UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 9, 2019
 
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC.
(Exact Name of Registrant as Specified in Its Charter)
 
   
Delaware
 
001-33805
 
26-0354783
(State or Other Jurisdiction
of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
9 West 57th Street, New York, New York
 
10019
(Address of Principal Executive Offices)
 
(Zip Code)
212-790-0000
(Registrant’s Telephone Number, Including Area Code)
Och-Ziff Capital Management Group LLC
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Securities registered pursuant to Section 12(b) of the Act:
(Title of each class)
 
(Trading symbol)
 
(Name of each exchange on which registered)
Class A Shares
 
OZM
 
New York Stock Exchange
 
 




Item 2.02. Results of Operations and Financial Condition.
On May 9, 2019 , Och-Ziff Capital Management Group Inc. (the “Company”) reported its financial results for the quarter ended March 31, 2019 . A copy of the Company’s earnings release is attached as Exhibit 99.1 and is incorporated herein by reference.
The Company is making references to non-GAAP financial information in the earnings release and will make on the conference call the Company is hosting on May 9, 2019 , to discuss its financial results for the quarter ended March 31, 2019 . Reconciliations of these non-GAAP financial measures to the most comparable GAAP financial measures are contained in the earnings release. These non-GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with GAAP.
The information in this Current Report on Form 8-K, including the exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (“Exchange Act”) or otherwise subject to the liabilities of that section. The information in this Current Report on Form 8-K shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
The Company files annual, quarterly and current reports, proxy statements and other information required by the Exchange Act with the U.S. Securities and Exchange Commission (“SEC”). The Company makes available free of charge on its website ( www.ozm.com ) its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those filings as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The Company also uses its website ( www.ozm.com ) to distribute company information, and such information may be deemed material. Accordingly, investors should monitor the Company’s website, in addition to its press releases, SEC filings and public conference calls and webcast. The contents of the Company’s website is not, however, a part of this report.
Item 8.01. Other Events.
On  May 9, 2019 , the Company announced that its Board of Directors declared a dividend for the  first  quarter of  2019 of $0.37  per Class A share. The dividend is payable on  May 28, 2019 , to holders of record as of the close of business on  May 20, 2019 .
Class A Shareholders will receive a final Form K-1 for the period from January 1, 2019, through April 1, 2019. There can be no assurance that shareholders will receive sufficient distributions to satisfy payment of tax liabilities in respect of their membership interests in the Company, for such period. Distributions received after the Company’s change in tax classification to a corporation on April 1, 2019, will be treated as dividends and reported on Form 1099-DIV.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC.
 
(Registrant)
 
 
 
 
By:
 
/s/ Thomas M. Sipp
 
 
 
Thomas M. Sipp
 
 
 
Chief Financial Officer and
Executive Managing Director
May 9, 2019




OZLOGOA08.JPG
Oz Management Reports First Quarter 2019 Results
Dividend of  $0.37  per Class A Share
NEW YORK , May 9, 2019 – Och-Ziff Capital Management Group Inc. (NYSE: OZM) (the “Company” or “Oz Management”) today reported GAAP net income attributable to Class A Shareholders (“GAAP Net Income ”) of $37.1 million , or $1.81 per basic and $1.73 per diluted Class A Share, for the first quarter of 2019 .
Summary
•
Distributable Earnings of $30.0 million , or $0.55 per Adjusted Class A Share for the first quarter of 2019 .
•
A cash dividend of  $0.37  per Class A Share was declared for the first  quarter of 2019 , payable on  May 28, 2019 , to holders of record on  May 20, 2019 .
•
Oz Master Fund, the Company’s largest multi-strategy fund, was up 9.5% gross and 7.9% net for the first quarter of 2019 .
•
Oz Credit Opportunities Master Fund, the Company’s global opportunistic credit fund, was up 3.2% gross and 2.3% net for the first quarter of 2019 .
•
As of May 1, 2019 , estimated assets under management were $32.4 billion , with Oz Master Fund generating an estimated 3.3% net return in April 2019.
•
The outstanding senior term loan facility balance is $55.0 million, reflecting a $120.0 million pay down in the first quarter of 2019, followed by an additional $25.0 million paid on May 8, 2019 .
•
The Company changed its tax status to a corporation effective April 1, 2019, and changed its corporate form to a Delaware corporation effective May 9, 2019.
Rob Shafir, CEO of Oz Management, said, “I am pleased with our solid start to 2019. We have had strong investment performance and are making material progress towards our strategic objectives for the year.”


