NorthStar Real Estate Income II Inc., a publicly registered non-traded real estate investment trust, purchased a Class B+ office and flex business center and an adjacent Class A office building in the Seattle suburb of Bothell, Washington from the Teachers Insurance and Annuity Association of America, an unaffiliated third party, for a total initial cost of $130.6 million.
NorthStar Income II acquired the properties through a joint venture with Steelwave LLC, a vertically integrated real estate investment manager, owner and operator. The REIT owns a 95 percent interest in the joint venture, and invested approximately $45.7 million of equity, including closing costs, with proceeds from its ongoing initial public offering.
The two properties total 717,702 square feet and were 73 percent leased to 70 tenants, with a remaining weighted average lease term of 4.2 years. The joint venture plans to invest approximately $14.9 million in capital and tenant improvements to the properties, including lobbies, corridors and conference rooms.
NorthStar Income II is the manager and controls the joint venture’s business and affairs, subject to Steelwave’s consent with respect to certain major decisions. Steelwave will manage the day-to-day operations of the properties.
In connection with the acquisition, the joint venture obtained senior debt financing with an initial term of three years and a principal amount of approximately $82.5 million, with up to an additional $14.9 million of future funding commitments. The loan bears a floating interest rate of 1.9 percent over the one-month London Interbank Offered Rate.
NorthStar Income II is a publicly registered, non-traded real estate investment trust sponsored by NorthStar Asset Management Group Inc. that was formed to originate, acquire and asset manage a diversified portfolio of commercial real estate debt, select equity and securities investments.