NEW YORK, Oct. 6, 2016 /PRNewswire/ -- NorthStar Real Estate Income II, Inc. (NorthStar Income II) announced today that it recently closed on two significant portfolio transactions in which it committed approximately $370 million of equity capital, substantially investing all of the company's current investible capital.
Daniel R. Gilbert, chief executive officer and president, stated that "these two investments have tremendous diversification with exposure to 39 industrial net leased properties in one case and 41 institutional quality private equity real estate funds (PERE funds) in the other, which have varied exposure by asset type and geographic location. These are both institutional quality investments with strong cash flow that we believe will be accretive to our historical dividend and provide value growth."
US Industrial Portfolio
- Through subsidiaries of its operating partnership, NorthStar Income II originated an approximately $98 million subordinate interest investment in a portfolio of 39 industrial real estate properties.
- The industrial portfolio is currently 100% leased with an average remaining lease term of approximately 11 years containing over 6.0 million square feet located in 17 states.
- The Sponsor of the industrial portfolio is a national operator with an industrial focus owning and managing over 24.0 million square feet of industrial real estate assets.
- NorthStar Income II acquired a diversified portfolio of limited partnership or similar equity interests in 41 real estate private equity funds, managed by 20 institutional-quality real estate managers from a company managed by our sponsor.
- The funds reported an aggregate net asset value (NAV) of approximately $344 million as of March 31, 2016 (the record date). NorthStar Income II acquired the PERE funds at a price equal to 92.25% of the record date NAV, or approximately $273 million. NorthStar Income II funded 25% of the purchase price at closing and will fund the remaining 75% on December 31, 2016.
- The properties within the PERE funds are diversified by investment type, including mixed-use, multifamily, office and hotel properties located in 24 states and internationally.
- At closing, NorthStar Income II received approximately $34 million in distributions of cash flow and return of capital generated by the fund portfolio from the record date through closing, which was netted against the amounts required to close the acquisition of the PERE funds.
As of June 30, 2016, adjusted for acquisitions and commitment to purchase and sell through August 10, 2016, NorthStar Income II's $1.8 billion portfolio consists of 17 senior mortgage loans, four subordinate interest investments, one mezzanine loan, 24 real estate operating properties, three portfolios of real estate private equity funds and eight commercial mortgage-backed securities investments.
About NorthStar Real Estate Income II, Inc.
NorthStar Income II is a public, non-traded REIT sponsored by NorthStar Asset Management Group. NorthStar Income II was formed to originate, acquire and asset manage a diversified portfolio of commercial real estate debt, select equity and securities investments.
This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "will," "may," "plans," "intends," "believes" or other similar words or expressions. These statements are based on NorthStar Income II's current expectations and beliefs and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward looking statements; NorthStar Income II can give no assurance that its expectations will be attained. Forward-looking statements are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying any forward-looking statements will not materialize or will vary significantly from actual results. Variations of assumptions and results may be material. Factors that could cause actual results to differ materially from NorthStar Income II's expectations include, but are not limited to, the tremendous diversification of NorthStar Income II's portfolio, including the debt and equity mix; whether the investments will yield strong cash flow; whether the investments will be accretive to our historical dividend and provide value growth; NorthStar Income II's sponsor's ability to continue to execute on institutional quality investments throughout the commercial real estate capital structure, including through its extensive relationships or otherwise; the ability of the fund managers to effectively manage the funds, the actual amount of capital contributions that NorthStar Income II will be required to invest to the funds, the actual amount of distributions NorthStar Income II will receive from the funds, the ability of NorthStar Income II to pay the deferred purchase price obligations assumed in connection with the acquisition of the fund portfolio, including obligations to the seller and obligations to third parties, the performance of the fund portfolio generally and each of the underlying funds specifically, the ability of the sponsor to effectively manage the industrial portfolio; the ability of the borrower to comply with the terms, including financial and other covenants, of the subordinate interest and the senior financing secured by the industrial portfolio; whether the industrial portfolio's cash flow is sufficient to cover the full interest payment for the senior financing and support NorthStar Income II's preferred return; whether the industrial portfolio's cash flow declines; whether NorthStar Income II will realize any benefit from its profit participation in the industrial portfolio's capital proceeds and/or cash flows; changes in market demand and rental rates for industrial properties; whether the subordinate interest will be redeemed on the terms and in the timeframe contemplated or at all; future property values; the impact of any losses from NorthStar Income II's investments on cash flow and returns; changes in economic conditions generally and the real estate and debt markets specifically; availability of capital; the ability to achieve targeted returns; changes to generally accepted accounting principles; policies and rules applicable to REITs and the factors specified in in Part I, Item 1A of NorthStar Income II's Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and in Part II, Item 1A of NorthStar Income II's Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, as well as in NorthStar Income II's other filings with the Securities and Exchange Commission. The foregoing list of factors is not exhaustive. All forward-looking statements included in this press release are based upon information available to NorthStar Income II on the date of this report and NorthStar Income II is under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.
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SOURCE NorthStar Real Estate Income II, Inc.