1

RECENT DEVELOPMENTS
Recapitalization
In February 2019, the Company completed a recapitalization of its business (the “Recapitalization”). As part of the Recapitalization, a portion of the interests held by its former executive managing directors in the Company’s principal operating subsidiaries (the “Oz Operating Group”) were reallocated to current members of senior management. In addition, the Company restructured the previously outstanding $400.0 million of existing Preferred Units into $200.0 million of new Preferred Units and $200.0 million of new Debt Securities. Additionally, the Company repaid $100.0 million of the debt outstanding under its senior term loan facility and terminated the $100.0 million of undrawn commitments under its revolving credit facility. Since December 31, 2018, the Company has paid down $145.0 million of the debt outstanding under its senior term loan facility, including $25.0 million on May 8, 2019 .
Change of Tax Status Election to Corporation
The Company (i) changed its tax classification from a partnership to a corporation effective April 1, 2019 and (ii) subsequently converted from a Delaware limited liability company into a Delaware corporation effective May 9, 2019.
GAAP NET INCOME ATTRIBUTABLE TO CLASS A SHAREHOLDERS
For the first quarter of 2019 , Oz Management reported GAAP Net Income of $37.1 million , or $1.81 per basic and $1.73 per diluted Class A Share, compared to GAAP Net Income of $3.5 million , or $0.18 per basic and diluted Class A Share, for the first quarter of 2018 .
The increase in GAAP Net Income for the first quarter of 2019 compared to the first quarter of 2018 was primarily due to an adjustment to the redemption value of Preferred Units recognized during the first quarter of 2019 in connection with the Recapitalization. Partially offsetting this increase in GAAP Net Income were higher compensation and benefits, primarily due to Recapitalization-related equity-based compensation grants. Management fees were also lower, primarily due to lower assets under management in multi-strategy funds, partially offset by higher assets under management in Institutional Credit Strategies.
DISTRIBUTABLE EARNINGS (NON-GAAP)
For the first quarter of 2019 , Oz Management reported Distributable Earnings of $30.0 million , or $0.55 per Adjusted Class A Share, compared to Distributable Earnings of $45.3 million , or $0.82 per Adjusted Class A Share, for the first quarter of 2018 .
The decline in earnings for the first quarter of 2019 compared to the first quarter of 2018 was primarily due to higher bonus expense as a result of reversals of deferred cash compensation due to forfeitures in the first quarter of 2018. Also contributing to the decline were lower management fees, primarily due to lower assets under management in multi-strategy funds, partially offset by higher assets under management in Institutional Credit Strategies.
Distributable Earnings and Distributable Earnings per Adjusted Class A Share are non-GAAP measures. For information on and reconciliations of the Company’s non-GAAP measures to the respective GAAP measures, please see Exhibits 2 through 4 that accompany this press release.

2

ASSETS UNDER MANAGEMENT
 
 
 
 
 
Year-Over-Year Change
(dollars in billions)
March 31, 2019
 
March 31, 2018
 
Inflows / (Outflows)
 
Distributions / Other Reductions
 
Appreciation
 
Total
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multi-strategy funds
$
10.3

 
$
13.3

 
$
(2.7
)
 
$
(0.6
)
 
$
0.3

 
$
(3.0
)
 
-23%
Credit
 
 
 
 
 
 
 
 
 
 
 
 
 
Opportunistic credit funds
5.8

 
5.4

 
0.2

 
(0.1
)
 
0.2

 
0.4

 
7%
Institutional Credit Strategies
13.4

 
11.2

 
2.6

 
(0.3
)
 
(0.1
)
 
2.2

 
20%
Real estate funds
2.7

 
2.5

 
0.2

 
(0.1
)
 
—

 
0.2

 
7%
Other
0.2

 
0.4

 
(0.2
)
 
—

 
—

 
(0.2
)
 
-49%
Total
$
32.3

 
$
32.8

 
$
0.1

 
$
(1.0
)
 
$
0.4

 
$
(0.5
)
 
