NorthStar Asset Management Group Moves Higher After Activist Investor Details Why Shares Are 'Materially Undervalued'

Shares of NorthStar Asset Management Group Inc NSAM were trading higher by more than 4 percent early Friday afternoon after Land and Buildings, an activist investment firm, delivered a letter to the company.

Jonathan Litt, Land and Buildings Chief Investment Officer, said in his letter that shares of NorthStar Asset Management are "materially undervalued" and there is "one straightforward solution" that management should focus on to drive shareholder value.

Litt continued that recombining NorthStar Asset Management with Northstar Realty Finance Corp NRF.

Shares of Northstar Realty Finance were trading higher by nearly 7 percent on Friday.

"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," Litt noted in his letter. "Externally managed REITs, such as NRF, have historically struggled to gain institutional investor support given the misaligned incentives between the manager and the REIT."

Litt further proposed: "NSAM could pay a special dividend of $2.6 billion in proceeds from the sale of the public REIT management contracts, or $13 per share, to NSAM shareholders, which is 20% more than the current share price."