P are "P1"
and "P2" and such ratings by Moody's are "Al" and "A2," and (c) interest
bearing deposits in dollars in United States banks with an unrestricted
surplus of at least two hundred fifty million dollars ($250,000,000),
maturing within one year.
8.5 Not Applicable.
8.6 Not Applicable.
ITEM 9. MANAGEMENT
9.1 General.
(a) Board of Managers. The Board of Managers sets broad
policies for the Fund and its officers. The Advisor manages the day-to-day
operations of the Fund subject to the oversight of the Board of Managers
and supplies officers to the Fund for this purpose. The Board of Managers
shall consist at all times following the issuance of any Shares of no fewer
than two (2) Managers, of whom at least 40% are not "interested persons" of
the Fund as defined in Section 2(a)(19) of the 1940 Act.
(b) Investment Advisor. The Advisor, FIG Advisors LLC,
maintains its office at 1301 Avenue of the Americas, New York, New York
10019. The Advisor is a registered investment advisor formed in August
1999. The Advisor is owned by Fortress Investment Group LLC ("FIG"), a
Delaware limited liability company which, through itself and other
affiliates, provides investment advice to real estate investment trusts and
other related accounts.
Pursuant to the Agreement, the Fund has retained the
Advisor to manage the investment of its assets, to provide such investment
research, advice and supervision, in conformity with its investment
objective and policies, as may be necessary for the operations of the Fund.
As compensation for its services to the fund, Section 6.1
of the Agreement provides that the net profits of the Fund for each fiscal
year be allocated first to the Advisor in an amount equal to a cumulative
return of 1.5% per annum on all capital contributions; provided that for
any fiscal year in which the Advisor does not serve as investment advisor
for the entire fiscal year pursuant to an investment advisory arrangement
that has been approved according to the applicable provisions of the 1940
Act, the Advisor shall receive an annual allocation based on a percentage
equal to the days the Advisor served as investment advisor pursuant to a
duly approved investment advisory arrangement divided by 365 days.
(c) Portfolio Management.
The Fund's assets are managed by a committee composed of
the following persons:
WESLEY R. EDENS 39 is the Chief Executive Officer of FIG
and Fortress Investment Corp. ("FIC"), as well as the Chairman of the Board
of FIC. Mr. Edens co-founded FIG, which manages FIC's investment
activities, with Messrs. Kauffman, Nardone and Nygaard. Prior to the
forming of FIG, Mr. Edens was the head of the Global Principal Finance
("GPF") group at Union Bank of Switzerland ("UBS"), as well as a Managing
Director of UBS. Prior to joining GPF in 1997, Mr. Edens was a partner and
Managing Director of BlackRock Financial Management, Inc. ("BFM"), and the
Chief Operating Officer of BlackRock Asset Investors ("BAI"), a real estate
investment fund with approximately $560 million in capital. In addition,
Mr. Edens was formerly a partner and Managing Director of Lehman Brothers,
where he was head of the Non-Agency Mortgage Trading Desk. Mr. Edens
received a B.S. degree in Finance and Computer Science from Oregon State
University.
ROBERT I. KAUFFMAN 37 is the President of FIG and FIC,
and a member of the Board of Directors of FIC. Mr. Kauffman co-founded FIG
with Messrs. Edens, Nardone and Nygaard. Previously, Mr. Kauffman was the
head of the acquisitions and risk management department of GPF, as well as
a Managing Director of UBS. Prior to joining GPF in 1997, Mr. Kauffman was
a principal of BFM, and a Managing Director of BAI. Prior to joining BFM,
Mr. Kauffman was an Executive Director of Lehman Brothers International
("LBI"). Mr. Kauffman received a B.S. degree in Business Administration
from Northeastern University.