-2%
Totals may not sum due to rounding.
The year-over-year decrease in assets under management was driven primarily by net outflows in the Company’s multi-strategy funds, primarily Oz Master Fund, partially offset by the closing of additional CLOs and an aircraft securitization within Institutional Credit Strategies. The net outflows include approximately $558.1 million to former executive managing directors, the majority of which relate to the anticipated redemptions disclosed in the Company’s Form 8-K filed on December 6, 2018 (the “Liquidity Redemption”).
Since March 31, 2019 , estimated assets under management increased to $32.4 billion as of May 1, 2019 , which includes approximately $335.0 million to former executive managing directors, the majority of which relates to the Liquidity Redemption.
Please see the detailed assets under management and fund information on Exhibits 5 through 7 that accompany this press release.
CONFERENCE CALL
Robert Shafir, Chief Executive Officer, and Thomas Sipp, Chief Financial Officer, will host a conference call today, May 9, 2019 , 8:30 a.m. Eastern Time to discuss the Company’s first quarter 2019 results. The call can be accessed by dialing +1-866-393-4306 (in the U.S.) or +1-734-385-2616 (international), passcode 3937005 . A simultaneous webcast of the call will be available on the Public Investors page of the Company’s website ( www.ozm.com ). For those unable to listen to the live broadcast, a webcast replay will also be available on the Company’s website as noted above.

3

About Oz Management
Oz Management is one of the largest institutional alternative asset managers in the world, with offices in New York, London, Hong Kong, Mumbai and Shanghai. The Company 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. Oz Management 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. The Company’s funds invest across multiple strategies and geographies, consistent with the investment objectives of each fund. The global investment strategies employed include convertible and derivative arbitrage, corporate credit, global equities, merger arbitrage, private investments, real estate and structured credit. As of May 1, 2019 , Oz Management had approximately $32.4 billion in assets under management. For more information, please visit the Company’s website ( www.ozm.com ).


Investor Relations Contact
 
Media Relations Contact
Elise King
 
Jonathan Gasthalter
+1-212-719-7381
 
Gasthalter & Co. LP
investorrelations@ozm.com
 
+1-212-257-4170

 
jg@gasthalter.com

4

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. The Company cautions 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; the outcome of third-party litigation involving the Company; the consequences of the settlements with the SEC and the DOJ; whether the Company realizes all or any of the anticipated benefits from the Recapitalization and other related transactions; whether the Recapitalization and other related transactions result in any increased or unforeseen costs, indemnification obligations or have an impact on the Company’s ability to retain or compete for professional talent or investor capital; conditions impacting the alternative asset management industry; the Company’s ability to retain existing investor capital; 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 SEC, including but not limited to the Company’s annual report on Form 10-K for the year ended December 31, 2018 , dated March 15, 2019 , 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 Oz Management fund.
The Company files annual, quarterly and current reports, proxy statements and other information required by the Exchange Act of 1934, as amended, with the SEC. The Company makes available free of charge on its website ( www.ozm.com ) its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those filings as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The Company also uses its website to distribute company information, and such information may be deemed material. Accordingly, investors should monitor the Company’s website, in addition to its press releases, SEC filings and public conference calls and webcast.

5



EXHIBIT 1
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Consolidated Statements of Comprehensive Income (Unaudited)
(dollars in thousands, except per share amounts)
 
 
 
 
 
Three Months Ended March 31,
 
 
2019
 
2018
Revenues
 
 
 
 
Management fees
 
$
63,623

 
$
72,450

Incentive income
 
53,198

 
50,834

Other revenues
 
3,769

 
4,542

Income of consolidated funds
 
2,604

 
584

Total Revenues
 
123,194

 
128,410

 
 
 
 
 
Expenses
 
 
 
 
Compensation and benefits
 
85,715

 
68,924

Interest expense
 
6,208

 
6,598

General, administrative and other
 
37,788

 
37,850

Expenses of consolidated funds
 
55

 
84

Total Expenses
 
129,766

 
113,456

 
 
 
 
 
Other Income
 
 
 
 
Net losses on early retirement of debt
 
(5,458
)
 
—

Net gains on investments
 
2,689

 
312

Net gains of consolidated funds
 
3,746

 
492

Total Other Income
 
977

 
804

 
 
 
 
 
Income (Loss) Before Income Taxes
 
(5,595
)
 
15,758

Income taxes
 
3,386

 
3,012

Consolidated and Comprehensive Net (Loss) Income
 
(8,981
)
 
12,746

Less: Net loss (income) attributable to noncontrolling interests
 
7,234

 
(8,635
)
Less: Net (income) loss attributable to redeemable noncontrolling interests
 
(5,534
)
 
(621
)
Net (Loss) Income Attributable to Och-Ziff Capital Management Group Inc.
 
