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NorthStar REIT closes $370m in deals

The REIT, whose parent company is merging with Colony Capital, bought real estate fund interests and an industrial real estate portfolio stake with its remaining investible capital.

A nontraded real estate investment trust managed by NorthStar Asset Management Group has committed over $370 million of capital between one secondaries deal and one industrial real estate purchase, the REIT said last week.

NorthStar Real Estate Income II, a $1.8 billion REIT known as NorthStar Income II, bought limited partner interests in 41 private equity real estate funds run by 20 managers. The REIT purchased the stakes from a company managed by NorthStar for about $273 million.

Assets held by the funds are diversified across property type and geography, with mixed-use, multifamily, office and hotel properties located in 24 states and internationally.

Additionally, NorthStar bought a minority stake in a portfolio of 39 industrial real estate properties in 17 states for $98 million, according to the announcement. The six million square foot portfolio is fully leased with an average remaining lease term of about 11 years.

New York-based NorthStar, which could not be reached for comment, did not name the seller.

After completing the two transactions, NorthStar will have deployed all of the REIT’s investible capital.

“These two investments have tremendous diversification,” Daniel Gilbert, NorthStar’s chief investment officer and the REIT’s chief executive, said in a statement last week. “These are both institutional quality investments with strong cashflow that we believe will be accretive to our historical dividend and provide value growth.”

NorthStar Income II’s portfolio consisted 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 as of June 30, according to the statement. The REIT’s equity investments include a minority stake in a 313-unit luxury Nashville, Tennessee apartment building, acquired for $24.9 million in August 2014, according to its website.

The REIT’s parent, NorthStar Asset Management, managed $40.3 billion as of June 30, according to its website. In June, NorthStar, NorthStar Realty Finance and Colony Capital announced an agreement to merge the three companies into what would become the fifth largest global real estate manager in the world, with a combined $58 billion in assets under management.