Shareholders Approve $58 Billion Colony NorthStar REIT

Shareholders have now given approval for the formation Colony NorthStar Inc., a behemoth real estate investment trust (REIT) that will have $58 billion of assets under management—including senior housing properties.

The new company will be created by the merger of Colony Capital Inc. (NYSE: CLNY), NorthStar Asset Management Group Inc. (NYSE: NSAM), and NorthStar Realty Finance Corp. (NYSE: NRF). Initially announced in June 2016, the merger now is expected to be completed in January 2017, the companies announced Tuesday.

NRF owns 461 health care properties, including nearly 200 senior housing assets. It recently sold a $1 billion stake in that health care portfolio to a Chinese insurance firm.

Advertisement

NorthStar Asset Management has been the external manager of NRF. That external management structure fell out of favor with investors, and changing that structure is part of what makes the three-way merger “compelling,” David T. Hamamoto, executive chairman of NSAM and chairman of NRF, has said in the past.

Not every investor has been on board with the plan. NSAM’s largest shareholder questioned the proposed governance structure of the combined REIT in September, echoing issues earlier raised by activist shareholder Land and Buildings.

Such qualms did not deter shareholders from green lighting the merger at respective special meetings held by the three companies, however.

“The overwhelmingly favorable shareholder vote provides support to our view that combining these three complementary companies will result in what we believe is the best outcome for all stakeholders,” Hamamoto said in a press release issued Tuesday. “We are very excited with creating such a strong partnership of already established companies and our future prospects.”

Upon closing, the leadership structure as originally proposed will be put in place: Thomas J. Barrack Jr. will be Executive Chairman of the Board of Directors of Colony NorthStar, Inc.; Hamamoto will be Executive Vice Chairman; and Richard B. Saltzman will be CEO.

Colony NorthStar will trade under the symbol “CLNS” on the New York Stock Exchange.

Written by Tim Mullaney