LOS ANGELES—Colony NorthStar Inc. (CLNS) said late Friday afternoon it had agreed to sell real estate investment management business the Townsend Group to insurance broker Aon plc for $475 million. Founded in 1983 by CEO Terry Ahern and the late Kevin Lynch, Townsend had about $175.7 billion of assets under advisory and approximately $14.5 billion of assets under management globally as of Dec. 31, 2016.
NorthStar Asset Management, one of the predecessor firms that combined to form CLNS, took an 85% stake in Townsend in November 2015 for $380 million. Following the close of the merger that created CLNS this past January, it became apparent that majority ownership of an asset manager didn't fit with CLNS' business model as a REIT and the company began exploring strategic alternatives for Townsend, PERE reported this past April.
Richard B. Saltzman, CLNS' president and CEO, says divesting Townsend is “definitely bittersweet for Colony NorthStar, but we're extremely pleased that the talented Townsend team has found a great new home with Aon. Townsend is a terrific non-core legacy NorthStar business, but by the closing of the Colony Capital/NorthStar merger in January of this year, it became clear that the market perceived a conflict with Colony's institutional investment management business. For these reasons, Colony NorthStar's sale of Townsend to Aon is a winning outcome for all three organizations.”
For London-based Aon, the acquisition of Townsend will significantly expand its investment capabilities, which include outsourced chief investment officer (OCIO) services and advisory services for large and mid-sized global organizations, the company said Friday. It will bring greater depth of expertise in real estate and real assets to Aon's distribution scale and further its ability to provide more attractive investment opportunities for clients, according to Aon. Currently among the top three OCIO providers by AUM, Aon manages $106.7 billion of worldwide assets as of June 30, and advises on $4.2 trillion of assets globally for more than 2,500 clients around the world.
“Our clients' investment strategies are focused on driving the strongest risk management and return outcomes, and alternative private market investments are playing an increasingly important role in those strategies,” says Cary Grace, CEO of global retirement & investment solutions at Aon. “This acquisition will unite two investment industry leaders that provide objective advice and implemented OCIO solutions to institutional investors. Together, we will expand our capabilities and expertise to create sophisticated investment solutions that best serve our clients and further accelerate our growth.”
PERE reported in June that CLNS was considering offers from a dozen different bidders for Townsend. “We were happy to have a large number of quality firms that wanted to partner with us, but it was the commonality of culture, approach and expertise that led us to Aon,” Ahern says. “We look forward to having additional opportunities to continue our evolution that we began 30 years ago, while leveraging the platform, capabilities and people that, together, Aon and Townsend can offer to clients.”
Ahern will continue to lead real estate and real asset investment services as part of Aon's Global Retirement & Investment organization. Morgan Stanley was the exclusive financial advisor on the sale, which is expected to close over the next six months.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
