Oaktree Held Talks Last Year to Buy Parts of Colony Capital

(Bloomberg) -- Tom Barrack’s Colony Capital Inc., which in February said it would conduct a strategic review as it seeks to salvage its plummeting market value, held talks late last year to sell pieces of itself to Oaktree Capital Group LLC, according to people with knowledge of the matter.

The discussions centered on Colony Credit Real Estate Inc., a REIT with a market value of $2 billion in which Colony is the largest shareholder; Colony Industrial, owner of warehouses with a total gross asset value of more than $3.7 billion as of Dec. 31; and the firm’s stake in Digital Colony, a joint venture focused on communications infrastructure investments, said the people, who asked not to be named because they weren’t authorized to speak publicly.

The conversations were preliminary and have since been abandoned, a person familiar said. Colony Capital continues to weigh strategic options, including the sale of its stakes in some of the same businesses.

Shares of Colony Capital rose as much as 2.6 percent Friday.

Oaktree’s consideration of a deal took place before the firm agreed in March to sell a majority stake to Brookfield Asset Management Inc., the Toronto-based alternative asset manager whose biggest business is real estate, said the people.

NorthStar Deal

Colony Capital, a real estate investor with $43 billion under management, has been struggling to recover from a calamitous January 2017 merger with two NorthStar companies. Los Angeles-based Colony’s shares have fallen about 65 percent since that transaction.

Representatives for Oaktree, Colony Capital and Brookfield declined to comment.

Barrack’s firm in February appointed new directors as part of a pact with Blackwells Capital and also formed a strategic asset review committee. Blackwells asserts that Colony’s stock, which closed at $5 a share on Thursday, could be worth $11 if the firm were to reconfigure its operations, a person familiar with the matter said in February.

Barrack, an ally of President Donald Trump, has made other moves to lift the company’s share price. In November, the founder took back the CEO post after stepping down in 2014 and planned to shift Colony’s focus to asset management. Barrack replaced Richard Saltzman, who oversaw the firm’s merger with the NorthStar companies.

--With assistance from Scott Deveau.

To contact the reporters on this story: Sabrina Willmer in New York at swillmer2@bloomberg.net;Gillian Tan in New York at gtan129@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Vincent Bielski, Josh Friedman

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