The three-way merger of Colony Capital, NorthStar Asset Management (NSAM) and NorthStar Realty Finance (NRF) has been approved by all three firms’ shareholders, the companies said on Tuesday.
The companies agreed to the deal in June, PERE previously reported. The new real estate investment trust, which will have $58 billion in assets under management, is called Colony NorthStar and will be listed on the New York Stock Exchange when the merger is completed in January, according to Tuesday’s announcement.
“This merger is the result of decades of long line relationships by all three companies aligning into one powerful, global real estate and real asset investment manager,” Thomas Barrack, the founder of Colony Capital, said in the statement.
Barrack will be the executive chairman of Colony NorthStar’s board of directors. Colony’s current chief executive will be the CEO of the merged company, and David Hamamoto, the current executive chairman of NSAM and the chairman of NRF, will be the executive vice chairman of the new firm.
In June, Barrack said a major driver for the merger was to create an entity that would be significantly more competitive in the marketplace.
“The world is changing and everybody talks about scale,” he said, speaking during a second-quarter analyst call in June. “The reason we’re so enthused about this is it would take decades for any of the three companies to not only achieve the scale in AUM, but to find those silos, with athletes that are in those silos, for proprietary deal sourcing on one side, and all the verticals for distribution on the other. Now we have institutional distribution, public distribution, retail distribution, and you’ve got best-in-class athletes, and basically 16 varying businesses today combined.”
Barrack noted that the combination would also respond to the growing trend among institutional investors to scale down their base of investment managers in favor of fewer, longer-term relationships. “I think we’re amazingly positioned for the next round of scrutiny to come from that institutional market, which wants scale, athletes, proprietary deal sourcing and other verticals,” he said.
In January, NSAM announced that it was considering strategic alternatives for the firm, including a potential sale as a result of devaluation in its share price. The firm spun out of NRF in 2014 and managed $38 billion in real estate assets as of December 31, according to its website.
Colony Capital itself became a public company in April 2015 when it combined with its publicly-traded mortgage real estate investment trust, Colony Financial.
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