NEW YORK CITY—Fortress Investment Group LLC has reached an agreement in principle with Mount Kellett Capital Management to become co-manager of Mount Kellett's investment funds and related accounts. Mount Kellett affiliates will continue to serve as general partner of the funds, while affiliates of Fortress will become special limited partners of the funds.

Deal terms were not disclosed; the Wall Street Journal reported that Fortress would invest $200 million in Mount Kellett's funds. Further, PERE reported Tuesday that Fortress would effectively acquire the funds and Mount Kellett's operating platform. The deal is set to close by June 30, subject to the approval of Mount Kellett's investors.

Between them, the two firms have more than $6 billion in commercial property assets under management, and the agreement brings together teams with extensive experience in special situations and sector-specific knowledge of credit and global real estate. Mount Kellett co-founder Mark McGoldrick and Fortress principal and co-chairman Peter Briger are both alumni of Goldman Sachs, and formed Goldman's special situations group in the 1990s. Briger left Goldman in 2002 to join Fortress, with McGoldrick departing five years later to launch Mount Kellett with fellow Goldman veteran Jason Maynard.