Tom Barrack has buyer’s remorse over Colony Capital’s merger with NorthStar; looks to shed distressed assets

Barrack’s Colony Capital has been weighed down by billions of dollars in poorly-performing hotels, warehouses and other assets from the NorthStar merger

TRD NATIONAL /
Sep.September 18, 2019 01:11 PM
Colony Capital CEO and Executive Chairman Tom Barrack (Credit: Getty Images, iStock)

Colony Capital CEO and Executive Chairman Tom Barrack (Credit: Getty Images, iStock)

UPDATED, Sept. 19, 1:30 p.m. ET: Three years later, Tom Barrack has buyer’s remorse.

As his firm, Colony Capital, embarks on a $325 million venture into digital infrastructure, it first needs to offload much of its real estate portfolio from its disastrous merger with NorthStar Realty Finance Corp.

Share value of the Los Angeles-based Colony still hasn’t fully recovered from that 2016 deal. Barrack and other Colony execs have acknowledged they misstepped when they closed the $19.9 billion all-stock transaction for NorthStar, according to the Wall Street Journal.

“It’s on me,” said Barrack, the firm’s CEO and executive chairman, during an investor conference last week, the Journal reported. He accepts responsibility for the merger, which he said was mispriced and “shouldn’t have happened.”

Colony officials said they want to sell as much as 90 percent of its $20 billion portfolio of traditional real estate assets — senior living facilities, hotels, warehouses, and others — ahead of a $325 million merger with digital infrastructure investment firm Digital Bridge Holdings.
Many of those properties are former NorthStar assets with high levels of debt, according to the Journal.

Barrack stepped down as CEO in 2014 but remained executive chairman of the company when the NorthStar deal closed. He returned as CEO in November 2018.

Colony and Digital Bridge closed their merger deal in July. As part of the deal, Barrack is set to step down as CEO to be replaced by Digital Bridge CEO Marc Ganzi within 24 months. [WSJ] — Dennis Lynch

Correction: a previous version of this story stated that Colony and Digital Bridge would complete their merger in two years. They closed the transaction in July and plan to complete a leadership change within two years.


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