NEW YORK (TheStreet) -- Northstar Realty Finance Corp (NRF) was soaring on the news it plans to separate its asset management business to form an individual publicly listed entity. The company's core business involves structuring and acquiring commercial real estate and related debt, although a branch of the business concerned with managing those assets has blossomed.
The spinoff will take the form of a tax-free distribution and is expected to reach completion in the second quarter of 2014. The company noted the newly formed NorthStar Asset Management Corp will most likely be listed on the New York Stock Exchange.
Since it announced the split after the bell Tuesday, shares have added 19% to $11.82, contributing more than $400 million to its market capitalization. By late afternoon, the commercial real estate investment trust was worth $2.84 billion.
"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," said CEO and Chairman David Hamamoto in a statement.
Deutsche Bank reiterated its "buy" rating on the New York-based business following the announcement.
"The separation of the asset management business will create value for shareholders, as the management company will trade at higher multiples than the traditional mortgage REIT and real estate business. While our target is $12.50 per share, we believe it represents a conservative valuation of the combined business," wrote analyst Stephen Laws in a report.