(7,281
)
 
3,490

Less: Change in redemption value of Preferred Units
 
44,364

 
—

Net Income Attributable to Class A Shareholders
 
$
37,083

 
$
3,490

 
 
 
 
 
Earnings per Class A Share
 
 
 
 
Income per Class A Share - basic
 
$
1.81

 
$
0.18

Income per Class A Share - diluted
 
$
1.73

 
$
0.18

Weighted-average Class A Shares outstanding - basic
 
20,475,359

 
19,223,092

Weighted-average Class A Shares outstanding - diluted
 
21,491,970

 
45,678,707



6



EXHIBIT 2
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Reconciliation of Non-GAAP Measures to the Respective GAAP Measures (Unaudited)
(dollars in thousands, except per share amounts)
 
 
 
 
 
Three Months Ended March 31,
 
2019
 
2018
Net Income Attributable to Class A Shareholders
$
37,083

 
$
3,490

Change in redemption value of Preferred Units
(44,364
)
 
—

Net (Loss) Income Attributable to Och-Ziff Capital Management Group Inc.
(7,281
)
 
3,490

Net (loss) income attributable to Group A Units
(7,369
)
 
8,370

Equity-based compensation, net of RSUs settled in cash
37,223

 
21,895

Adjustment to recognize deferred cash compensation in the period of grant
2,568

 
12,783

Recapitalization-related non-cash interest expense accretion
2,311

 
—

Income taxes
3,386

 
3,012

Net losses on early retirement of debt
5,458

 
—

Adjustment for expenses related to compensation and profit-sharing arrangements based on fund investment performance
2,377

 
(162
)
Depreciation, amortization and net gains and losses on fixed assets
2,411

 
2,372

Other adjustments
(3,307
)
 
982

Economic Income—Non-GAAP
37,777

 
52,742

Tax receivable agreement and other payables—Non-GAAP (1)
(7,744
)
 
(7,463
)
Distributable Earnings—Non-GAAP
$
30,033

 
$
45,279

 
 
 
 
Weighted-Average Class A Shares Outstanding
20,475,359

 
19,223,092

Weighted-Average Partner Units
29,613,012

 
32,291,964

Weighted-Average Class A Restricted Share Units (RSUs)
4,606,223

 
3,475,715

Weighted-Average Adjusted Class A Shares
54,694,594

 
54,990,771

 
 
 
 
Distributable Earnings Per Adjusted Class A Share—Non-GAAP
$
0.55

 
$
0.82

(1) Presents an estimate of payments under the tax receivable agreement and income taxes related to the earnings for the periods presented. These amounts are grossed-up for Och - Ziff Capital Management Group Inc’s ownership percentage in the Oz Operating Group, assuming the conversion of all outstanding Partner Units into Class A Shares, on a one-to-one basis.  

7



EXHIBIT 3
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
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,
 
2019
 
2018
Management fees—GAAP
$
63,623

 
$
72,450

Adjustment to management fees (1)
(3,608
)
 
(4,741
)
Management Fees—Economic Income Basis—Non-GAAP
60,015

 
67,709

 
 
 
 
Incentive Income—Economic Income Basis—GAAP and Non-GAAP
53,198

 
50,834

 
 
 
 
Other revenues—GAAP
3,769

 
4,542

Adjustment to other revenues (2)
—

 
(39
)
Other Revenues—Economic Income Basis—Non-GAAP
3,769

 
4,503

Total Revenues—Economic Income Basis—Non-GAAP
$
116,982

 
$
123,046

 
 
 
 
Compensation and benefits—GAAP
$
85,715

 
$
68,924

Adjustment to compensation and benefits (3)
(42,169
)
 
(35,905
)
Compensation and Benefits—Economic Income Basis—Non-GAAP
$
43,546

 
$
33,019

 
 
 
 
Interest expense—GAAP
$
6,208

 
$
6,598

Adjustment to interest expense (4)
(2,311
)
 
—

Interest Expense—Economic Income Basis—Non-GAAP
$
3,897

 
$
6,598

 
 
 
 
General, administrative and other expenses—GAAP
$
37,788

 
$
37,850

Adjustment to general, administrative and other expenses (5)
(6,026
)
 
(7,152
)
General, Administrative and Other Expenses—Economic Income Basis—Non-GAAP
$
31,762

 
$
30,698

 
 
 
 
Net gains on investments—GAAP
$
2,689

 
$
312

Adjustment to net gains on investments (6)
(2,689
)
 
(312
)
Net Losses on Investments—GAAP
$
—

 
$
—

 
 
 
 
Net (loss) income attributable to noncontrolling interests—GAAP
$
(7,234
)
 
$
8,635

Adjustment to net (loss) income attributable to noncontrolling interests (7)
7,234

 
(8,646
)
Net Loss Attributable to Noncontrolling Interests—Economic Income Basis—Non-GAAP
$
—

 
$
(11
)
See Exhibit 4 for footnote references.

