During the company’s recent earnings call, Richard Saltzman, Colony NorthStar president and CEO, described the firm’s full year 2017 financial results to be disappointing and said the firm will turn its full attention to the institutional side.
“We think given what’s happened in the retail capital raising environment, that hopefully there is a strong future there, over the course of that whole state is transitioning to a new model and the new approach, but at least for the time being we are just discounting it completely in terms of thinking that it’s really going to benefit us,” said Saltzman.
Its retail broker-dealer distribution did not meet expectations for the firm. Saltzman noted, “alleviating from more challenging industry conditions in healthcare real estate as well as our retail broker-dealer distribution business combined with impairments and lower returns in our residual real estate private equity secondaries and CDO securities portfolios. Higher floating rate interest cost that needs our in-place caps also reduced earnings as well as slower than anticipated redeployment of investment capital.”
Recently the firm’s retail distribution business, NorthStar Securities, merged with S2K Financial Holdings to create a broker-dealer retail distribution business.
S2K is the holding company of S2K Financial, a registered broker-dealer wholesale distributor of investment vehicles and funds, and S2K Servicing, a provider of administrative services to institutional investment managers.
Saltzman added, “We have a lot of confidence in our new partner. We haven’t yet closed that S2K that if there is a group that’s going to be able to figure it out, they’re at the front of the class. But really the focus[for us] is completely on the institutional side of the business. And again, there’s plenty of institutional capital sitting on the sidelines, evidenced by this first closing that we just announced this morning in terms of the $1.4 billion that we raised. But again it’s got be in those spaces, which the market thinks are smart and where there’s the best risk-adjusted opportunity, which is not the majority of the spaces out there, okay; it’s clearly the minority of spaces. So that’s our plan.”