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. 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.
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The article Why Northstar Realty Finance Corp. Shares Soared originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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