8



EXHIBIT 4
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Non-GAAP Measures
Footnotes to Reconciliations
(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 funds is also removed.
(2)
Adjustment to exclude gains on fixed assets.
(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. In addition, expenses related to incentive income profit-sharing arrangements are generally recognized at the same time the related incentive income revenue is recognized, as management reviews the total compensation expense related to these arrangements in relation to any incentive income earned by the relevant fund. Further, deferred cash compensation is expensed in full in the year granted for Economic Income, rather than over the service period for GAAP. Distributions to the Group D Units are also excluded, as management reviews operating performance at the Oz Operating Group level, where substantially all of the Company’s operations are performed, prior to making any income allocations.
(4)
Adjustment to exclude non-cash interest expense accretion on Debt Securities issued in exchange for Preferred Units in connection with the Recapitalization. Upon exchange, Debt Securities were recognized at fair value and are being accreted to par value over time through interest expense for GAAP; however, management does not consider this interest accretion to be reflective of the operating performance of the Company.
(5)
Adjustment to exclude depreciation, amortization and losses on fixed assets, 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.
(6)
Adjustment to exclude gains and losses on investments, as management does not consider these items to be reflective of the operating performance of the Company.
(7)
Adjustment to exclude amounts attributable to the executive managing directors on their interests in the Oz Operating Group, as management reviews the operating performance of the Company at the Oz Operating Group level. The Company conducts substantially all of its activities through the Oz Operating Group.
Non-GAAP Financial Measures
Distributable Earnings is a measure of operating performance that equals Economic Income less amounts related to the tax receivable agreement and other payables. Economic Income excludes the adjustments described above that are required for presentation of the Company’s results on a GAAP basis . These measures are non-GAAP measures and 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. These measures are presented to provide a more comparable view of the Company’s core operating results year-over-year.
For purposes of calculating Distributable Earnings per Share, the Company assumes that all the interests held by its current and former executive managing directors in the Oz Operating Group (collectively, “Partner Units”), as well as Class A Restricted Share Units (“RSUs”), have been converted on a one-to-one basis into Class A Shares (“Adjusted Class A Shares”). As of March 31, 2019 , there were 3,410,000 Group P Units outstanding and 1,000,000 performance-based restricted share units (“PSUs”). Group P Units and PSUs do not participate in the economics of the Company until certain service and market-performance conditions are met; therefore, the Company will not include the Group P Units or PSUs in Adjusted Class A Shares until such conditions are met. As of March 31, 2019 , the service and market-performance conditions had not yet been met.
Management uses Distributable Earnings and Economic Income, among other financial information, as the basis on which it evaluates the financial performance of the Company and makes resource allocation and other operating decisions, as well as 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. Management considers it important that investors review the same operating information that it uses.

9



EXHIBIT 5
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Summary of Changes in Assets Under Management (1) (Unaudited)
(dollars in thousands)
 
Three Months Ended March 31, 2019
 
December 31, 2018
 
Inflows / (Outflows)
 
Distributions / Other Reductions
 
Appreciation / (Depreciation) (2)
 
March 31, 2019
 
 
 
 
 
 
 
 
 
 
Multi-strategy funds
$
10,420,858

 
$
(886,353
)
 
$
(21,278
)
 
$
779,324

 
$
10,292,551

Credit
 
 
 
 
 
 
 
 
 
Opportunistic credit funds
5,751,411

 
(63,530
)
 
(26,972
)
 
126,209

 
5,787,118

Institutional Credit Strategies
13,491,734

 
13,506

 
(107,147
)
 
(32,450
)
 
13,365,643

Real estate funds
2,577,040

 
75,470

 
—

 
(22
)
 
2,652,488

Other
286,635

 
(62,868
)
 
—

 
379

 
224,146

Total
$
32,527,678

 
$
(923,775
)
 
$
(155,397
)
 
$
873,440

 
$
32,321,946

 
Three Months Ended March 31, 2018
 
December 31, 2017
 
Inflows / (Outflows)
 
Distributions / Other Reductions
 
Appreciation / (Depreciation) (2)
 
March 31, 2018
 
 
 
 
 
 
 
 
 
 
Multi-strategy funds
$
13,695,040

 
$
(551,670
)
 
$
(103,968
)
 
$
285,828

 
$
13,325,230

Credit
 
 
 
 
 
 
 
 
 
Opportunistic credit funds
5,513,618

 
(98,840
)
 
(115,985
)
 
