Featured Company News – Colony NorthStar, NorthStar REIT and NorthStar Real Estate Income II Merge Assets to Form Colony NorthStar Credit Real Estate Inc.

Research Desk Line-up: Transcontinental Realty Investors Post Earnings Coverage

LONDON, UK / ACCESSWIRE / August 30, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Colony NorthStar, Inc. (NYSE: CLNS), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=CLNS. Colony NorthStar, Inc. (NYSE: CLNS) and some of its affiliates, NorthStar Real Estate Income Trust, Inc. (NorthStar I), a public, non-traded REIT, and NorthStar Real Estate Income II, Inc. (NorthStar II), a public, non-traded REIT, announced on August 28, 2017 that the three Companies have signed a tri-party agreement wherein a select portfolio of Colony NorthStar assets and liabilities (CLNS Contributed Portfolio) will merge with NorthStar I and NorthStar II. The all – stock merger transaction will lead to the formation of a leading commercial real estate credit REIT with approximately $5.5 billion in assets and $3.4 billion in equity value. The merged Company has been named as Colony NorthStar Credit Real Estate, Inc. (CNCRE). For immediate access to our complimentary reports, including today’s coverage, register for free now at:

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Discover more of our free reports coverage from other companies within the REIT – Diversified industry. Pro-TD has currently selected Transcontinental Realty Investors, Inc. (NYSE: TCI) for due-diligence and potential coverage as the Company reported on August 14, 2017, its financial results for Q2 2017 which ended on June 30, 2017. Tune in to our site to register for a free membership, and be among the early birds that get our report on Transcontinental Realty Investors when we publish it.

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on CLNS; also brushing on TCI. Go directly to your stock of interest and access today’s free coverage at:

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Details of the transaction

According to the merger agreement, Colony NorthStar and some of its affiliates will contribute the CLNS Contributed Portfolio, which includes Colony NorthStar’s substantially all the US investments in the Other Equity and Debt segment that are transferable assets consistent with the CNCRE’s strategy (CLNS Contributions) plus NorthStar I and NorthStar II will merge with and into the CNCRE. After which only CNCRE will continue to exist.

After the completion of the merger, Colony NorthStar will receive both shares of Class A common stock of CNCRE and membership units in the CNCRE’s operating Company against the value of CLNS’ Contributed Portfolio. Units in the CNCRE’s operating Company will be exchangeable against CNCRE’s Class A common stock or cash at CNCRE’s discretion. All Class A common stock received by Colony NorthStar against its CLNS Contributed Portfolio or by way of exchange against units in the CNCRE’s operating Company come with a lock-in period. During the lock-in period, Colony NorthStar would be prohibited from selling the Class A common stock of CNCRE for one year from the date of closing of the transaction.

Shareholders of NorthStar I and NorthStar II will receive CNCRE’s Class B common stock. Shareholders of NorthStar I and NorthStar II will be able to convert CNCRE’s Class B common stock into CNCRE’s Class A common stock as per the schedule mentioned below:

10% within 30 days from the date of closing of the transaction;
45% at 180 days from the date of closing of the transaction;
45% at 1 year from the date of closing of the transaction.

CLNS Contributions are expected to be tax-free for Colony NorthStar, and NorthStar I and NorthStar II mergers would also qualify as tax-free reorganizations.

The transaction has been approved by the Board of Directors of Colony NorthStar as well as NorthStar I and NorthStar II’s special committees and Board of Directors. The transaction is expected to close in Q4 2017 or Q1 2018 subject to regulatory and shareholders’ approvals and other closing conditions. The closing of the transaction is also based on the successful listing of CNCRE’s stock on a national securities exchange, which could take around nine months’ time after the transaction is approved by the shareholders of NorthStar I and NorthStar II.

Arrangement Post the completion of transaction

Once the merger is completed, Colony NorthStar will be the largest single investor in CNCRE and own approximately 37% stake. Shareholders of NorthStar I will own approximately 32% stake and shareholders of NorthStar II will own approximately 31% stake in CNCRE. The percentage of ownership stake is subject to certain adjustments as per the terms of the merger agreement.

Post the completion of the merger, Colony NorthStar will enter into a management agreement with CNCRE on market terms to serve as CNCRE’s external manager. Kevin P. Traenkle, Colony NorthStar’s current Executive Vice President and Chief Investment Officer, is expected to be the CEO, and Sujan Patel, Colony NorthStar’s current Managing Director and Co-Head of US Investment Management, is expected to be the CFO of CNCRE. CNCRE’s new Board of Directors is expected to have seven members out of which four would be independent directors.

Strategic and Financial Advantages

The merger is expected to offer numerous strategic and financial advantages to all the stakeholders of all three parties of the merger – Colony NorthStar, NorthStar I, and NorthStar II. The merger will create CNCRE – a leading commercial real estate credit REIT (Real Estate Investment Trust), with approximately $5.5 billion in assets and $3.4 billion in equity value. CNCRE will be the second largest publicly listed commercial mortgage REIT, by equity value.

CNCRE will have a well-diversified and stabilized investments portfolio with attractive in-place yield and potential for capital appreciation and net asset value growth via equity participations and owned real estate.

Colony NorthStar, being the majority stakeholder in CNCRE, brings with it a rich asset management experience across the capital stack through multiple real estate cycles. This will allow Colony NorthStar to align its interests with CNCRE’s stockholders.

CNCRE will have diversified investment criteria across its capital structure. This will allow CNCRE to mitigate reinvestment risk and provide flexibility through economic cycles and achieve appropriate risk-adjusted returns.

CNCRE would have access to multiple financing sources to raise capital at attractive costs including credit facilities, credit market securitizations, mortgage debt on real estate and term facilities.

About parties to the merger agreement

Los Angeles, California based Colony NorthStar, Inc. is a leading global real estate and investment management firm. It is a diversified equity REIT with an embedded institutional and retail investment management business. The Company was formed as a result of the merger between Colony Capital, Inc., NorthStar Asset Management Group Inc., and NorthStar Realty Finance Corp. in January 2017. Colony NorthStar has significant property holdings in the healthcare, industrial, and hospitality sectors, other equity and debt investments and an embedded institutional and retail investment management business. Its current AUM is approximately $56 billion.

NorthStar I and NorthStar II are public, non-traded REITs financed by Colony NorthStar. NorthStar I and NorthStar II were formed to originate, acquire, and asset manage a diversified portfolio of commercial real estate debt, select equity, and securities investments in the US.

Last Close Stock Review

On Tuesday, August 29, 2017, the stock closed the trading session at $12.77, dropping 1.39% from its previous closing price of $12.95. A total volume of 2.16 million shares have exchanged hands. Colony NorthStar’s stock price surged 14.25% in the previous twelve months. The stock is trading at a PE ratio of 140.33 and has a dividend yield of 8.46%. At Tuesday’s closing price, the stock’s net capitalization stands at $7.03 billion.

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