Centerbridge Partners LP
Last Updated: 12/3/2020
Centerbridge Partners LP is a Limited Partnership that started in 2006 and is primarily owned and controlled by Jeffrey H. Aronson and Mark T. Gallogly.
Centerbridge serves as the management company with discretionary trading authority to private pooled investment vehicles, and a subadvisor to a number of funds including: Credit Partners Funds, Special Credit Funds, Capital Parnters Funds, Real Estate Fund, and Coinvestment Vehicles.
In October 2019, Centerbridge announced to investors that Mr. Gallogly plans to retire from the Firm in October 2020, and upon his retirement, Mr. Aronson will be the sole Managing Principal.
Centerbridge Partners LP operates out of an office in New York, NY. Based on the Form ADV filed on 2020-03-30 00:00:00, the investment firm is comprised of 263 employees, only 100 of whom performs investment advisory functions.
- Name: Centerbridge Partners LP
- CRD No: 157359
- Filing Recorded: 2020-03-30 00:00:00
- Year of Origin: 2006
- Employees: 263
- Clients: 18
- AUM: 21,711,411,143
- Management Fee: 1.25 to 1.5 Percent
- Performance Fee: 20 Percent
- Client Type: Pooled Investment Vehicles
- Assets Traded: Unspecified
According to the brochure submitted to IAPD, Centerbridge Partnerss investment strategy is as follows:
The Credit Funds employ a multi-pronged analytical approach to private credit investing that combines elements of traditional value investing (assessing the longterm intrinsic value of an investment in relation to its market price and focusing on those situations where value and price materially diverge) together with event and legal analysis. Through such analysis, Centerbridge seeks to consistently assess the risks of each investment and the Credit Funds’ portfolios as a whole – in particular, the risk of a permanent loss of capital as opposed to mark-to-market price fluctuations – with a view toward generating superior risk-adjusted returns. The investment strategy revolves around a disciplined research process and is based on the belief that a thorough understanding of a company and its industry is essential to generating positive absolute returns. Centerbridge expects to apply its substantial experience in analyzing and assessing a company’s valuation, capital structure, financial performance and underlying industry dynamics in order to capitalize on market imbalances, event-driven situations and other mispriced opportunities. Such investments might include issuers who are the subject of corporate reorganizations, restructurings, liquidity crises, mergers, spin-offs, leveraged buyouts or credit rating changes or other situations when the market may be mispricing an asset’s intrinsic value.
The Capital Partners Funds seek to opportunistically make primarily (i) private equity (i.e., buyout) investments using Centerbridge’s experience in a targeted range of industry verticals, (ii) distressed investments with the primary purpose of obtaining influence over or control of financially troubled companies and (iii) structured investments with the primary purpose of investing in an equity position of significant influence or control (with all of the attendant portfolio company management tools and approaches) and seeking to limit downside through various structural features. Centerbridge’s investment team has extensive experience investing domestically and abroad, and Centerbridge focuses the Capital Partners Funds’ investment activities principally in North America and Europe but from time to time pursues opportunities in other geographies. Centerbridge’s ability to bridge private equity and distressed investment strategies provides the Capital Partners Funds with considerable flexibility to adapt to different market conditions. Centerbridge believes that this complementary approach has several competitive advantages, including: (i) a flexible investment approach; (ii) a reduced need to “time” the market, as the strategies generally are countercyclical; (iii) expanded sources of deal flow; (iv) enhanced industry relationships and insights; and (v) broadened due diligence, investment execution and value creation skill sets. Centerbridge’s restructuring experience informs a general preference for conservative leverage, particularly in the case of businesses emerging from bankruptcy proceedings.
CPREF continues Centerbridge’s historical approach to real estate investing by seeking investments throughout the capital structure where Centerbridge identifies and believes it has the opportunity to create or capture value across three types of real estate transactions: Corporate Platforms, Loans and Securities and Direct Assets. CPREF employs Centerbridge’s value-oriented approach with an emphasis on downside protection and invest when it believes the market price of the company, instrument or asset is meaningfully below the intrinsic value of its underlying real estate.
