LOS ANGELES—Publicly traded REIT Colony Financial Inc. and Colony Capital LLC are making it official, swapping their previously announced non-binding agreement to merge with a definitive one. The deal is valued at up to $657.5 million, and calls for substantially all of Colony Capital's real estate and investment management businesses and operations to go to CLNY. Representing about $19 billion in assets under management and $13 billion of equity under management, the deal does not include Colony American Homes, the self-managed REIT in the single-family rental sector.

The combined company will be led by Colony Capital's executive chairman, Thomas Barrack, and its CEO, Richard B. Saltzman. Both have entered into five-year employment agreements with CLNY to become effective when the merger closes, and will continue to oversee and manage the day-to-day business operations of the group. As the two companies announced last month, all of Colony Capital's senior executives will move over to CLNY under three-year employment agreements.

When the then-non-binding agreement was announced in November, CLNY and Colony capital said the merger would simplify matters by uniting the two entities' investment activity and resources “under a single, transparent structure.” Post-merger, CLNY will become the sponsor of new funds under the Colony name. The deal is expected to close in the first half of 2015, pending shareholder and regulatory approval.

The merger announcement comes five weeks after CLNY made its first foray into the industrial sector, saying that it would acquire Cobalt Capital Partners and its 30-million-square-foot industrial portfolio for $1.6 billion. Comprised mainly of light industrial, the portfolio spans 16 markets across the US, with an emphasis on the Atlanta, Chicago and Dallas metro areas.