NorthStar Asset Management Group Inc. said Thursday it has agreed to buy a roughly 85 percent stake in The Townsend Group. for about $380 million. GTCR is the seller. New York-based Townsend is a specialty real estate advisory and investment firm. NorthStar said it has obtained a $500 million financing commitment, which is being led by Morgan Stanley Senior Funding Inc. The deal is expected to close in early 2016. Morgan Stanley advised NorthStar.
NEW YORK, Oct. 15, 2015 /PRNewswire/ — NorthStar Asset Management Group Inc. (NYSE: NSAM) today announced it has entered into a definitive agreement to acquire an approximately 85% interest in The Townsend Group (“Townsend”), a leading global provider of investment management and advisory services focused on real assets. Founded in 1983, Townsend is the manager or advisor to approximately $180 billion of assets, designing customized strategies and building distinctive portfolios for its world-class institutional investor base.
Following the closing of the transaction, Townsend’s management team will own the remainder of the business and will continue to direct day-to-day operations. Subject to the terms and conditions of the purchase and sale agreement, NSAM will acquire the interest in Townsend for approximately $380 million, predominately from funds affiliated with private equity firm GTCR LLC. NSAM has obtained a commitment for $500 million of financing which will be used to fund the transaction and for general corporate purposes, including repurchases of its common stock. The transaction is expected to close in early 2016.
David Hamamoto, Executive Chairman of NSAM, commented, “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. 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.”
Al Tylis, Chief Executive Officer of NSAM, commented, “Townsend has a culture based upon service and success, resulting in deep relationships with a client roster that includes many of the world’s leading institutional investors, which will continue to benefit from Townsend’s scale, scope and information advantages. Townsend’s business model will be highly complementary to NSAM and, beyond the immediate expected CAD accretion to NSAM, we look forward to strong growth from this partnership and will seek to leverage each other’s platforms to further create substantial value for NSAM shareholders and Townsend clients.”
Terry Ahern, Co-Founder and Chief Executive Officer of Townsend, commented, “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.”
Key Expected Strategic Benefits
• Revenue Growth
o Strong revenue growth and proven track record, including 19% total revenue CAGR since 2000
o Opportunity to leverage respective platforms to drive future growth
• Durable and Recurring Management Fee Concentrated Business Model
o Provides durable and recurring base management fees generated from managing and advising institutional capital in addition to the public company and retail capital currently managed by NSAM
o Stability through various cycles without a single decline in year-over-year annual revenues
• CAD Accretion
o $0.07 per share of annualized CAD accretion in 2016, based on expected in-place earnings at closing and expected cost of committed debt financing for the transaction, excluding any cost or revenue synergies
o Meaningful opportunities to increase CAD accretion in the future
• Significant Investor and Client Base of Leading Global Institutional Investors
o Currently manages approximately $13 billion of assets (approximately 80% of revenue) and advises on approximately $170 billion of assets (approximately 20% of revenue)
o Increases pro-forma NSAM assets under management to approximately $38 billion
• International Expansion and Diversification
o Committed/Directed $43 billion of global real estate in the last five years, including 40% internationally
• Intellectual Capital and Information Advantages
o Investment or oversight of approximately $180 billion in assets creates information, sourcing and execution advantages, as well as other intangible benefits
• Deep and Experienced Investment Team
o Integrated platform with comprehensive real estate coverage and global footprint of investment skills
• Alignment of Incentives for Key Management
o Townsend management team will own 100% of the equity in the business not owned by NSAM and will continue to direct day-to-day operations
o Invested in the successful long-term prospects of the business and NSAM
Morgan Stanley & Co. LLC has acted as sole financial advisor to NSAM on this transaction and Morgan Stanley Senior Funding, Inc. is the lead provider of the $500 million debt financing commitment to NSAM.
About NorthStar Asset Management Group
NorthStar Asset Management Group Inc. (NYSE: NSAM) is a global asset management firm focused on strategically managing real estate and other investment platforms in the United States and internationally. For more information about NorthStar Asset Management Group Inc., please visit www.nsamgroup.com.
About The Townsend Group
The Townsend Group is the leading global provider of investment advisory and investment solutions for real estate, infrastructure, timber and agriculture. With a culture based upon service and success measured by investment performance, Townsend’s clients include many of the world’s leading institutional investors. As of December 31, 2014, Townsend’s advised assets were approximately$170 billion; as of June 30, 2015, Townsend’s assets under management were approximately $12.8 billion. For more information about The Townsend Group, please visit townsendgroup.com.
Safe Harbor Statement
This press release contains certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. Forward looking statements are generally identifiable by use of forward looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “project,” “predict,” “hypothetical,” “continue,” “future” or other similar words or expressions. Forward looking statements are not guarantees of performance and are based on certain assumptions, discuss future expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward looking information. Such statements include, but are not limited to, whether the transaction will be completed on the terms contemplated or at all; whether NSAM will obtain financing for the transaction on the terms contemplated in the commitment or at all; NSAM’s ability to use any financing obtained for the contemplated uses, including stock repurchases, as well as NSAM’s ability to comply with any limitations, restrictions or covenants in such agreements; Townsend’s ability to exert significant influence over the assets for which it provides management or advice; whether Townsend’s clients will continue to benefit from its scale, scope and information advantages, or at all; Townsend’s ability to design customized strategies and build distinctive portfolios; whether Townsend’s business model will be highly complementary to NSAM; the strength and value of Townsend’s brand and franchise; Townsend’s ability to maintain or grow its client base of institutional investors, both domestically and globally; NSAM’s ability to grow, expand and accelerate its asset management capabilities as a result of the transaction, Townsend’s growth or otherwise; the ability of NSAM and Townsend to leverage each other’s platforms to further create substantial value for NSAM shareholders and Townsend clients, or at all; NSAM’s ability to achieve immediate CAD accretion in the amount contemplated or at all; whether NSAM will have the ability to increase CAD accretion in the future; Townsend’s ability to continue to thoughtfully and responsibly develop its investment team and global platform; NSAM’s ability to achieve strategic benefits from the transaction, including, but not limited to, Townsend’s ability to continue its proven track record, its revenue growth, including the stability of such revenues, ability to leverage platforms, Townsend’s ability to generate durable and recurring base management fees, and information, sourcing and execution advantages; whether the equity ownership of Townsend management team will be completed on the contemplated terms and whether such ownership will successfully align incentives for management; the impact of Townsend management’s equity ownership on the long-term prospects of the business and NSAM; and the factors described in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, under the heading “Risk Factors.”
The foregoing list of factors is not exhaustive. All forward looking statements included in this press release are based upon information available to us on the date hereof and we are under no duty to update any of the forward looking statements after the date of this report to conform these statements to actual results.
Factors that could have a material adverse effect on our operations and future prospects are set forth in “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The factors set forth in the Risk Factors section and otherwise described in our filings with United States Securities and Exchange Commission could cause our actual results to differ significantly from those contained in any forward looking statement contained in this press release.
SOURCE NorthStar Asset Management Group Inc.