SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 10, 2015
NorthStar Real Estate Income Trust, Inc.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction
399 Park Avenue, 18th Floor, New York, NY
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01. Other Events.
On September 10, 2015, NorthStar Real Estate Income Trust, Inc. (“NorthStar Income”), through a subsidiary of its operating partnership, originated a $45.1 million senior mortgage loan (the “Senior Loan”) secured by Airport Tower, a Class-A office building located in Irvine, California (the “Property”). NorthStar Income initially funded $39.2 million of the Senior Loan at origination, and intends to fund the remaining $5.9 million for capital and tenant improvements and leasing commissions over the term of the Senior Loan, subject to the satisfaction of certain conditions.
The Property totals over 241,000 square feet and is centrally located in close proximity to major transportation routes and John Wayne International Airport. The Property also has various amenities, including a full service café/deli, two conference rooms and a storage facility. The borrower is a subsidiary of a partnership between a real estate private equity firm and a commercial real estate operator.
The Senior Loan bears interest at a floating rate of 3.73% over the one-month London Interbank Offered Rate (“LIBOR”), but at no point shall LIBOR be less than 0.20%, resulting in a minimum interest rate of 3.93% per year. NorthStar Income will earn an exit fee equal to 1.0% of the outstanding amount of the Senior Loan at the time of repayment. The Senior Loan is currently unlevered and NorthStar Income intends to finance the investment with one of its credit facilities in the future.
The initial term of the Senior Loan is 36 months, with two 12-month extension options available to the borrower, subject to the satisfaction of certain performance tests and the payment of an extension fee. The Senior Loan may be prepaid during the first 18 months, provided the borrower pays an additional amount equal to the remaining interest due on the amount prepaid through month 18. Thereafter, the Senior Loan may be prepaid in whole or in part without penalty. The underlying loan agreement requires the borrower to comply with various financial and other covenants. In addition, the loan agreement contains customary events of default (subject to certain materiality thresholds and grace and cure periods). The events of default are standard for agreements of this type and include, for example, payment and covenant breaches, insolvency of the borrower, the occurrence of an event of default relating to the collateral or a change in control of the borrower.
The loan-to-value ratio (“LTV Ratio”) of the Senior Loan is approximately 52.9%. The LTV Ratio is the amount loaned to the borrower net of reserves funded and controlled by NorthStar Income and its affiliates, if any, over the appraised value of the Property at the time of origination.
Safe Harbor Statement
This Current Report on Form 8-K 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” or other similar words or expressions. These statements are based on NorthStar Income’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 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’s expectations include, but are not limited to, the borrower's ability to comply with the terms, including financial and other covenants, of the underlying loan agreement; the borrower's ability to successfully manage the Property securing the Senior Loan; the borrower's ability to complete planned capital expenditures, tenant improvements and leasing commissions at the Property; whether the borrower determines to extend the Senior Loan; NorthStar Income’s ability to finance the Senior Loan with one of its credit facilities in the future; changes in market rates for commercial properties located in Irvine, California; market rental rates and property level cash flow; changes in market demand and rental rates for office properties; future property values; the impact of any losses from NorthStar Income'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’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as well as in NorthStar Income’s other filings with the Securities and Exchange Commission. The foregoing list of factors is not exhaustive. All forward-looking statements included in this Current Report on Form 8-K are based upon information available to NorthStar Income on the date of this report and NorthStar Income 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.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NorthStar Real Estate Income Trust, Inc.
Date: September 16, 2015
/s/ Jenny B. Neslin
Jenny B. Neslin
General Counsel and Secretary