126,198

 
5,424,991

Institutional Credit Strategies
10,136,991

 
1,031,630

 
—

 
7,485

 
11,176,106

Real estate funds
2,495,190

 
—

 
(23,676
)
 
(16
)
 
2,471,498

Other
587,723

 
(570
)
 
(154,171
)
 
5,752

 
438,734

Total
$
32,428,562

 
$
380,550

 
$
(397,800
)
 
$
425,247

 
$
32,836,559

(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. CLOs included within Institutional Credit Strategies are reflected at principal value and any change in appreciation/(depreciation) reflects a change in the par value of the underlying collateral within the CLOs, or foreign currency translation changes in the measurement of assets under management of the Company’s European CLOs.​

10



EXHIBIT 6
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Fund Information (1) (Unaudited)
(dollars in thousands)
 
Assets Under Management as of March 31,
 
Returns for the Three Months Ended March 31,
Annualized Returns Since Inception Through March 31, 2019
 
 
 
 
 
 
2019
 
2018
 
 
 
2019
 
2018
 
Gross
 
Net
 
Gross
 
Net
 
Gross
 
Net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multi-strategy funds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oz Master Fund (2)
$
9,191,339

 
$
11,241,001

 
9.5
%
 
7.9
%
 
3.0
%
 
2.1
%
 
16.3
%
(2)  
11.4
%
(2)  
Oz Enhanced Master Fund
886,834

 
642,820

 
15.0
%
 
12.7
%
 
5.1
%
 
3.8
%
 
14.0
%
 
9.5
%
 
Other funds
214,378

 
1,441,409

 
n/m

 
n/m

 
n/m

 
n/m

 
n/m

 
n/m

 
 
10,292,551

 
13,325,230

 
 
 
 
 
 
 
 
 
 
 
 
 
Credit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Opportunistic credit funds:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oz Credit Opportunities Master Fund
1,726,050

 
1,723,981

 
3.2
%
 
2.3
%
 
4.2
%
 
2.8
%
 
16.2
%
 
11.8
%
 
Customized Credit Focused Platform
3,207,350

 
3,031,073

 
4.8
%
 
3.6
%
 
2.9
%
 
2.3
%
 
17.9
%
 
13.5
%
 
Closed-end opportunistic credit funds
447,976

 
220,228

 
See table below for return information on the Company’s closed-end opportunistic credit funds.
Other funds
405,742

 
449,709

 
n/m

 
n/m

 
n/m

 
n/m

 
n/m

 
n/m

 
 
5,787,118

 
5,424,991

 
 
 
 
 
 
 
 
 
 
 
 
 
Institutional Credit Strategies
13,365,643

 
11,176,106

 
See the second following page for information on the Company’s Institutional Credit Strategies.
 
19,152,761

 
16,601,097

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real estate funds
2,652,488

 
2,471,498

 
See the third following page for information on the Company’s real estate funds.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
224,146

 
438,734

 
n/m

 
n/m

 
n/m

 
n/m

 
n/m

 
n/m

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
$
32,321,946

 
$
32,836,559

 
 
 
 
 
 
 
 
 
 
 
 
 
n/m not meaningful
Please see the last page of this Exhibit 6 (“Fund Information—Footnotes”) for important disclosures related to the footnotes referenced herein.

11



EXHIBIT 6
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Fund Information — continued (Unaudited)
(dollars in thousands)
 
Assets Under Management as of March 31,
Inception to Date as of March 31, 2019
 
 
 
 
 
 
 
 
 
IRR
 
 
 
2019
 
2018
 
Total Commitments
 
Total Invested Capital (3)
 
Gross (4)
 
Net (5)
 
Gross
MOIC (6)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Closed-end Opportunistic Credit Funds (Investment Period)
 
 
 
 
 
 
 
 
 
 
 
 
 
Oz European Credit Opportunities Fund (2012-2015) (7)
$
1,455

 
$
47,137

 
$
459,600

 
$
305,487

 
15.7
%
 
11.8
%
 
1.5x
Oz Structured Products Domestic Fund II (2011-2014) (7)
61,966

 
79,729

 
326,850

 
326,850

 
19.8
%
 
15.7
%
 
2.1x
Oz Structured Products Offshore Fund II (2011-2014) (7)
64,360

 
81,920

 
304,531

 
304,531

 
17.3
%
 
13.6
%
 
1.9x
Oz Structured Products Offshore Fund I (2010-2013) (7)
6,095

 
5,906

 
155,098

 
155,098

 
23.9
%
 
19.1
%
 
2.1x
Oz Structured Products Domestic Fund I (2010-2013) (7)
5,350

 
5,358

 
99,986

 
99,986

 
22.7
%
 
18.1
%
 
2.0x
Other funds
308,750

 
178

 
309,000

 
—

 
n/m

 
n/m

 
n/m
 
$
447,976

 
$
220,228

 
$
1,655,065

 
$
1,191,952

 
 
 
 
 
 
n/m not meaningful
Please see the last page of this Exhibit 6 (“Fund Information—Footnotes”) for important disclosures related to the footnotes referenced herein.


