NorthStar Real Estate Income Trust Inc., a publicly registered non-traded real estate investment trust, has originated a $173.5 million senior mortgage loan secured by a fee-simple interest in an 805-room four-star hotel in San Jose, California, according to a filing with the Securities and Exchange Commission.
The REIT initially funded $166.6 million of the senior loan and will fund the remaining $6.9 million over the next 18 months.
The 985,000-square-foot hotel is located in the Downtown San Jose submarket, and includes 69,000 square feet of meeting space, five food and beverage outlets, and a 6,000-square-foot spa.
The unnamed borrower is an affiliate of a California-based real estate asset manager and contributed $85.9 million of equity towards the purchase of the property. The borrower plans to invest an additional $7.1 million ($8,800 per room) over the term of the loan in capital expenditures, alongside NorthStar Income’s $6.9 million future funding commitment.
The loan bears interest at a floating rate of 4.25 percent over the one-month London Interbank Offered Rate, subject to a LIBOR floor of 1.0 percent. The loan was originated at a 1.0 percent discount on the fully-funded amount and is financed on one of the REIT’s credit facilities.
The initial loan term is 24 months, with three 12-month extension options available. The loan-to-value ratio is approximately 66.2 percent.
NorthStar Real Estate Income invests in real estate debt, select equity and securities investments predominantly in the United States. The offering was declared effective by the SEC in July 2010 and closed in July 2013 after raising more than $1.1 billion. As of the third quarter 2017, the company’s portfolio was comprised of 15 investments totaling nearly $2.2 billion. NorthStar Income is externally advised by an affiliate of Colony NorthStar Inc. (NYSE: CLNS).