NorthStar Real Estate Income II Originates Two Senior Loans Totaling $77.5 Million
NorthStar Real Estate Income II Inc., a publicly registered non-traded real estate investment trust, originated a $36.5 million senior mortgage loan secured by a Class A apartment community located in Austin, Texas. NorthStar Income II funded the loan with proceeds from its ongoing initial public offering. The unnamed borrower is an affiliate of an experienced regional owner and operator of multifamily properties, with more than 16,000 multifamily units across 65 properties under management.
The multifamily property totals 421,000 square feet and is centrally located within close proximity to downtown Austin, the University of Texas and Austin-Bergstrom International Airport. Since 2010, the facility has undergone approximately $1.8 million in capital improvements including clubhouse upgrades, parking lot resurfacing and a new roof.
The loan bears interest at a floating rate of 4.70 percent over the one-month London Interbank Offered Rate, and was originated at a 0.50 percent discount. NorthStar Income II will earn an exit fee equal to 1 percent of the outstanding amount at the time of repayment. The loan is currently unlevered and the REIT intends to finance it with one of its credit facilities in the future.
The loan has an initial term of 24 months, with three 12-month extension options, and has a loan-to-value ratio of approximately 78 percent.
NorthStar Real Estate Income II also originated a $41 million senior mortgage loan secured by a 15,342-square-foot retail property located in Beverly Hills, California. The loan was funded with proceeds from its ongoing initial public offering. The unnamed borrower is an affiliate of an experienced real estate investment and management organization that owns and manages more than 90 properties totaling an excess of 3 million square feet.
The property, which is one block away from North Rodeo Drive, is centrally located within the Beverly Hills’ high-end shopping district and is in close proximity to several primary freeways which provide wide accessibility to the Brentwood, Holmby Hills, Bel-Air and Hollywood Hills communities. The borrower has recently invested more than $1.4 million in connection with its ownership of property and plans to fund an additional $2.8 million in capital expenditures, tenant improvements and leasing commissions using proceeds from the loan.
The loan bears interest at a floating rate of 4.10 percent over one-month LIBOR, and was originated at a 0.50 percent discount. NorthStar Income II will earn an exit fee equal to 1.00 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 is 36 months, with two 12-month extension options available to the borrower. The loan-to-value ratio is approximately 57 percent.
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. The REIT commenced operations in September 2013, and since August 10, 2015, has raised $705.7 million in investor equity. In March 2015, the company’s board of directors extended the offering for one year to May 2016.
