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NorthStar Realty Finance Buys 11 Class A Office Properties in Europe

NorthStar Realty Finance Corp (NorthStar Realty)(NYSE: NRF), a publicly traded REIT managed by NorthStar Asset Management Group, Inc. (NYSE: NSAM) a sponsor of non-traded REITs, today revealed that it has entered into an agreement in cooperation with Cale Street Partners to acquire a European office portfolio valued at €1.1 billion or $1.342 billion.

Cale Street Partners is a real estate finance and investment firm backed by sovereign wealth capital. The company helped source the portfolio and will provide certain financing for the acquisition.

The portfolio consists of 11 Class A office properties in seven European markets, including London, UK; Paris, France; Hamburg, Germany; Milan, Italy; Brussels, Belgium; Amsterdam and Rotterdam, Netherlands; and Gothenburg, Sweden.

The portfolio’s total of 186,299 square meters (2 million square feet) is 93% leased with a weighted average remaining lease term of six years.

Approximately 50% of the portfolio’s rent comes from London and Paris properties. Tenants BNP Paribas, Cushman & Wakefield, Chartis Europe, AIG, Barclays, Invesco UK, Ernst & Young, and Deloitte represent approximately 66% of current rents.

NorthStar Realty’s Chairman and Chief Executive Officer, David Hamamoto, commented, “We are extremely pleased to announce this differentiated and rare portfolio acquisition. The size and execution complexity of this transaction, spanning seven countries and three currencies, demonstrates the strength of our investment platform.”

“While our base case assumption is that we retain these high quality assets as we expect rents to grow and cap rates to compress in the coming years, we believe the optionality of this portfolio is very valuable, both from an asset level standpoint and from a corporate standpoint given the quality and scale of the portfolio,” added Hamamoto.

Based on year-one estimated NOI (Net Operating Income), NorthStar Realty expects to earn an initial leveraged yield of around 13%.

This acquisition follows two billion dollar plus closings this quarter for the REIT.

Early this month, NorthStar completed its $4 billion acquisition of Griffin-American Healthcare REIT II, a non-traded REIT and in November, completed a $1.1 billion acquisition of a hotel portfolio from Inland American Real Estate Trust, also a non-traded REIT.