Northstar Realty Finance (NRF) has not only had a big year — but is boasting big for its dividends of over 7%
The finance real estate investment trust has since seen shares add 19% to $11.82, contributing more than $400 million to its market capitalization. That puts its worth at some $2.8 billion.
According to the Street, “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.”
Investors are excited because the move will give Wall Street the chance to value Northstar’s asset management arm all on its own — which is gain ground on a quick basis.
Analysts are also smiling about its earnings potential following the announcement — and are treating the NRF stock accordingly.
“NorthStar Asset Management will have a scalable operating platform with limited capital needs and a proven ability to grow,” said Chairman and CEO David Hamamoto. “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.”
The new venture provides a solid structure to the company, which has already seen strong growth during the year. It’s up 66% year to date.
As Cash Machine’s Brian Perry notes, “NorthStar is more fully engaged in what would be termed commercial mortgage-backed securities (CMBS). The company doesn’t just trade in secondary markets, but rather it originates and structures debt investments, net leases, mezzanine loans, credit tenant loans and other collateralized debt obligations (CDOs) that represent approximately 44% of its portfolio holdings.”
The company also is expanding its presence in net lease property management, acquiring commercial real estate assets throughout the United States that are leased to corporate tenants including health care operators, general purpose office, industrial and retail, with the highest concentration in skilled and assisted health care facilities. The net lease operations make up about 14% of the company’s portfolio.
… NorthStar is growing its mortgage servicing business for its portfolio as well as for other third parties on a fee basis, acting as a market maker for non-traded REITs and CMBS securities while providing interim financing to counterparties for secured term financing.