- Posted at 12:37, December 23, 2013
- By Russ Bleemer
A big New York City-based REIT is investing in another big New York City real estate investment firm.
New York Stock Exchange-traded NorthStar Realty Finance Corp. announced this morning that it invested $340 million investment in RXR Realty.
The deal includes "a combination of corporate debt, preferred equity and common stock in RXR which provides NorthStar with an approximately 30% ownership interest in RXR."
NorthStar's recent corporate moves figure in its handling of the RXR investment. Earlier this month, NorthStar announced it would spin off an asset management business into a separate publicly traded company, expected to be completed in 2014's second quarter.
The move will convert NorthStar Realty Finance to an externally managed REIT from its current internally organized structure.
The company says it has more than $10 billion under management as of Sept. 30, with the largest chunk, $3.8 billion, in its property holdings. But it also has an equal amount of investments in its real estate securities holdings, and in assets underlying real estate debt obligations; NorthStar values the combined categories at nearly $4.2 billion.
The new company, NorthStar Asset Management, will enter into a 20-year management contract to manage NorthStar Realty Finance. The new company also will also manage NorthStar Realty Finance's s non-traded REIT business and own its broker-dealer platform.
Today, in a statement, NorthStar's Chairman and Chief Executive Officer, David Hamamoto, said that RXR is "a perfect fit for NorthStar, both in terms of further diversifying NorthStar's asset base with trophy properties in New York City, and growing NorthStar's asset management business."
In connection with the recently announced planned spin-off of NorthStar Asset Management, we will be evaluating alternatives for including NorthStar's portion of RXR's asset management business as part of the assets that NorthStar Asset Management will receive in the spin-off. This transaction with RXR is the first of many opportunities that we hope to execute on as we begin to scale our asset management business.
RXR is a private firm formed in 2007 that focus its real estate ownership and management investments in Manhattan, Long Island and New Jersey. Among its buildings are the landmarked 75 Rockefeller Plaza, 340 Madison Ave., and 237 Park Ave., which has been in the news recently (on QuidnuncRE, HERE).
The press release says that NorthStar and RXR "intend to immediately begin working together on raising capital through NorthStar's distribution network to complement the activities of RXR's current investment vehicles and future funds."
It adds that the new NorthStar Asset Management company "will be entitled to 50% of the asset management fees from any capital raised through its distribution network and will be entitled to additional asset management fees through its proportionate ownership interest in RXR."
You can see NorthStar's announcement, as well as comments from RXR's Chairman and Chief Executive Officer, Scott Rechler, on NorthStar's website HERE.