RANDAL A. NARDONE 45 is the Chief Operating Officer and
Secretary of FIG and FIC. Mr. Nardone co-founded FIG with Messrs. Edens,
Kauffman and Nygaard. Previously, Mr. Nardone was the head of the
structured finance and contract finance department of GPF, as well as a
Managing Director of UBS. Prior to joining GPF in 1997, Mr. Nardone was a
principal of BFM, and a Managing Director of BAI. Prior to joining BFM, Mr.
Nardone was a partner and member of the executive committee at the law firm
of Thacher Proffitt & Wood ("Thacher Proffitt"). Mr. Nardone received a
B.A. degree in English and Biology from the University of Connecticut and a
J.D. degree from the Boston University School of Law.
ERIK P. NYGAARD 41 is the Chief Information Officer and
Treasurer of FIG and FIC. Mr. Nygaard co-founded FIG with Messrs. Edens,
Kauffman and Nardone. Previously, Mr. Nygaard was the head of the financial
engineering department of GPF, as well as a Managing Director of UBS. Prior
to joining GPF in 1997, Mr. Nygaard was a principal of BFM, and a Managing
Director of BAI. Mr. Nygaard received a B.S. degree in Electrical
Engineering and Computer Science from the Massachusetts Institute of
Technology.
GREGORY F. HUGHES 37 is the Chief Financial Officer of
FIG and FIC. From 1997 to 1999, Mr. Hughes was the Chief Financial Officer
for Wellsford Real Properties, Inc., a real estate merchant banking firm
which acquires, finances, develops and operates real properties and
organizes and invests in private and public real estate companies. From
1993 to 1997, Mr. Hughes served as the Chief Financial Officer for
Wellsford Residential Property Fund, a real estate investment trust. Mr.
Hughes received a B.S. degree in Accounting from the University of
Maryland.
(d) Administrator. None.
(e) Custodian. United States Trust Company of New York
serves as Custodian for the Fund and maintains certain financial and
accounting books and records pursuant to an agreement with the Fund.
(f) Expenses. The Agreement provides, among other things,
that the Advisor will bear all costs and expenses of its directors,
officers and employees, any overhead incurred in connection with its duties
under the Agreement, the cost of any compensation of any officers or
Managers of the Fund who are partners, directors, officers or employees of
the Advisor and all other costs and expenses of the Fund that are not
expressly stated to be borne by the Fund.
The Agreement provides that the Fund will pay all
ordinary operating expenses of the Fund including, but not limited to, fees
and expenses of the Board of Managers; fees of the Advisor; expenses of
registering the Shares and Preferred Interests for sale under state
securities laws and other expenses in connection with the offering of the
Shares and the Preferred Interests; interest; taxes; fees and expenses of
the Fund's legal counsel and independent accountants; fees and expenses of
the Fund's administrator, transfer agent and custodian; expenses of
printing and mailing Share and Preferred Interest certificates (if any),
reports to holders of Shares and Preferred Interests, notices to holders of
Shares and Preferred Interests, proxy statements; reports to regulatory
bodies; brokerage and other expenses in connection with the execution,
recording and settlement of portfolio security transactions; expenses in
connection with the acquisition and disposition of portfolio securities or
the registration of privately issued portfolio securities; costs of third
party evaluations or appraisals of the Fund (or its assets) or its
investments; expenses of membership in investment company and other trade
associations; expenses of fidelity bonding and other insurance premiums;
expenses of meetings of the holders of the Shares and Preferred Interests;
indemnification costs and expenses; and all of the Fund's other business
and operating expenses. In addition, the Fund will bear all organizational
and syndication expenses.
(g) Affiliated Brokerage. Not applicable.
9.2 Non-resident Managers. Not applicable.
9.3 Control Persons.
<TABLE>
<S> <C> <C>
The Northwestern Mutual Life Insurance Company 67% of the Shares
Weyerhaeuser Company Master Retirement Trust 33% of the Shares
</TABLE>
ITEM 10. CAPITAL STOCK, LONG-TERM DEBT, AND OTHER SECURITIES
10.1 Capital Stock. The Fund is authorized to issue up to
$100,000,000 in common limited liability company interests in the Fund
known as Shares. The Shares have no preemptive, conversion, appraisal,
exchange or redemption rights. Holders of Shares are entitled to one vote
per Share on all matters subject to Shareholder approval.
