Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Northstar Realty Finance Corp. (NRF) surged 16% today after the commercial REIT announced plans to spin off its asset management business into a separate publicly traded company.
So what: The move will allow Wall Street to value Northstar's asset management arm on a stand-alone basis, which is a particularly positive thing given how fast the segment is growing. In connection with the spin-off, NorthStar Asset Management will also enter into a 20-year management contract to manage NRF, giving analysts even more good vibes about the segment's income stream going forward.
Now what: The distribution is expected to be completed in the second quarter of 2014. "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."
Given the fact that both parents and their spin-off spawn traditionally trounce the market for several years after the split, Northstar is certainly a special situation worth following.
