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
  • Strong revenue growth and proven track record, including 19% total revenue CAGR since 2000
  • Opportunity to leverage respective platforms to drive future growth

• Durable and Recurring Management Fee Concentrated Business Model
  • 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
  • Stability through various cycles without a single decline in year-over-year annual revenues 

• CAD Accretion
  • $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
  • Meaningful opportunities to increase CAD accretion in the future

• Significant Investor and Client Base of Leading Global Institutional Investors
  • Currently manages approximately $13 billion of assets (approximately 80% of revenue) and advises on approximately $170 billion of assets (approximately 20% of revenue) 
  • Increases pro-forma NSAM assets under management to approximately $38 billion

• International Expansion and Diversification
  • Committed/Directed $43 billion of global real estate in the last five years, including 40% internationally

• Intellectual Capital and Information Advantages
  • 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
  • Integrated platform with comprehensive real estate coverage and global footprint of investment skills

• Alignment of Incentives for Key Management
  • 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
  • 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.