The Fund is authorized to issue up to $100,000 in
preferred limited liability company interests in the Fund known as
"Preferred Interests." The Preferred Interests will pay cumulative
dividends when, as and if declared by the Board of Managers at the rate of
10% per year, will have a liquidation preference equal to $500 per
Preferred Interest plus accumulated and unpaid dividends, will be
redeemable in whole or in part at any time at liquidation preference and
will have certain others rights as required by the Investment Company Act
of 1940 (the "1940 Act"). Holders of the Preferred Interests shall have the
right to elect two Managers and such other voting rights as required by the
1940 Act.
When issued against payment therefor, the Shares and the
Preferred Interests will be fully paid and non-assessable. No person has
any liability for obligations of the Fund by reason of owning Shares or
Preferred Interests, although each person that subscribes for Shares or
Preferred Interests is liable for the full amount of such subscription.
10.2 Long-Term Debt. None.
10.3 General. None.
10.4 Taxes. The Fund will elect to be treated as a partnership for
U.S. Federal income tax purposes. Accordingly, the Fund itself will not be
subject to Federal income tax, and each holder in computing its Federal
income tax liability will take into account its share of the Fund's income,
gain, loss, deductions and credits, regardless of whether such holder
receives any distribution from the Fund.
10.5 Outstanding Securities.
<TABLE>
<CAPTION>
Amount
Outstanding
Amount Held Exclusive of
by Amount Shown
Amount Registrant or Under Previous
Title of Class Authorized for its Account Column
------------------------- ------------------------ ----------------------- ------------------
<S> <C> <C> <C>
Shares up to $100,000,000 None $15,000,000
Preferred Interests up to $100,000 None $ 50,000
</TABLE>
10.6 Securities Ratings. None.
ITEM 11. DEFAULTS AND ARREARS ON SENIOR SECURITIES
11.1 Not Applicable.
11.2 Not Applicable.
ITEM 12. LEGAL PROCEEDINGS
Not Applicable.
ITEM 13. TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
Not Applicable.
PART B
ITEM 14. COVER PAGE
Not Applicable.
ITEM 15. TABLE OF CONTENTS
Not Applicable.
ITEM 16. GENERAL INFORMATION AND HISTORY
The Fund has no history. See Item 8 - General Description of the
Registrant, for general information.
ITEM 17. INVESTMENT OBJECTIVE AND POLICIES
Additional information regarding the Fund's permitted
investment securities is set forth below. See Item 8 - General Description
of the Registrant, for additional information.
The Fund may borrow money or otherwise incur indebtedness
for temporary or emergency purposes in an amount up to $500,000. The Fund
may not borrow for investment purposes.
The Fund may invest temporarily in repurchase agreements,
which are agreements pursuant to which securities are acquired by the Fund
from a third party with the understanding that they will be repurchased by
the seller at a fixed price on an agreed date. The resale price reflects
the purchase price plus an agreed upon market rate of interest which is
unrelated to the coupon rate or date of maturity of the purchase security.
Repurchase agreements permit the Fund to keep all its assets earning
interest while retaining "overnight" flexibility.
The Fund may enter into repurchase agreement transactions
only with (i) banks whose subordinated debt has a credit rating of at least
"A" from Moody's or S&P (ii) banks, and broker/dealers that are designated
as primary dealers in U.S. Government securities by the Federal Reserve
Bank of New York and other such counter-parties having comparable
qualifications. Repurchase agreements may be characterized as loans secured
by the underlying securities and will be entered into in accordance with
the requirements of the Securities and Exchange Commission (the
"Commission").
