NorthStar Asset Management (NSAM) Inactive
Filed: 15 Apr 16, 12:00am
Historical(1) | Townsend Historical(2) | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||||
| Assets | ||||||||||||||||||
| Cash | $ | 84,707 | $ | 14,028 | $ | (25,493 | ) | (3) | $ | 73,242 | ||||||||
| Restricted cash | 36,780 | — | — | 36,780 | ||||||||||||||
| Receivables, net | 93,809 | 18,710 | — | 112,519 | ||||||||||||||
| Investments in unconsolidated ventures | 88,069 | 17,821 | — | 105,890 | ||||||||||||||
| Securities, at fair value | 46,215 | — | — | 46,215 | ||||||||||||||
| Intangible assets, net | — | 46,915 | 162,605 | (4) | 209,520 | |||||||||||||
| Goodwill | — | 90,738 | 165,716 | (4) | 256,454 | |||||||||||||
| Other assets | 25,241 | 5,807 | (3,754 | ) | (5) | 27,294 | ||||||||||||
| Total assets | $ | 374,821 | $ | 194,019 | $ | 299,074 | $ | 867,914 | ||||||||||
| Liabilities | ||||||||||||||||||
| Credit facility | $ | 100,000 | $ | — | $ | (100,000 | ) | (6) | $ | — | ||||||||
| Term loan, net | — | — | 469,222 | (6) | 469,222 | |||||||||||||
| Accounts payable and accrued expenses | 90,160 | 32,818 | (12,970 | ) | (7) | 110,008 | ||||||||||||
| Commission payable | 6,988 | — | — | 6,988 | ||||||||||||||
| Other liabilities | 930 | 6,129 | 29,522 | (8) | 36,581 | |||||||||||||
| Total liabilities | 198,078 | 38,947 | 385,774 | 622,799 | ||||||||||||||
| Redeemable non-controlling interests | — | — | 75,300 | (9) | 75,300 | |||||||||||||
| Equity | ||||||||||||||||||
| NorthStar Asset Management Group Inc. Stockholders’ Equity | ||||||||||||||||||
| Performance common stock | 42 | — | — | 42 | ||||||||||||||
| Preferred stock | — | — | — | — | ||||||||||||||
| Common stock | 1,857 | — | — | 1,857 | ||||||||||||||
| Accumulated other comprehensive income (loss) | — | (252 | ) | — | (252 | ) | ||||||||||||
| Additional paid-in capital | 208,318 | 155,324 | (155,324 | ) | (10) | 208,318 | ||||||||||||
| Retained earnings (accumulated deficit) | (35,152 | ) | — | (6,676 | ) | (3) | (41,828 | ) | ||||||||||
| Total NorthStar Asset Management Group Inc. stockholders’ equity | 175,065 | 155,072 | (162,000 | ) | 168,137 | |||||||||||||
| Non-controlling interests | 1,678 | — | — | 1,678 | ||||||||||||||
| Total equity | 176,743 | 155,072 | (162,000 | ) | 169,815 | |||||||||||||
| Total liabilities and equity | $ | 374,821 | $ | 194,019 | $ | 299,074 | $ | 867,914 | ||||||||||
Historical(1) | Townsend Historical(2) | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||||
| Revenues | ||||||||||||||||||
| Asset management and other fees | $ | 307,988 | $ | 63,287 | $ | — | $ | 371,275 | ||||||||||
| Selling commission and dealer manager fees, related parties | 126,907 | — | — | 126,907 | ||||||||||||||
| Other income | 926 | 2,870 | (202 | ) | (11) | 3,594 | ||||||||||||
| Total revenues | 435,821 | 66,157 | (202 | ) | 501,776 | |||||||||||||
| Expenses | ||||||||||||||||||
| Commission expense | 117,390 | — | — | 117,390 | ||||||||||||||
| Interest expense | 778 | 94 | 24,663 | (12) | 25,535 | |||||||||||||
| Transaction costs | 9,665 | — | (1,211 | ) | (13) | 8,454 | ||||||||||||
| Other expenses | 1,633 | — | — | 1,633 | ||||||||||||||
| General and administrative expenses | — | |||||||||||||||||
| Salaries and related expense | 68,349 | 27,176 | (1,498 | ) | (14) | 94,027 | ||||||||||||
| Equity-based compensation expense | 57,468 | 8,593 | (7,252 | ) | (15) | 58,809 | ||||||||||||
| Other general and administrative expenses | 33,386 | 10,724 | — | 44,110 | ||||||||||||||
| Total general and administrative expenses | 159,203 | 46,493 | (8,750 | ) | 196,946 | |||||||||||||
| Depreciation and amortization | 1,887 | 6,010 | 2,098 | (4) | 9,995 | |||||||||||||
| Total expenses | 290,556 | 52,597 | 16,800 | 359,953 | ||||||||||||||
| Unrealized gain (loss) on investments and other | (4,274 | ) | — | — | (4,274 | ) | ||||||||||||
| Income (loss) before equity in earnings (losses) of unconsolidated ventures and income tax benefit (expense) | 140,991 | 13,560 | (17,002 | ) | 137,549 | |||||||||||||
| Equity in earnings (losses) of unconsolidated ventures | 1,625 | 1,978 | (1,978 | ) | (8) | 1,625 | ||||||||||||
| Income tax benefit (expense) | (21,869 | ) | — | 2,487 | (16) | (19,382 | ) | |||||||||||
| Net income (loss) | 120,747 | 15,538 | (16,493 | ) | 119,792 | |||||||||||||
