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Colony, Townsend explore strategic alternatives – Exclusive

The Los Angeles-based alternative asset manager is in active discussions on a potential sale of the Cleveland, Ohio-based real assets consultant and multi-manager.

Colony NorthStar is exploring strategic alternatives for The Townsend Group, less than three months after the merger that brought them together was completed, PERE has learned.

The alternative asset manager is said to be in active discussions for strategic options for Townsend, including a potential sale, according to people familiar with the matter. In conjunction with a potential sale, Townsend is looking to recapitalize its business with new capital sources, these people said.

Colony declined to comment and Townsend could not be reached at press time. However, PERE understands that Colony NorthStar is exploring a potential sale of 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.

PERE understands that a sale may not occur and a sale agreement is not imminent.

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 $56 billion real estate and investment management powerhouse.

Colony Capital, which was founded in 1991 by Tom Barrack, has long been one of the top private equity real estate firms, ranking #17 in last year’s PERE 50 ranking, having raised more than $4.25 billion in equity over the past five years.

Meanwhile, Townsend has its own investment management platform as a multi-manager, having deployed $3.8 billion in 86 co-investment and secondary 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.