12



EXHIBIT 6
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Fund Information — continued (Unaudited)
(dollars in thousands)
 
 
 
 
 
Assets Under Management as of March 31,
Institutional Credit Strategies
Initial Closing Date
(Most Recent Refinance Date)
 
Deal Size
 
2019
 
2018
CLOs:
 
 
 
 
 
 
 
OZLM I
July 19, 2012 (July 24, 2017)
 
$
523,550

 
$
496,427

 
$
496,487

OZLM II
November 1, 2012 (August 29, 2018)
 
567,100

 
508,375

 
508,455

OZLM III
February 20, 2013 (December 15, 2016)
 
653,250

 
608,231

 
608,049

OZLM IV
June 27, 2013 (September 15, 2017)
 
615,500

 
539,329

 
539,700

OZLM VI
April 16, 2014 (April 17, 2018)
 
621,250

 
596,133

 
594,833

OZLM VII
June 26, 2014 (July 17, 2018)
 
636,775

 
596,434

 
792,305

OZLM VIII
September 9, 2014 (November 15, 2018)
 
622,250

 
597,424

 
594,514

OZLM IX
December 22, 2014 (November 8, 2018)
 
510,208

 
500,402

 
498,466

OZLM XI
March 12, 2015 (August 18, 2017)
 
541,532

 
515,929

 
515,451

OZLM XII
May 28, 2015 (September 18, 2018)
 
565,650

 
548,622

 
548,126

OZLM XIII
August 6, 2015 (September 18, 2018)
 
511,600

 
494,476

 
494,344

OZLM XIV
December 21, 2015 (June 4, 2018)
 
507,420

 
501,227

 
501,066

OZLM XV
December 20, 2016
 
409,250

 
395,554

 
395,663

OZLME I
December 15, 2016
 
430,490

 
447,109

 
489,818

OZLM XVI
June 8, 2017
 
410,250

 
399,788

 
400,689

OZLM XVII
August 3, 2017
 
512,000

 
498,023

 
497,707

OZLME II
September 14, 2017
 
494,708

 
444,332

 
488,048

OZLM XIX
November 21, 2017
 
610,800

 
600,513

 
599,644

OZLM XXI
January 26, 2018
 
510,600

 
500,572

 
500,620

OZLME III
January 31, 2018
 
509,118

 
447,224

 
491,386

OZLM XXII
February 22, 2018
 
509,200

 
463,697

 
466,905

OZLM XVIII
April 4, 2018
 
508,000

 
498,705

 
—

OZLM XX
May 11, 2018
 
464,150

 
446,937

 
—

OZLME IV
August 1, 2018
 
479,385

 
449,838

 
—

OZLME V
December 11, 2018
 
471,987

 
449,974

 
—

 
 
 
13,196,023

 
12,545,275

 
11,022,276

STARR 2018-1
June 27, 2018
 
696,000

 
573,084

 
—

Other funds
n/a
 
n/a

 
247,284

 
153,830

 
 
 
$
13,892,023

 
$
13,365,643

 
$
11,176,106


13



EXHIBIT 6
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Fund Information — continued (Unaudited)
(dollars in thousands)
 
Assets Under Management as of March 31,
Inception to Date as of March 31, 2019
 
 
 
 
 
 
 
Total Investments
 
Realized/Partially Realized Investments (8)
 
2019
 
2018
 
Total Commitments
 
Invested Capital (9)
 
Total
Value (10)
 
Gross IRR (11)
 
Net IRR (5)
 
Gross
MOIC (12)
 
Invested Capital
 
Total
Value
 
Gross IRR (11)
 
Gross
MOIC (12)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Funds
(Investment Period)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Och-Ziff Real Estate Fund I (2005-2010) (7)
$
13,578

