Colony NorthStar Inc. (NYSE: CLNS), a real estate and investment management firm, has entered into a definitive agreement to sell The Townsend Group to insurance broker Aon plc (NYSE: AON) for $475 million, subject to certain purchase price adjustments. The deal is expected to close over the next six months.
Townsend is a provider of global investment management and advisory services primarily focused on real estate with assets under advisory totaling approximately $175.7 billion and assets under management totaling approximately $14.5 billion. NorthStar Asset Management acquired an 84 percent interest in Townsend for $380 million in October 2015.
NorthStar Asset Management and Townsend are co-sponsoring a $1 billion closed-end interval fund, NorthStar/Townsend Institutional Real Estate Fund, which filed a registration statement with the SEC in October 2016, but the offering is not yet effective.
Net proceeds to affiliates of Colony NorthStar for its ownership interest after transaction and other expenses is estimated to be approximately $379 million.
“The divestiture of Townsend is definitely bittersweet for Colony NorthStar,” said Richard Saltzman, president and chief executive officer of Colony NorthStar, “but we’re extremely pleased that the talented Townsend team has found a great new home with Aon. Townsend is a terrific non-core legacy NorthStar business, but by the closing of the Colony Capital/NorthStar merger in January of this year, it became clear that the market perceived a conflict with Colony’s institutional investment management business.”
Terry Ahern, chief executive officer of Townsend, will continue to lead real estate and real asset investment services as part of Aon’s global retirement and investment organization.
Last week, Colony NorthStar and two affiliated non-traded REITs, NorthStar Real Estate Income Trust and NorthStar Real Estate Income II, announced a plan to merge and create a commercial real estate credit REIT called Colony NorthStar Credit Real Estate Inc. with approximately $5.5 billion in assets and $3.4 billion in equity value.
Colony NorthStar resulted from the merger between Colony Capital Inc., NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. The company currently has assets under management of $56 billion and manages capital on behalf of its stockholders, as well as institutional and retail investors in private funds, non-traded and traded real estate investment trusts and registered investment companies. The company also owns captive broker-dealer NorthStar Securities LLC.