NEW YORK CITY—NorthStar Realty Finance Corp. is planning to spin off its asset management business this coming Monday with a distribution of all outstanding common stock of Northstar Asset Management Group and a reverse stock split of its own common stock. NSAM will begin trading on the New York Stock Exchange the following day.
First announced this past December, the spinoff entails a 20-year contract for NSAM to manage NRF, with terms including an annual base management fee of $90 million and an additional annual base management fee equal to 1.5% of the cumulative equity raised at NRF after Dec. 10, 2013, along with incentive fees. It will be led by the current NRF management team, including chairman and CEO David Hamamoto. In addition, NSAM will manage NRF’s non-traded REIT business and own its broker-dealer platform.
This past December, Hamamoto said the spinoff represented “a fully aligned, long-term opportunity to unlock value for NRF shareholders through the creation of a leading asset-manager. NorthStar Asset Management will have a scalable operating platform with limited capital needs and a proven ability to grow.” Further, he said that it “crystalizes the value of NRF and its platform, and allows our shareholders to be the beneficiaries of a long-term contract to manage a diversified public company, a rapidly growing non-traded REIT platform and a broker-dealer.”
NRF will continue trading on the NYSE under its current ticker symbol after July 1, but will have a new CUSIP number, 66704R 704. In connection with the distribution of NSAM stock, NRF is conducting an internal corporate reorganization and a one-for-two reverse stock split of its common stock, in which NorthStar Realty will merge with and into its subsidiary, NRFC Sub-REIT Corp., and the survivor will be re-named NorthStar Realty Finance Corp.
Earlier this month, NRF and Chatham Lodging Trust closed on a 47-asset joint venture in which NRF bought out Cerberus Capital Management‘s 89.7% interest for $958.5 million. The extended-stay and select service portfolio is concentrated mainly on the East and West coasts and mainly affiliated with Marriott or Hilton brands.