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Colony NorthStar gets 12 bids for Townsend – Exclusive

The Los Angeles-based real estate and investment management firm is said to be close to selecting a winning bidder.

Colony NorthStar has attracted a flock of bidders for The Townsend Group since it began exploring a potential sale of the Cleveland, Ohio-based real assets consultant and multi-manager earlier this year.

The firm, led by executive chairman Thomas Barrack, has received a dozen bids over the past few months, according to two people familiar with the sale. Of those 12 bidders, seven or eight are understood to have advanced to the second round, and Colony NorthStar is said to be close to selecting a winning bidder. A sale agreement, however, is not necessarily imminent.

The so-called highwater mark for the bidding process was unclear, but Townsend is expected to trade in the hundreds of millions of dollars, sources said. Morgan Stanley is understood to be handling the sale on behalf of Colony NorthStar. Both firms declined to comment, and Townsend could not be reached at press time.

In April, PERE reported that Colony NorthStar was exploring strategic alternatives for Townsend, including a potential sale. In conjunction with the sale, Townsend also was said to be seeking to recapitalize its business with new capital sources.

PERE understands that Colony NorthStar wants to sell Townsend because majority ownership of an asset manager does not fit with Colony NorthStar's business model as a real estate investment trust, which owns only real estate assets.

In October 2015, NorthStar Asset Management, one of the predecessor entities to Colony NorthStar, agreed to acquire an 85 percent interest in Townsend for $380 million. Subsequently, NorthStar Asset Management entered into a three-way merger with Colony Capital and NorthStar Realty Finance. The merger closed in January, creating a real estate and investment management powerhouse with $56 billion of assets under management as of March 31.

Meanwhile, Townsend has its own investment management platform as a multi-manager, having deployed $3.8 billion in 86 co-investment and secondaries transactions with more than 50 real estate investment managers and operators throughout Europe, Asia and the Americas since 2007.

Most recently, Townsend held a final close in 2016 for its global private real estate fund, Townsend Real Estate Alpha Fund II, collecting $496 million in commitments. As of September 30, Townsend had $15 billion of assets under management and $173.1 billion of advised assets.