| Net (income) loss attributable to non-controlling interests | (953 | ) | — | 33 | (17) | (920 | ) | |||||||||||
| Net (income) loss attributable to redeemable non-controlling interests | — | — | (3,251 | ) | (17) | (3,251 | ) | |||||||||||
| Net income (loss) attributable to NorthStar Asset Management Group Inc. common stockholders | $ | 119,794 | $ | 15,538 | $ | (19,711 | ) | $ | 115,621 | |||||||||
| Earnings (loss) per share | ||||||||||||||||||
| Basic | $ | 0.61 | $ | 0.59 | ||||||||||||||
| Diluted | $ | 0.60 | $ | 0.58 | ||||||||||||||
| Weighted average number of shares | ||||||||||||||||||
| Basic | 188,705,876 | (18) | 188,705,876 | |||||||||||||||
| Diluted | 193,119,145 | (18) | 193,119,145 | |||||||||||||||
| (1) | Represents the Company’s audited condensed consolidated balance sheet as of December 31, 2015 and audited condensed consolidated statement of operations for the year ended December 31, 2015. |
| (2) | Represents Townsend’s audited consolidated balance sheet as of December 31, 2015 and audited consolidated statement of operations for the year ended December 31, 2015. Certain balances reported in Townsend’s financial statements have been reclassified to conform to the Company’s presentation. |
| (3) | Included in this amount is $6.7 million of transaction costs not reflected in the historical financial statements. Transaction costs relate to advisory, legal and other professional services and are factually supportable as such amounts are based on invoices received. The remainder represents cash of the Company used in connection with the transaction. |
| (4) | Represents elimination of Townsend’s historical intangible assets offset by the estimated fair value of intangible assets in connection with the preliminary purchase price allocation. The fair value is a preliminary estimate and may be adjusted within one year of the proposed transaction in accordance with U.S. GAAP. The fair value of the intangible assets is determined primarily using the “income approach” which requires management forecasts of all of the expected future cash flow. The following table summarizes the estimated fair value of Townsend’s identifiable intangible assets and their estimated useful lives (dollars in thousands): |
| Estimated Fair Value | Estimated Useful Life in Years | Year Ended December 31, 2015 Amortization Expense | |||||||||
| Trade names | $ | 16,610 | 30 years | $ | 554 | ||||||
| Proprietary technology | 210 | 3 years | 84 | ||||||||
| Customer relationships | 192,700 | 25 to 30 years | 7,147 | ||||||||
| Goodwill | 256,454 | (i) | — | — | |||||||
| Total | 465,974 | 7,785 | |||||||||
| Townsend historical | (137,653 | ) | (5,687 | ) | |||||||
| Pro forma adjustments | $ | 328,321 | $ | 2,098 | |||||||
| (i) | Includes $17.8 million of goodwill related to a deferred tax liability associated with the share deal acquisition of the seller’s corporate entity. The deferred tax liability and corresponding goodwill is recorded at acquisition based on tax basis differences. |
| (5) | Represents notes receivable from members of Townsend paid off concurrent with the transaction. |
| (6) | Represents the issuance of a $500 million term loan used to fund the transaction and repay the Company’s revolving credit facility of $100 million. The Company incurred $30.8 million of deferred financing costs relating to the term loan. The term loan accrues interest at a rate per annum equal to LIBOR (subject to a floor of 0.75%) plus a margin of 3.875%. The borrowing under the term loan facility matures on January 29, 2023. |
| (7) | Represents a net decrease to accounts payable and accrued expenses based on the following adjustments (dollars in thousands): |
| Contingent obligations | $ | (9,444 | ) | (i) | |
| Compensation accrual | 5,005 | (ii) | |||
| Compensation contracts | (8,531 | ) | (iii) | ||
| Total | $ | (12,970 | ) | ||
| (i) | Represents the adjustment to reflect fair value of contingent obligations associated with the claw back feature, relating to incentive fee revenue previously received from the co-investment funds. The fair value is based on the preliminary purchase price allocation and may be adjusted within one year of the transaction in accordance with U.S. GAAP. |
| (ii) | Represents the liability of approximately 50% of the incentive fee previously received that is due to certain employees of Townsend. |
