The proposed merger of NorthStar Realty Finance Corp., NorthStar Asset Management Group and Colony Capital could result in a “must-own equity REIT,” according to a NorthStar Asset Management shareholder, but the presumptive management team needs to “let go of the more complicated real estate investments of their past, and at the same time embrace changes which would maximize value for all shareholders.”

That’s the opinion of Jonathan Litt, founder and chief investment officer of registered investment manager Land and Buildings, who addressed fellow shareholders in a letter Wednesday.

The management of Colony NorthStar, the $58 billion real estate investment trust that would be formed from the merger, needs to follow the traditional real estate investment model to see success in public markets, Litt said.

“Pension funds, sovereign wealth funds and endowments continue to have a voracious appetite for traditional real estate and the high yield it offers,” he said. “If Colony committed, for example, $1 billion to a private fund to own traditional real estate, they should be able to raise $4 billion in additional capital, earning attractive returns on its investments as well as performance fees on the third-party capital.”

Litt also recommended that Colony NorthStar reduce the size of its proposed board from 13, which he said could be “unwieldy and expensive.” A smaller, “more nimble” board, he added, could help devise the strategy needed to maximize shareholder value.

“We continue to maintain our live six-person director nominee slate for the NSAM board,” he said, adding that if shareholders vote down the merger,  “we would proceed with a vote for our nominees to the NSAM board.”

Colony NorthStar also should set a minimum investment threshold for all members of the board, Litt suggested.