Repurchase agreements will be fully collateralized at all
times. For this purpose, a repurchase agreement is deemed to be fully
collateralized only if the market value of the securities held as
collateral for such agreement, plus any accrued interest on those
securities, is equal to or greater than the repurchase price of such
agreement. Repurchase agreements are marked to the market daily throughout
the entire term of the agreement.
ITEM 18. MANAGEMENT
18.1 The following individuals are the officers and Managers of
the Fund. A brief statement of their present positions and principal
occupations during the past five years is also provided.
<TABLE>
<CAPTION>
Name, Age and Positions(s) Held With Principal Occupation(s)
Business Address Registrant During Past Five Years
---------------- ---------------------- ----------------------
<S> <C> <C>
Wesley R. Edens 39 (1, 2) Chief Executive Officer Chief Executive Officer of
Fortress Brookdale Investment (and Chairman of the Board the Advisor, FIG and FIC;
Fund LLC of Managers) formerly Head of GPF and
1301 Avenue of the Americas Managing Director at UBS;
New York, NY 10019 Partner and Managing
Director, BFM (asset
management company) and
Chief Operating Officer,
BAI. Also, Partner and
Managing Director, Lehman
Brothers (investment
banking).
Dennis Porterfield 64 Manager Executive Vice President,
Fortress Brookdale Investment Summit Bancorp
Fund LLC
1301 Avenue of the Americas
New York, NY 10019
Robert I. Kauffman 37 President President, Advisor, FIG and
Fortress Brookdale Investment FIC; formerly, Managing
Fund LLC Director, GPF and UBS;
1301 Avenue of the Americas Principal, BFM; Managing
New York, NY 10019 Director, BAI; Executive
Director, LBI (Europe)and
Vice President, Lehman
Brothers.
Randal A. Nardone 45 Chief Operating Officer and Operating Officer and
Fortress Brookdale Investment Secretary Secretary, Advisor, FIG and
Fund LLC FIC; formerly Managing
1301 Avenue of the Americas Director, GPF and UBS;
New York, NY 10019 Principal, BFM; Managing
Director, BAI; and
Partner, Thatcher Proffitt
(attorneys).
Gregory F. Hughes (37) Chief Financial Officer Financial Officer, Advisor,
Fortress Brookdale Investment FIG and FIC; formerly
Fund LLC Chief Financial Officer,
1301 Avenue of the Americas Wellsford Real Properties,
New York, NY 10019 Inc.; Chief Financial
Officer, Wellsford
Residential Property Fund
Erik P. Nygaard 41 Chief Information Officer Chief Information Officer
Fortress Brookdale Investment and Treasurer and Treasurer, Advisor,
Fund LLC FIG and FIC; formerly,
1301 Avenue of the Americas Managing Director, GPF
New York, NY 10019 and UBS; Principal, BFM;
Managing Director, BAI;
Director, Nomura Securities
International (investment
banking); and Vice
President, Lehman Brothers
----------------
1. Manager who is a director, officer or employee of the Advisor
2. Manager who may be deemed to be an "interested person" of the Fund
</TABLE>
Each Manager (other than any Manager who is an "affiliated person"
of the Fund or the Advisor) shall receive the following amounts for serving
as a Manager: (i) $6,000 per year, (ii) $1,000 per physical meeting, and
(iii) $125 per telephonic meeting, subject to a cap of $500 per year for
all telephonic meetings. The Fund also pays each Manager (whether or not
such person is a partner, director, officer or employee of the Advisor or
any affiliate thereof or successor thereto) for all out-of-pocket expenses
of such Manager incurred in attending each such meeting.
18.2 See Item 18.1
18.3 Not Applicable
18.4 Not Applicable
18.5 The Fund and the Advisor have adopted a Code of Ethics
pursuant to Rule 17j-1 of the 1940 Act. Personnel subject to this Code of
Ethics are permitted to invest in securities including, under certain
circumstances, securities that may be purchased or held by the Fund.
