Tom Barrack’s Colony Capital Inc. (NYSE: CLNY) said it’s combining with NorthStar Realty Finance Corp. (NYSE: NRF) and NorthStar Asset Management Group Inc. (NYSE: NSAM) in an all-stock deal to form a real estate investment trust with $58 billion of assets under management.
Shareholders of each of the companies will own 33 percent or 34 percent of the new entity, which will be called Colony NorthStar Inc., the companies said Friday in a statement. Barrack will be executive chairman of the new entity while Richard Saltzman, Colony’s chief executive officer, will be CEO. David Hamamoto, chairman of NorthStar Realty, will be executive vice chairman.
The new REIT will have assets across diverse geographies and property types, from health-care facilities to hotels and manufactured housing. The combined entity will have wider access to capital and more potential for long-term growth, with a seasoned team for internal management, according to the statement.
The transaction combines three “highly compatible companies with complementary strategic priorities,” Barrack, the billionaire real estate mogul behind the 2008 takeover of Michael Jackson’s Neverland Ranch property, said in the statement. “We also will realize substantial efficiencies and synergies by bringing our organizations together and offering a well-curated menu of durable real estate business lines with broad-based capital access.”
The companies expect annual cost savings of about $115 million, about $80 million of that in cash and $35 million in stock-based compensation. The deal, expected to close early next year, requires approval of shareholders of all three companies.
NorthStar Realty Finance rose 2.7 percent to $13.84. NorthStar Asset Management slipped 1.5 percent to $12.13. Colony Capital was little changed at $18.36.
NorthStar Realty Finance hired a division of UBS Group AG to advise on a possible recombination in February. Activist investor Jonathan Litt of Land & Buildings Investment Management LLC has been pressuring NorthStar Realty to sell assets and return to an internally managed structure.
NorthStar Asset Management, which announced in January that it hired Goldman Sachs Group Inc. (NYSE: GS)to explore strategic alternatives, was spun off from NorthStar Realty Finance. Barrack last year merged his private equity firm into publicly traded Colony Financial Inc.