 
$
13,402

 
$
408,081

 
$
386,298

 
$
836,259

 
25.4
%
 
16.0
%
 
2.2x
 
$
372,720

 
$
836,306

 
26.8
%
 
2.2x
Och-Ziff Real Estate Fund II (2011-2014) (7)
100,904

 
152,257

 
839,508

 
762,588

 
1,512,869

 
32.9
%
 
21.5
%
 
2.0x
 
718,888

 
1,430,768

 
33.1
%
 
2.0x
Och-Ziff Real Estate Fund III (2014-2019)
1,483,435

 
1,461,547

 
1,500,000

 
968,036

 
1,528,878

 
31.4
%
 
21.1
%
 
1.6x
 
526,695

 
983,442

 
37.7
%
 
1.9x
Och-Ziff Real Estate Credit Fund I (2015-2020) (13)
725,200

 
697,647

 
736,225

 
143,346

 
178,753

 
n/m

 
n/m

 
n/m
 
54,186

 
68,106

 
n/m

 
n/m
Other funds
329,371

 
146,645

 
443,835

 
222,875

 
306,412

 
n/m

 
n/m

 
n/m
 
61,373

 
111,172

 
n/m

 
n/m
 
$
2,652,488

 
$
2,471,498

 
$
3,927,649

 
$
2,483,143

 
$
4,363,171

 
 
 
 
 
 
 
$
1,733,862

 
$
3,429,794

 
 
 
 
 
Unrealized Investments as of March 31, 2019
 
Invested Capital
 
Total
Value
 
Gross
MOIC (12)
 
 
 
 
 
 
Real Estate Funds (Investment Period)
 
 
 
 
 
Och-Ziff Real Estate Fund I (2005-2010) (7)
$
13,578

 
$
(47
)
 
0.0x
Och-Ziff Real Estate Fund II (2011-2014) (7)
43,700

 
82,101

 
1.9x
Och-Ziff Real Estate Fund III (2014-2019)
441,341

 
545,436

 
1.2x
Och-Ziff Real Estate Credit Fund I (2015-2020) (13)
89,160

 
110,647

 
n/m
Other funds
161,502

 
195,240

 
n/m
 
$
749,281

 
$
933,377

 
 
n/m not meaningful
Please see the last page of this Exhibit 6 (“Fund Information—Footnotes”) for important disclosures related to the footnotes referenced herein.

14



EXHIBIT 6
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
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 Oz 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, 2019 , the gross and net annualized returns since the Oz Master Fund’s inception on January 1, 1998 were 12.7% and 8.6% , 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, 2019 , 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, 2019 . 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, 2019 .
(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, 2019 , 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 has invested less than half of its committed capital; therefore, IRR and MOIC information is not presented, as it is not meaningful.

15



EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Longer-Term Assets Under Management (Unaudited)
(dollars in thousands)
Longer-Term Assets Under Management
As of March 31, 2019 , approximately 63% of the Company’s assets under management were subject to initial commitment periods of three years or longer. Incentive income on these assets, if any, is 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 that has not yet been recognized in our revenues. 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, 2019
 
Longer-Term Assets Under Management
 
Accrued Unrecognized Incentive
 
 
 
 
Multi-strategy funds
$
414,409

 
$
7,380

Credit
 
 
 
Opportunistic credit funds
3,904,029

 
152,859

Institutional Credit Strategies
13,194,489

 
—

Real estate funds
2,652,487

 
99,622

Other
224,147

 
—

 
$
20,389,561

 
$
259,861

The Company generally recognizes incentive income on its longer-term assets under management in multi-strategy funds and open-end opportunistic credit funds at or near the end of their respective commitment periods, which are generally three to five years, when such amounts are probable of not significantly reversing. The Company may begin recognizing incentive income related to assets under management in its closed-end opportunistic credit funds and real estate funds after the conclusion of their respective investment period, when such amounts are probable of not significantly reversing. However, these investment periods may generally be extended for an additional one to two years. See Exhibit 6 for fund investment periods.

16



EXHIBIT 8
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC
Financial Supplement (Unaudited)
As of April 1, 2019
 
 
 
 
 
Investors by Geography (1)
 
 
Investors by Type (1)
 
North America
70
%
 
Pensions
47
%
Asia and Other
17
%
 
Corporate, Institutional and Other
19
%
Europe
13
%
 
Private Banks
11
%
 
 
 
Fund-of-Funds
7
%
Assets Under Management by Geography (2)
 

 
Foundations and Endowments
6
%
North America
75
%
 
Family Offices and Individuals
5
%
Europe
21
%
 
Related Parties
5
%
Asia
4
%
 
 
 
 
 
 
 
 
(1)
Presents the composition of the Company’s fund investor base across its funds excluding investors in securitization vehicles within Institutional Credit Strategies products, which are held by various types of investors.
(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.

17