A copy of this Code of Ethics is attached as Exhibit R to this
Registration Statement. In addition, a copy of this code of ethics can be
reviewed and copied at the Commission's Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room
may be obtained by calling the Commission at 1-202-942-8090. The Code of
Ethics is available on the EDGAR Database on the Commission's Internet site
at http://www.sec.gov, and copies of the Code of Ethics may be obtained,
after paying a duplicating fee, by electronic request at the following
E-mail address: [email protected], or by writing the Commission's Public
Reference Section, Washington, D.C. 20549-0102.
ITEM 19. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
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19.1 The Northwestern Mutual Life Insurance Company 67% of the Shares
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Weyerhaeuser Company Master Retirement Trust 33% of the Shares
One Tower Bridge
West Conshocken, PA 19428
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19.2 See response to Item 19.1.
19.3 The officers and Managers as a group own less than 1% of the
equity securities of the Fund.
ITEM 20. INVESTMENT ADVISORY AND OTHER SERVICES
20.1-6 See Item 9 - Management.
20.7 The Fund's independent auditors are Ernst & Young LLP, 1211
Avenue of the Americas, New York, New York 10036. Ernst & Young LLP audits
the Fund.
20.8 None.
ITEM 21. BROKERAGE ALLOCATION AND OTHER PRACTICES
21.1 See Item 9 - Management, above. From time to time, one or
more of the investment companies or accounts which the Advisor manages may
own the same investments as the Fund. Investment decisions for the Fund are
made independently from those of such other investment companies or
accounts; however, from time to time, the same investment decision may be
made for more than one company or account. Subject to the foregoing, when
two or more investment companies or accounts managed by the Advisor or its
affiliates seek to purchase or sell the same securities, the securities
actually purchased or sold will be allocated among the companies and
accounts on a good faith equitable basis by the Advisor in its discretion
in accordance with the accounts' various investment objectives. In some
cases, this system may adversely affect the price or size of the position
obtainable for the Fund. In other cases, however, the ability of the Fund
to participate in volume transactions may produce better execution for the
Fund.
The Advisor will, subject to the investment limitations and
restrictions set forth herein, make all decisions to buy and sell
securities for the Fund, will select dealers to effect transactions, will
negotiate prices, and will effect securities transactions in a manner
deemed fair and reasonable to the shareholders of the Fund and not
according to any formula. The Advisor's primary considerations in selecting
the manner of executing securities transactions for the Fund will be prompt
execution of orders, the size and breadth of the market for the security,
the reliability, integrity and financial condition and execution capability
of the firm, the size of and difficulty in executing the order, and the
best net price.
21.2 None.
21.3 See response to Item 21.1.
21.4 None.
21.5 None.
ITEM 22. TAX STATUS
The following is a summary of the material U.S. Federal income tax
consequences relating to the purchase, ownership and disposition of Shares
in the Fund. The discussion is based upon the Internal Revenue Code of
1986, as amended (the "Code"), rules and regulations promulgated
thereunder, published rulings and court decisions, all as in effect on the
date of this Registration Statement. The discussion does not describe all
of the U.S. Federal income tax consequences that may be relevant to a
particular investor in view of such investor's particular circumstance and,
except as otherwise directed, is not directed to individuals, closely-held
corporations, foreign persons, insurance companies and entities or other
persons generally exempt from U.S. Federal income taxation. No advance
rulings have been or will be sought from the Internal Revenue Service (the
"Service") regarding any matter related to the Fund. ACCORDINGLY,
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE
THE FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES TO
THEM OF ACQUIRING, HOLDING AND DISPOSING SHARES, INCLUDING THE APPLICATION
OF THE ALTERNATIVE MINIMUM TAX.
Taxation of the Fund. The Fund will elect to be treated as a
partnership and not as an association taxable as a corporation for U.S.
Federal income tax purposes.
