Hedge fund urges NorthStar Asset, NorthStar Realty to recombine

(Reuters) - An activist hedge fund urged NorthStar Asset Management Group Inc, which is exploring strategic options, to consider folding back into former parent NorthStar Realty Finance Corp to increase value for shareholders of both companies.

The companies' shares have more than halved in value from their highs last year since the "grand experiment of spinning off" NorthStar Asset (NSAM) from NorthStar Realty (NRF) in 2014, Land and Buildings Investment Management LLC said.

NSAM shares rose 8.1 percent to $11.55 in morning trading on Friday, while NRF shares increased 7 percent to $12.20.

NSAM could sell its public REIT management contracts with NRF for nearly $2.6 billion and use the proceeds to pay a special dividend of $13 per share, Land and Buildings founder and Chief Investment Officer Jonathan Litt said in a letter.

NRF "is the most logical buyer, although the contract could be a coveted asset to other investors," Litt wrote in the letter to NSAM Executive Chairman David Hamamoto.

Litt said externally managed REITs, such as NRF, have historically struggled to gain institutional investor support, given the "misaligned incentives" between the manager and the REIT.

"Once reconstituted, NRF could again be positioned to grow as it will be an internally advised and managed REIT," said Litt, a former Citigroup Inc REIT analyst.

Litt again urged NSAM to extend the deadline to nominate directors and asked the company to immediately appoint new independent directors.

(Reporting by Radhika Rukmangadhan in Bengaluru; Editing by Saumyadeb Chakrabarty and Kirti Pandey)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Roblox expands tools to help creators build, distribute games
• Arizona accuses L'Oreal of concealing cancer risks linked to hair relaxers
• US court blocks Trump administration bid to keep Michigan coal plant open