| (iii) | Represents the elimination of Townsend’s compensation arrangements that were canceled in connection with the transaction. |
| (8) | Represents a net increase to other liabilities based on the following adjustments (dollars in thousands): |
| Co-investment fund liability | $ | 14,562 | (i) | ||
| Loan payable | (2,450 | ) | (ii) | ||
| Deferred tax liability | 17,410 | (iii) | |||
| Total | $ | 29,522 | |||
| (i) | Represents an increase of $14.6 million for Townsend’s obligation to pay the cost basis and related income on certain co-investment funds to certain employees of Townsend. The rights to income on the co-investment funds were assigned to such employees as part of the transaction. The liability is recorded as an offset to the fair value of the co-investment funds. Accordingly, $2.0 million of income related to the co-investment funds are eliminated from the pro forma condensed statement of operations as they are non-recurring in nature for the Company. |
| (ii) | Represents the repayment of Townsend’s borrowings of $2.5 million paid off concurrent with the transaction. |
| (iii) | Represents elimination of Townsend’s historical deferred tax liability of $0.4 million related to the book to tax difference of intangible assets previously recorded, offset by the $17.8 million deferred tax liability associated with the share deal acquisition of the seller’s corporate entity. The deferred tax liability and corresponding goodwill is recorded at acquisition based on tax basis differences. |
| (9) | Represents the fair value of the redeemable non-controlling interests retained by management of Townsend. |
| (10) | Represents the elimination of Townsend’s historical equity. |
| (11) | Represents the elimination of interest income on the notes receivable that were paid off in connection with the transaction. |
| (12) | Represents $24.8 million of interest expense on the term loan, of which $21.2 million is contractual interest and $3.6 million is the amortization of deferred financing costs, partially offset by a decrease of $0.1 million of interest and other fees related to Townsend’s borrowings that were repaid. If market rates of interest changed by 1/8 of 1% variance, then the increase or decrease on the floating rate interest expense would be approximately $0.6 million. |
| (13) | Represents the elimination of transaction costs incurred through December 31, 2015. These costs are non-recurring in nature directly related to the transaction. |
| (14) | Represents the elimination of Townsend’s historical compensation expense on compensation arrangements that were canceled in connection with the transaction. |
| (15) | Represents the reversal of Townsend’s historical equity-based compensation expense of $8.6 million, offset by an estimated equity-based compensation expense related to grants to certain members of Townsend management relating to post-acquisition services of $1.3 million. The Company granted 658,330 shares of restricted shares of common stock to certain members of Townsend’s management team who also own an interest in Townsend, subject to time-based vesting conditions through December 31, 2020. The Company recognizes compensation expense over the vesting period on a straight-line basis using the grant date fair value. |
| (16) | Represents the income tax benefit in connection with the transaction. |
| (17) | Represents the allocation of the pro forma net income to redeemable and non-redeemable non-controlling interests holders. |
| (18) | The weighted average shares used to compute basic and diluted earnings per share represents the number of weighted average shares assumed to be outstanding as of the transaction date, excluding unvested shares granted to Townsend employees as they were not dilutive for the period presented. |
| Assets: | |||
| Cash | $ | 14,318 | |
| Investments in unconsolidated ventures | 17,706 | ||
| Intangible assets, net | 209,520 | ||
| Goodwill | 256,454 | ||
| Other assets acquired | 24,392 | ||
| Total assets | $ | 522,390 | |
| Liabilities: | |||
| Accounts payable and accrued expenses | $ | 20,977 | |
| Other liabilities acquired | 35,536 | ||
| Total liabilities | 56,513 | ||
| Redeemable non-controlling interests | 75,300 | ||
| Total equity | 390,577 | ||
| Total liabilities and equity | $ | 522,390 | |