Extremely high dividend yields are tantalizing, but also come with significant risks. While they certainly look appealing, it is important to assess whether the dividend is sustainable.

Colony NorthStar, Inc. (CLNS) has a whopping 8.3% dividend yield. Its largest shareholder, Seth Klarman’s Baupost Group, is one of the most well-known value investors around.

Seth Klarman is the Chief Executive Officer and Portfolio Manager of Baupost.

As of December 31, 2016, Baupost held 18.7 million shares, a nearly 10% investment in the company, which is worthy approximately $279 million.

Colony NorthStar was formed in 2016, as a result of a merger of three different companies.

As a result, it is not a Dividend Achiever, a group of 271 stocks with 10+ years of consecutive dividend increases.

You can see the full Dividend Achievers List here.

This article will discuss whether investors should follow Seth Klarman into Colony NorthStar stock.

Business Overview

Colony NorthStar is a real estate investment trust (REIT). It invests primarily in commercial real estate. The company has a market capitalization of $7.3 billion.

Source: March 2017 Investor Presentation, page 3

It was formed through a tri-party merger between Colony Capital, Inc. (CLNY), NorthStar Asset Management Group Inc. (NSAM) and NorthStar Realty Finance Corp. (NRF).

Colony NorthStar has 25 years of real estate investment experience, and has more than $56 billion of assets under management (AUM).

Today, the combined entity has four major investment segments, which are:

The “Other Equity & Debt” segment includes private equity fund interests, single family residential rentals, CRE loans, and Direct Property & Net Lease investments.

Source: March 2017 Investor Presentation, page 5

It also has a sizable investment management business, which accounts for $39 billion of its $56 billion AUM.