Target Information

Fortress Investment Group has successfully acquired assets from APR Energy, which include 30 mobile gas-powered turbines along with related balance-of-plant inventory. These assets are notable for their combined energy generation capacity of 850 megawatts and are ready for immediate deployment, providing critical energy support to various sectors.

In conjunction with this acquisition, Fortress has partnered with Duos Energy Corporation, which is led by the former executive management team of APR Energy. This strategic alliance will oversee the management and deployment of the turbines, enhancing the operational efficiency and market readiness of this asset portfolio.

Industry Overview

In the United States, the demand for electricity is surging, primarily driven by the rapid development of large-scale computing facilities, such as data centers. This surge comes at a time when the electricity generation sector faces significant capacity challenges. These challenges stem from longstanding underinvestment in generation assets and infrastructure, which is exacerbating the existing supply-demand imbalance.

The transition towards renewable energy sources is further complicating the landscape for energy supply. As data centers increasingly seek sustainable solutions, there is rising interest in co-located renewable energy generation, resulting in heightened demand for bridge and supplemental energy solutions in the short term. This trend is projected to continue, with expectations that the demand for energy will surpass supply for at least a decade.

The mobile gas turbines acquired by Fortress represent a timely response to these emerging needs. Their capacity for rapid deployment positions them as an ideal short-term solution while long-term renewable energy infrastructure is developed and upgraded. With the capacity to be operational in a matter of weeks, these turbines can address immediate energy demands of data centers and similar facilities.

Market conditions indicate that states experiencing the most significant growth in commercial electricity demand are also the ones investing heavily in expanding their computing infrastructures. This creates not only opportunities but also challenges for energy providers, as they must quickly adapt to the evolving landscape of energy needs.

Rationale Behind the Deal

The acquisition of these mobile gas turbines by Fortress Investment Group is driven by the increasing importance of energy infrastructure, especially in sectors such as data centers that are essential for advancing AI applications. Josh Pack, Co-CEO and Managing Partner at Fortress, emphasizes that the availability of immediate energy capacity is a key selling point for customers who need reliable energy supply for their infrastructure needs.

Furthermore, as energy demand is projected to outpace supply, the strategic positioning of Fortress to offer customized financing options alongside energy solutions becomes an attractive proposition for clients navigating these challenges. This acquisition not only enhances Fortress's portfolio but also strengthens its capability to provide real estate financing tailored to energy supply requirements.

Information About the Investor

Fortress Investment Group LLC is a recognized leader in global investment management, with a diverse portfolio that spans across various asset classes including credit, private equity, and real estate. As of September 30, 2024, Fortress manages approximately $49 billion in assets on behalf of around 2,000 institutional and private investors worldwide.

Founded in 1998, Fortress has built a reputation for innovation and extensive industry experience, particularly in real estate and capital structuring. The firm’s proactive approach to investment in energy infrastructure aligns with its broader commitment to meet the evolving demands of its clients in an increasingly competitive market.

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The acquisition of APR Energy's mobile gas turbines by Fortress Investment Group is poised to be a strategic and timely investment. The current state of the energy market, characterized by rapidly increasing electricity demands from data centers, underscores the relevance of these turbines as a critical energy source. The foresight to secure these assets enables Fortress to bridge the gap in power supply while infrastructure adjustments to accommodate renewable energy take place.

Moreover, the partnership with Duos Energy Corporation, a firm specializing in sustainable energy solutions, enhances the operational capabilities surrounding the deployment of these turbines. Their expertise in providing eco-friendly and instant power solutions not only gives Fortress a competitive edge but also aligns with the growing trend towards sustainability within the industry.

Given the projected supply-demand imbalance in energy over the next decade, Fortress's investment in mobile gas generators presents a dual benefit: addressing immediate demand while preparing for future energy needs. This forward-thinking approach positions Fortress favorably within the sector, making the investment not only prudent but also essential for long-term strategic growth.

In conclusion, the acquisition is not only a strong addition to Fortress's growing energy portfolio but also a vital move that reflects an acute understanding of market dynamics. It is likely to yield significant returns and establish Fortress as a key player in providing energy solutions for the evolving landscape of data center operations.

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