Tom Barrack, the real estate investor and ally of US President Donald Trump, has struck a deal that will see him step down as chief executive of Colony Capital, months after assuming the role in the wake of a troubled merger with a rival fund manager.
Colony will pay $325m to buy Digital Bridge, which manages a portfolio of 342,000 mobile phone towers and 39 data centres, and which already has a $4bn joint venture with Mr Barrack’s company.
Marc Ganzi, who co-founded Digital Bridge in 2013, will become chief executive of Colony in 2021, the company said, taking over a role that Mr Barrack assumed last year after ousting Richard Saltzman in the aftermath of Colony’s merger with rival fund management group Northstar. Mr Barrack will return to his position as executive chairman.
Colony shares have fallen by about two-thirds since the deal was completed in early 2017, at a price that analysts say overvalued Northstar’s real estate portfolio.
Since then, Mr Barrack has had to contend with two campaigns by activist investors.
Under pressure from Senvest Management, a New York hedge fund, Colony last year slashed the management fees it collects from Northstar Realty Europe, a publicly traded real estate investment trust.
Then, in February, a firm named Blackwells Capital prodded Colony into appointing three new directors to its board and examining a sale of non-core assets.
In recent months, Colony has explored a sale of Colony Industrial, its warehouse portfolio, according to people briefed on the talks. It is unclear whether a deal will materialise, or when, one of the people added.
Colony said the deal announced on Thursday would help Colony position itself as a provider of “investment management products in which the digital and real estate frontiers intersect”.
One shareholder, speaking on condition of anonymity, welcomed the move as a sign that Colony was repositioning itself as an investment manager that earns fees for overseeing outside investors’ capital, rather than a direct owner of specialist real estate assets, many of which have underperformed.
“I think one could view this as a signal that soon the real estate assets will be sold,” the person said.
Mr Barrack played a high-profile role in Mr Trump’s ascent to power, attending the 2016 Republican convention to deliver a primetime address in support of his longtime friend.
He also introduced the future president to his former campaign chairman Paul Manafort, who is now serving a 47-month prison sentence for financial fraud.
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