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NorthStar Realty Finance Joins Forces with James F. Flaherty III, Former Chairman and CEO of HCP, Inc.

January 27, 2014

NorthStar Realty Finance Corp. announced that it has entered into a long-term partnership with Jay Flaherty to build a preeminent healthcare real estate business (the "Partnership"). According to a release, as part of the Partnership, Flaherty will (i) oversee and seek to substantially grow NorthStar's on-balance sheet healthcare real estate portfolio, (ii) focus on raising institutional capital for funds to be managed by NorthStar Asset Management Group Inc. ("NorthStar Asset Management") and (iii) become CEO of NorthStar's healthcare real estate non-traded REIT, NorthStar Healthcare Income, Inc. NorthStar's Chairman and Chief Executive Officer, David Hamamoto , commented, "We are very pleased and fortunate to have someone of Jay's caliber join the NorthStar team. Jay's distinguished career, institutional credibility and proven ability to dramatically scale a healthcare real estate business while generating superior returns for shareholders are incredibly compelling for NorthStar and NorthStar Asset Management. Given Jay's remarkable track record, I am confident that we can build a best in class healthcare real estate platform that will create the framework for extraordinary growth in NorthStar Asset Management and further diversify NorthStar's asset base with high quality investments." Prior to joining the NorthStar team, Flaherty was the Chairman and CEO of HCP, Inc. from 2003 to 2013. During his time at HCP, Flaherty grew HCP's equity market capitalization tenfold, from approximately $2 billion in 2003 to over $20 billion in 2013, becoming the third largest REIT in the United States , the first healthcare REIT selected to the S&P 500 and the only REIT in the world selected to the S&P 500 "Dividend Aristocrats" Index. During Flaherty's tenure at HCP, average shareholder returns exceeded 15 percent per year. Prior to joining HCP, Flaherty served at Merrill Lynch & Co. for 19 years in a variety of investment banking, capital markets and private equity functions in New York , London and Los Angeles and was head of Merrill Lynch's Global Healthcare Group . Flaherty is a member of the Board of Trustees of the University of Notre Dame and was a member of the Board of Governors of the National Association of Real Estate Investment Trusts from 2004 to 2013. The Partnership with Flaherty will be entitled to incentive fees ranging from 20-25 percent above certain hurdles in connection with new and existing healthcare real estate investments on NorthStar's balance sheet ("Healthcare Balance Sheet Promotes") and new investments in future healthcare real estate funds raised by the Partnership ("Healthcare Fund Promotes"). The Partnership will also be entitled to the incentive fees earned by NorthStar from managing NorthStar's healthcare non-traded REIT and any future healthcare non- traded REITs sponsored by NorthStar or NorthStar Asset Management ("Healthcare NTR Promotes"). Flaherty will be entitled to (i) one- third of any Healthcare Balance Sheet Promotes and Healthcare NTR Promotes and (ii) one-half of any Healthcare Fund Promotes. NorthStar expects that its interest in the Partnership will be transferred to NorthStar Asset Management as part of the previously announced spin-off of NorthStar's asset management business. Accordingly, NorthStar Asset Management would be entitled to (i) two- thirds of any Healthcare Balance Sheet Promotes and Healthcare NTR Promotes, (ii) one-half of any Healthcare Fund Promotes, and (iii) 100 percent of any asset management fees earned by the Partnership or any healthcare real estate vehicle managed by NorthStar Asset Management. NorthStar Realty Finance Corp. ("NorthStar") is a diversified commercial real estate investment and asset management company that is organized as a REIT. More information: ((Comments on this story may be sent to ))

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Source: Professional Services Close - Up

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