Methods of Analysis
In addition, Centerbridge Partnerss methods of analysis include:
The Credit Funds seek to minimize downside risk and protect principal by performing intensive credit research and actively monitoring the risk of each investment (including leveraging insights derived from Centerbridge’s private equity and portfolio operations activities). In general, with respect to investments in restructuring transactions, Centerbridge tends to focus on senior or secured debt instruments issued by North American and European domiciled companies in light of the downside protection inherent in such instruments and their superior legal rights in Chapter 11 or similar statutory reorganization contexts, along with other jurisdictions where the rule of law is clear, welldeveloped and respected. In pursuit of their investment objectives, the Credit Partners Funds have authority to use leverage and the Special Credit Funds have limited authority to do so on a non-recourse, asset-level basis. Among the ways the Credit Funds seek to manage potential downside risk is the use of hedging techniques, such as interest rate, currency or other forms of hedging through options, forwards, derivative contracts (including credit default swaps with one or more reference assets) or other instruments.
In regards to Capital Partners Funds, In private equity transactions, Centerbridge seeks to employ a variety of structures (including leveraged buyouts, recapitalizations, turnarounds, corporate buildups and growth opportunities) as well as forms (including common stock, preferred equity or debt of portfolio companies). In these transactions, Centerbridge seeks to invest opportunistically, employing rigorous analysis coupled with a value orientation across a broad range of targeted industry verticals, and approaches each investment with a defined thesis and a plan to add value to the business.
In distressed for influence or control transaction structures, Centerbridge invests through various distressed or defaulted debt instruments, including loans, publicly and privately traded bonds, including high yield bonds and “fallen angels,” trade claims, direct capital investments and other privately or publicly held instruments and claims. Specifically, it seeks to position the Capital Partners Funds to acquire material stakes in debt instruments or claims, including control or “blocking” positions in certain classes of debt, in an effort to acquire control of, or an influential equity stake in, the targeted business. This may result in the Capital Partners Funds receiving, in exchange for their holdings, cash, new debt or equity securities or a significant equity stake in, or outright control of, a reorganized company. In effectuating restructuring transactions, the Capital Partners Funds sometimes serve on official or unofficial creditors’ committees to implement their strategy or act unilaterally in certain circumstances. In addition, the Capital Partners Funds act occasionally as a lender to distressed companies through syndicated or bilateral credit facilities, including “rescue financings” and debtor-in-possession loans extended in the context of a Chapter 11 reorganization or equivalent protections under the laws of other jurisdictions.
For CPREFs, Centerbridge invests in Corporate Platforms where it can own or control a high-quality real estate company at what it believes to be a meaningful discount to the intrinsic value of such company’s assets or where Centerbridge believes its basis compares favorably to its expectations for the company’s future earnings prospects. Centerbridge invests in Corporate Platforms when it sees the opportunity to improve operations and / or management (bringing to bear the skills of the Centerbridge’s portfolio operations team), benefit from the existing management team’s deep experience, accretively invest additional capital into capex or add-on acquisitions, improve the company’s capital structure (e.g., amount, cost, duration and / or covenants of financing) and / or expand the company’s market position in a fragmented asset class.
Centerbridge invests in Loans and Securities, including corporate credit (e.g., secured, unsecured, term loans and revolvers), preferred / common equities, derivatives, hybrid securities and commercial mortgage-backed securities, when it can acquire a position at a meaningful discount to its intrinsic value and / or where it believes that it can create or capture value in a special situation by influencing or controlling a workout or reorganization by leveraging Centerbridge’s deep experience in restructuring.
Centerbridge makes Direct Asset investments when it believes that it can invest in a property or portfolio of properties in a market with highly favorable supply / demand dynamics at a meaningful discount to its intrinsic value and replacement cost and may collaborate with local operating partners to seek to drive value creation. Centerbridge seeks to acquire transitional assets within high barrier-to-entry markets when it sees an opportunity either to reposition assets to optimize performance and value or where the investment presents attractive optionality with multiple potential ways to achieve the investment’s potential. Centerbridge seeks to make Direct Asset investments where it believes that the complexity of the asset’s operations, capital structure or ownership structure masks the real estate’s true value. The real estate team seeks to improve a property, oftentimes in partnership with highly experienced local operating partners, through targeted capital expenditures or by implementing operational improvements.
Top 10 Holdings from Form 13F
Reporting Period: 09/30/2020
|AMERICAN RENAL ASSOCS HLDGS
|GENCO SHIPPING & TRADING LTD
|GENCO SHIPPING & TRADING LTD
|EXTENDED STAY AMER INC
|AVALONBAY CMNTYS INC
|FOCUS FINL PARTNERS INC
|GENCO SHIPPING & TRADING LTD
Historical 13F Filings
EdgeGiant has compiled all 13F filings since Q2 2013 for your convenience. You can view historical portfolio position forCenterbridge Partners LPin our 13F section HERE.
To get the comprehensive list of holdings that fall under 13F regulatory guidelines, check out our write up on how to access and use 13Fs in your personal investment decisions.