NEW YORK, Dec. 10, 2013 /PRNewswire/ -- NorthStar Realty Finance Corp. (NYSE: NRF) ("NRF") today announced that its Board of Directors unanimously approved a plan to spin-off its asset management business into a separate publicly traded company in the form of a tax-free distribution. The distribution is expected to be completed in the second quarter of 2014 and will be comprised of common stock in NorthStar Asset Management Corp. ("NorthStar Asset Management"), a newly formed company expected to be listed on the New York Stock Exchange.
In connection with the proposed spin-off, NorthStar Asset Management will enter into a 20-year management contract to manage NRF. NorthStar Asset Management will also manage NRF's non-traded REIT business and own its broker-dealer platform.
NorthStar Chairman and Chief Executive Officer, David Hamamoto commented, "We are constantly searching for ways to maximize shareholder value. This transaction represents a fully aligned, long-term opportunity to unlock value for NRF shareholders through the creation of a leading asset-manager. NorthStar Asset Management will have a scalable operating platform with limited capital needs and a proven ability to grow."
Mr. Hamamoto continued, "This unique transaction crystalizes the value of NRF and its platform, and allows our shareholders to be the beneficiaries of a long-term contract to manage a diversified public company, a rapidly growing non-traded REIT platform and a broker-dealer."NorthStar Asset Management and Management Contract NorthStar Asset Management will be led by the current NRF management team, which has a proven track record in managing and growing NRF and its non-traded REIT platform. The company's in place, long-duration and high margin revenue streams, together with substantial growth prospects, position it as an industry leading asset manager. In connection with the proposed spin-off, the 20-year management contract that NorthStar Asset Management will enter into with NRF will provide for (i) an annual base management fee of $90 million, (ii) an additional annual base management fee equal to 1.5% of the cumulative "equity" raised at NRF after December 10, 2013, and (iii) incentive fees to be determined as follows:
- 15% incentive fee payable when cash available for distribution at NRF ("CAD") exceeds $0.78 per share (equivalent to a 12% yield on September 30, 2013 adjusted book value of $6.46 per share); and
- 25% incentive fee payable when CAD exceeds $0.90 per share (equivalent to a 14% yield on September 30, 2013 adjusted book value of $6.46 per share).