NorthStar buys 85% stake in Townsend

The New York-based asset management firm, one of the most active players in real estate secondaries, has acquired a majority stake in the Cleveland-based real asset adviser primarily from Chicago-based private equity group GTCR for $380 million.

NorthStar Asset Management has bought an 85 percent interest in The Townsend Group, one of the largest investment advisory firms in real assets. The New York-based asset manager will acquire the interest for approximately $380 million, primarily from Chicago-based private equity firm GTCR. Townsend previously had sold a 70 percent in the firm to Aligned Asset Managers, a portfolio company of GTCR, in August 2011. NorthStar will also purchase an additional 15 percent stake from Townsend.

Following the anticipated close of the deal in early 2016, Townsend’s management team, which includes co-founder and chief executive Terry Ahern, will own the remaining 15 percent interest and continue to manage day-to-day operations of the firm. NorthStar, a top real estate secondaries buyer, also has secured a commitment for $500 million in financing – of which Morgan Stanley Funding will be the lead provider – which will be used partly to fund the transaction.

“We are extremely pleased with this strategic opportunity to expand and accelerate our asset management capabilities, both in the United States and internationally, with the acquisition of one of the world’s premier institutional real estate asset management platforms,” said David Hamamoto, NorthStar’s executive chairman, in a statement. “Townsend, which sits at the epicenter of the global real estate market, having significant influence over $170 billion of real estate, has a brand and franchise that is second to none.”

Terry Ahern, co-founder and chief executive officer of Townsend, added: “NSAM’s long-term commitment in our firm enables us to continue to thoughtfully and responsibly develop our investment team and global platform. We are excited to partner with a team of investment professionals recognized for their culture of creativity and thought-leadership.”

Among the anticipated benefits of the acquisition, NorthStar noted Townsend’s strong revenue growth and proven track record; its durable and recurring base management fees generated from managing and advising institutional capital; its significant investor and client base, on behalf of which the firm manages approximately $13 billion of assets and advises on approximately $170 billion of assets; and its international expansion and diversification, having committed or directed $43 billion of real estate globally – of which 40 percent was outside of the US – over the last five years. The asset manager also highlighted Townsend’s intellectual capital, deep and experienced investment team and alignment of incentives for the management team, which will own 100 percent of the business not held by NorthStar.

The acquisition of the majority interest in Townsend marks the second platform investment that NorthStar has done this year. In March, NorthStar affiliate NorthStar Realty Finance bought a 15 percent stake in European fund manager Aerium for an undisclosed amount.

This article was originally published in Secondaries Investor’s sister publication PERE.