Colony Capital in talks to buy NorthStar

The investment manager is in exclusive talks with the global asset management firm, which has been active in real estate secondaries.

Colony Capital and NorthStar Realty Finance announced on Friday they have entered into exclusive negotiations to acquire NorthStar Asset Management (NSAM), the New York-based global asset management firm.

Colony, NorthStar Asset Management and NorthStar Realty Finance said the talks involved a joint proposal from Colony and NorthStar Realty Finance for “a tri-party all-stock ‘at the market’ business combination,” in a statement,

They added: “The three companies believe that the combination would create a world-class diversified real estate and investment management equity REIT with significant scale, deep management talent, and the opportunity to generate substantial revenue and expense synergies.”

The deal is not guaranteed to occur and no terms are known, the three parties said. Interim updates on the progress of negotiations will not be provided.

In March, NorthStar said it was exploring options to sell its real estate fund portfolio to finance the repurchase of its common stock and repay debts, hiring an advisor to sell all or a portion of its real estate private equity fund interests worth close to $1 billion.

In January, the firm was “considering strategic alternatives”, including a potential sale as a result of devaluation in its share price. “We believe our current share price undervalues the Company,” executive chairman David Hamamoto said in a statement at the time. “Our board of directors and management have always been committed to acting in the best interests of our shareholders and we are aggressively seeking ways to maximise shareholder value.”

NSAM spun out of NorthStar Realty Finance in 2014 and managed $38 billion in real estate assets as of December 31, according to its website. In January, the firm bought an approximately 84 percent stake in The Townsend Group from Chicago-based private equity firm GTCR for about $383 million.

Bloomberg first reported on Friday that Colony was nearing a deal to buy NSAM.