Publicly-Traded Partnership. Under current U.S. Federal income tax
law, a partnership that constitutes a "publicly-traded partnership" may be
taxed as a corporation in certain circumstances generally depending upon
the nature of its income. Pursuant to Treasury regulations, a partnership
will not be treated as a publicly traded partnership if its interests are
not (a) traded on an established security market or (b) readily tradeable
on a secondary market (or the substantial equivalent thereof). Shares in
the Fund will not be listed on any securities exchange. In addition, due to
restrictions on transfers and redemptions, no secondary market will exist
for the units. Accordingly, the Fund expects that it will not be treated as
a publicly-traded partnership and will use its best efforts to conduct its
affairs so that it will not be so treated.
Taxation of holders on Trust Profits and Losses. As a partnership,
the Fund generally will not itself be subject to U.S. Federal income tax.
Rather, each holder in computing its Federal income tax liability for a
taxable year will be required to take into account its allocable share of
all items of Fund income, gain, loss, deduction and credit for the taxable
year of the Fund ending within or with the taxable year of such holder,
regardless of whether such holder has received any distributions from the
Fund. The Fund will make distributions of cash to its holders. If a
holder's allocable share of Fund taxable income exceeds cash distributions
to such holder for any taxable year, such income would pass through to the
holders without any corresponding distribution. Such accruals will
constitute ordinary income and will increase such holder's basis in its
interest in the Fund. If cash is subsequently received and distributed by
the Fund in respect of such accruals, no additional income would be
recognized. The characterization of an item of profit or loss usually will
be determined at the Fund (rather than at the holder) level.
Allocation of Fund Profits and Losses. For U.S. Federal income tax
purposes, a holder's allocable share of items of Fund income, gain, loss,
deduction and credit will be determined by the Agreement provided such
allocations either have "substantial economic effect" or are determined to
be in accordance with the holders' units in the Fund. If the allocations
provided by the Agreement were successfully challenged by the Service, the
redetermination of the allocations to a particular holder for U.S. Federal
income tax purposes could be less favorable than the allocations set forth
in the Agreement.
The maximum ordinary income tax rate for corporate taxpayers is
currently 35%.
Adjusted Tax Basis for Fund Interest. A holder's adjusted tax
basis for its Shares will be equal to the amount of its initial capital
contributions and will be increased by (a) any additional capital
contributions made by such holder and (b) the sum of such holder's
allocable share of (i) items of Fund taxable income and gain and (ii)
liabilities of the Fund. A holder's adjusted tax basis will be decreased,
but not below zero, by the holder's allocable share of (a) items of Fund
deductions and losses and (b) by the amount of any cash distributions by
the Fund or the amount of the basis of any property, other than cash,
distributed by the Fund and constructive distributions resulting from a
reduction in such holder's share of liabilities of the Fund, if any. In
certain situations, the distribution of marketable securities by the Fund
may be treated as a cash distribution equal to the fair market value of the
marketable securities. A distribution of marketable securities will not,
however, be treated as a cash distribution if the Fund constitutes an
"investment partnership." Although not free from doubt, the Shares should
constitute an investment partnership for this purpose and, therefore, any
distributions of marketable securities to the holders should not be treated
as cash distributions for U.S. Federal income tax purposes.
If the recognition of a holder's allocable share of Fund losses
would reduce its adjusted tax basis for its Shares below zero, the
recognition of such losses by such holder would be deferred until such time
as the recognition of such losses would not reduce such holder's basis
below zero. If a holder receives a cash distribution (or constructive cash
distribution, as described above) in an amount that exceeds such holder's
adjusted tax basis in its Shares, such holder would be required to
recognize taxable income to the extent of that excess. Any such income
recognized would be treated as gain from the sale or exchange of its
shares. In general, and subject to the discussion below with respect to the
possible application of Section 751 of the Code, if a holder is not a
"dealer" with respect to its Shares and has held its Shares for more than
one year, any such gain would be long-term capital gain.
