NorthStar Real Estate Income II Invests $41.3 Million in Three Private Equity Funds, Senior Loan
NorthStar Real Estate Income II Inc., a publicly registered non-traded real estate investment trust, acquired limited partnership interests in three real estate private equity funds. The funds are comprised of a diversified portfolio of real estate properties with an aggregate net asset value of $29.3 million.
NorthStar Income II paid $23.3 to the seller, plus a portion of the closing costs, to acquire all of the fund interests. In connection with the transaction, the REIT made an initial payment totaling $9.5 million on the closing date, and will make an additional payment totaling $13.9 million 12 months following the closing. In addition, NorthStar Income II originated a $12.0 million senior mortgage loan secured by a 128-room select service hotel located in Wisconsin Dells, Wisconsin. The REIT funded the senior loan with proceeds from its ongoing initial public offering.
The property is a Hilton hotel centrally located with access to major freeways and is in close proximity to various leisure and tourist locations. It has undergone $1.6 million in capital improvements over the last three years, and the borrower plans to invest an additional $1.6 million in planned property improvements during the term of the loan, including upgrades to guestrooms, meeting rooms, fitness areas and the lobby. The borrower is an affiliate of Ashford Hospitality Trust Inc., a publicly-traded hospitality real estate investment trust with approximately $4.8 billion of assets including 86 hotels across the United States.
The senior loan bears interest at a floating rate of 4.95 percent over the one-month London Interbank Offered Rate. It was originated at a 0.50 percent discount and NorthStar Income II will earn an exit fee equal to 0.50 percent of the outstanding amount at the time of repayment. The loan is currently unlevered and NorthStar Income II intends to finance it with one of its credit facilities in the future.
The initial term of the senior loan is 36 months, with two 12-month extension options available to the borrower, subject to the satisfaction of certain performance tests and the payment of an extension fee. It may be prepaid during the first 18 months, provided the borrower pays an additional amount equal to the remaining interest due on the amount prepaid through month 18. Thereafter, the senior loan may be prepaid in whole or in part without penalty.
The loan-to-value ratio is approximately 79 percent. The LTV ratio is the amount loaned to the borrower net of reserves funded and controlled by NorthStar Income II and its affiliates, if any, over the appraised value of the property at the time of origination.
The DI Wire recently reported that NorthStar Real Estate Income II’s investment portfolio has reached more than $1.0 billion in total assets. To read more, click here.
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.
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