STAMFORD, CT—Land and Buildings Investment Management's Jonathan Litt has "straightforward" advice for NorthStar Asset Management Group and NorthStar Realty Finance: get back together. NSAM, which was spun off from NRF a year and a half ago, earlier this month announced that it would explore strategic alternatives and had hired Goldman Sachs as its financial advisor.

Calling NSAM "materially undervalued," an assessment its chairman likely would agree with, the Land and Buildings founder and CIO says there are "numerous paths to unlock that value." In a letter to David Hamomoto, NSAM's executive chairman, Litt writes, "Since the grand experiment of spinning off NSAM from NRF in the summer of 2014, the shares of both companies have fallen over 50% from their highs.

"Externally managed REITs, such as NRF, have historically struggled to gain institutional investor support given the misaligned incentives between the manager and the REIT," he continues. Accordingly, Litt writes, "An NSAM/NRF recombination appears to us to be the right thing to do and the right time to do it for all NRF and NSAM shareholders."