Sales and Liquidation. A sale or liquidation of all or part of a
holder's Shares will result in the recognition of gain or loss in an amount
equal to the difference, if any, between the amount realized on the sale or
the cash distributions received upon the liquidation (including any deemed
cash distributions from the Fund, as described above) and the holder's
adjusted tax basis for its units. Such holder's adjusted tax basis will be
adjusted for this purpose by its allocable share of the Fund's income or
loss for the year of such sale or liquidation. Any gain or loss recognized
with respect to such a sale or liquidation generally will be treated as
capital gain or loss and will be long-term capital gain or loss if the
units have been held for more than one year. To the extent that the
proceeds of the sale or liquidation are attributable to such holder's
allocable share of the Fund's "unrealized receivables" or "substantially
appreciated inventory," as defined in Section 751 of the Code, any gain
will be treated as ordinary income.
Unrelated Business Taxable Income. Special tax considerations
apply to holders that are exempt from U.S. Federal income taxation under
Section 501 of the Code. Generally, such holders are not subject to U.S.
Federal income taxation on passive investment income such as dividends,
interest and capital gains. This general exemption, however, does not apply
to "unrelated business taxable income" ("UBTI") which includes income or
gain derived from a trade or business, the conduct of which is
substantially unrelated to the exercise or performance of the holder's
exempt purpose. UBTI also includes "unrelated debt-financed income," which
generally consists of (i) income derived by an exempt holder from
income-producing property with respect to which there is "acquisition
indebtedness" at any time during the taxable year, and (ii) gain derived by
the exempt holder from the disposition of property with respect to which
there is "acquisition indebtedness" at any time during the twelve-month
period ending with the date of such disposition. Accordingly, although not
currently anticipated, if the Fund incurs any indebtedness to acquire
income-producing property, an exempt holder will be subject to U.S. Federal
income taxation on its allocable share of income from such property. In
addition, an exempt holder will be subject to U.S. Federal income taxation
on any gain recognized from the disposition of its Shares if the holder
incurred indebtedness to acquire such Shares during the twelve-month period
ending with the date of disposition.
Limitation on Deductibility of Capital Losses. A holder may be
restricted from currently taking into account for U.S. Federal income tax
purposes (i) its allocable share of any Fund Capital losses and (ii) any
Capital losses recognized by the holder upon the disposition of any Shares.
Capital losses generally are deductible by corporations only to the extent
of capital gains for the taxable year. Corporations may carry capital
losses back three years and forward five years.
Tax Audits. Under the Code, adjustments in tax liability with
respect to Fund items generally will be made at the Fund level in a single
proceeding rather than in separate proceedings with each holder. The
Advisor will represent the Fund as its "tax matters partner" during any
audit and in any dispute with the Service. Each holder will be informed by
the Advisor of the commencement of an audit of the Fund. In general, the
Advisor may enter into a settlement agreement with the Service on behalf
of, and binding upon, the holders. Prior to settlement, however, a holder
may file a statement with the Service providing that the Advisor does not
have authority to settle on behalf of such holder.
If adjustments are made to items of Fund income, gain, loss,
deduction or credit as the result of an audit of the Fund, the tax returns
of the holders may be reviewed by the Service, which could result in
adjustments of non-Fund items as well as Fund items.
ITEM 23. FINANCIAL STATEMENTS
Not applicable.
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
24.1 FINANCIAL STATEMENTS:
Included in Part A of the Registration Statement:
None.
Included in Part B of the Registration Statement:
None.
24.2 EXHIBITS:
(a) Certificate of Formation of the Fund Dated August 30,
2000
(b) Limited Liability Company Agreement of the Fund dated
September 6, 2000
(c) None
(d) Certificate of Designation of the Preferred Interests
dated September 6, 2000
(e) None
(f) None
(g) See Section 6.1 of the Limited Liability Company
Agreement of the Fund attached hereto as Exhibit B.
(h) Not applicable
(i) None
(j) Form of Custodian Contract between the Fund and U.S.
