NorthStar Realty Finance prices USD531.5m floating rate CMBS transaction
NorthStar Realty Finance’s first sponsored non-traded REIT, NorthStar Real Estate Income Trust, has priced a USD531.5m non-recourse, floating-rate CMBS transaction at a weighted average coupon of LIBOR + 2.68 per cent.
The CMBS transaction will initially be collateralised by USD425.2m of commercial real estate loans with the flexibility to contribute up to USD106.3m of additional commercial real estate loans within six months of closing.
A total of USD382.7m of investment grade bonds will be issued, representing an advance rate of approximately 72 per cent.
The CMBS transaction is expected to close by the end of August.
As part of the CMBS transaction, NorthStar will contribute senior participations of originated commercial real estate loans, including an interest in the leasehold mortgage on the Milford Plaza hotel, and will retain USD124.4m of participations in these loans. NorthStar expects to earn a yield of approximately 13 per cent on its retained interests, inclusive of fees and estimated transaction expenses. NorthStar, together with NorthStar Income, will retain an aggregate 35 per cent ownership interest in the Milford Plaza hotel and retail component of the hotel.