US asset manager NorthStar, its former parent NorthStar Realty Finance Corp. and US private equity firm Colony Capital have agreed to merge into a single real estate investment trust with about $58 bn (€51 bn) in assets.
The combined company, to be named Colony NorthStar, will be 32.85% owned by the shareholders of NorthStar Asset Management, 33.9% by the NorthStar Realty shareholders and 33.25% by the Colony shareholders.
NSAM shareholders will also receive a special cash dividend equal to $128 mln, which represents a one-time distribution of excess NSAM taxable earnings and profits.
Richard Saltzman, chief executive of Colony Capital, will take the helm of the combined company. Thomas Barrack Jr., founder and chairman of Colony Capital, will be chairman, and David Hamamoto, chairman of NorthStar Realty, will be vice chairman.
The companies anticipate some $115 mln in cost savings annually.
'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,' said Hamamoto.
The all-stock merger is expected to close in the first quarter of next year.
'The pro forma combined enterprise's enhanced scale, diversification, and unique platforms will foster the ability to generate substantial return on equity through high quality real estate investments enhanced by attractive investment management revenues,' said Richard B. Saltzman, Chief Executive Officer and President of Colony.