Trust Company of New York
(k) None
(l) Not applicable
(m) None
(n) Not applicable
(o) Not applicable
(p) Form of Subscription Agreement of the Fund
(q) None
(r) Consolidated Code of Ethics of Fortress Registered
Investment Trust, the Fund and the Advisor dated August 16, 2000 as amended
through September 13, 2000
ITEM 25. MARKETING ARRANGEMENTS
None.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not applicable.
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
Title of Class Number of Record Holders
-------------- ------------------------
Shares 2
Preferred Interests 100
ITEM 29. INDEMNIFICATION
29.1 The Agreement provides that, none of the Advisor, any
Manager, any officer or any of their respective affiliates, shareholders,
partners, officers, directors, members, employees, agents and
representatives (each an "Indemnified Person") shall have any liability,
responsibility or accountability in damages or otherwise to any Member or
the Fund for, and the Fund agrees, to the fullest extent permitted by law,
to indemnify, pay, protect and hold harmless each Indemnified Person from
and against, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, proceedings, costs, expenses and
disbursements of any kind or nature whatsoever (including, without
limitation, all reasonable costs and expenses of attorneys, defense, appeal
and settlement of any and all suits, actions or proceedings instituted or
threatened against the Indemnified Persons or the Fund) and all costs of
investigation in connection therewith which may be imposed on, incurred by,
or asserted against the Indemnified Persons or the Fund in any way relating
to or arising out of, or alleged to relate to or arise out of, any action
or inaction on the part of the Fund, on the part of the Indemnified Persons
when acting on behalf of the Fund or otherwise in connection with the
business or affairs of the Fund or any portfolio investment, or on the part
of any brokers or agents when acting on behalf of the Fund or any portfolio
investment (collectively, the "Indemnified Liabilities") other than such as
results from such Indemnified Person's willful misfeasance, bad faith or
gross negligence in the performance of his, her or its duties or by reason
of his, her or its reckless disregard of his, her or its obligations and
duties. These indemnification rights Limited Liability Company shall
survive the termination of the Fund or this Agreement except that no claim
may be asserted by any Indemnified Person against any indemnitor after the
third anniversary of the termination of the Fund unless written notice of
such claim shall have been provided to the indemnitor prior to the third
anniversary date.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
30.1 For information as to the business, profession, vocation or
employment of a substantial nature of each of the officers and directors of
the Advisor, reference is made to the Advisor's current Form ADV, and
incorporated herein by reference upon filing.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
31.1 The accounts and records of the Fund are maintained in part
at the office of the Advisor at 1301 Avenue of the Americas, New York, New
York 10019, and in part at the offices of the Custodian with offices at114
West 47th Street, New York, NY 10036-1532.
ITEM 32. MANAGEMENT SERVICES
32.1 Except as described above in Item 9 - Management, the Fund is
not a party to any management service related contract.
ITEM 33. UNDERTAKINGS
Not Applicable.
SIGNATURES
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, as of the 13th day of December, 2000.
FORTRESS BROOKDALE INVESTMENT FUND LLC
(Registrant)
/s/ Wesley R. Edens
--------------------------------
Wesley R. Edens
Chief Executive Officer
SCHEDULE OF EXHIBITS TO FORM N-2
Page
Exhibit Number Exhibit Number
-------------- ------- ------
Exhibit A Certificate of Formation of the Fund dated
August 30, 2000................................
Exhibit B Limited Liability Company Agreement of the
Fund dated September 6, 2000...................
Exhibit D Certificate of Designation of the Preferred
Interests dated September 6, 2000..............
Exhibit G Investment Advisory Agreement.
See Section 6.1 of the Limited Liability
Company Agreement of the Fund attached
hereto as Exhibit B............................
.
Exhibit J Form of Custodian Contract between the Fund
and U.S. Trust Company of New York.............
Exhibit P Form of Subscription Agreement of the Fund.....
Exhibit R Consolidated Code of Ethics of Fortress
Registered Investment Trust, the Fund and
the Advisor dated August 16, 2000 as
amended through September 13, 2000.............
