NEW YORK AND LOS ANGELES — NorthStar Asset Management Group Inc. (NYSE: NSAM), Colony Capital Inc. (NYSE: CLNY) and NorthStar Realty Finance Corp. (NYSE: NRF) have entered into a definitive merger agreement under which the companies will combine in an all-stock merger to create a diversified global equity REIT with a total capitalization of $17 billion.
NorthStar Realty Finance Corp. invests in a wide variety of real estate, including healthcare. Of its healthcare portfolio, the vast majority is seniors housing.
NorthStar Asset Management Group (NSAM), which is currently publicly traded but not a REIT, will elect to be treated as a REIT beginning in 2017. Additionally, NRF and Colony, through a series of transactions, will merge with and into NSAM.
The company, to be named Colony NorthStar Inc., will have $58 billion of assets under management, placing it in the top quartile of the REIT sector overall. Upon completion of the transaction NSAM shareholders will own approximately 32.85 percent, Colony shareholders will own approximately 33.25 percent and NRF shareholders will own approximately 33.90 percent of the combined company.
“We are incredibly excited to merge with Colony to create a global real estate leader well positioned for long-term growth,” says David Hamamoto, executive chairman of NSAM and chairman of NRF. “This strategic combination is the next logical step for NSAM and NRF, creating substantial value for shareholders and transforming the companies into a world-class, internally managed equity REIT that includes a sizable, established institutional and retail asset management platform.”
“We are confident that Colony NorthStar with its lower leverage, larger balance sheet and improved liquidity profile is poised for meaningful multiple expansion and substantially enhanced long-term returns for shareholders,” he adds.
Approximately $115 million in total annual cost synergies, consisting of approximately $80 million of cash savings and $35 million of stock based compensation savings, is expected to be realized post-closing.
Current Colony CEO Richard Saltzman will serve as CEO of the new entity. David Hamamato, executive chairman of NSAM and chairman of NRF, will serve as executive vice chairman of Colony NorthStar. Thomas Barrack Jr., who founded Colony, will be executive chairman of the board for the new REIT.
New York-based NorthStar Asset Management Group is a global asset management firm focused on managing real estate and other investment platforms in the United States and internationally. As of March 31, NSAM had $23 billion of assets under management. The company’s stock price closed at $12.31 per share on Thursday, June 2, down from $21.51 per share a year ago.
NorthStar Realty Finance is a publicly traded REIT and is managed by an affiliate of NorthStar Asset Management Group Inc. NRF’s core business activities include acquiring commercial real estate properties, making opportunistic investments such as indirect interests in real estate through private equity real estate funds and originating, structuring and acquiring commercial real estate debt. NRF’s stock price closed Thursday, June 2 at $13.48 per share, down from $18.09 a year ago.
Los Angeles-based Colony Capital is a global real estate and investment management firm. Colony has sponsored $24 billion of equity across a variety of distinct funds and investment vehicles that collectively invested over $60 billion of total capital. Colony’s stock price closed Thursday, June 2 at $18.36 per share, down from $25.47 a year ago.
— Christina Cannon