NorthStar Wraps European Deal

NorthStar Realty Finance Corp. is the proud owner of a premier pan-European office portfolio.
David Hamamoto, NorthStar

David Hamamoto, NorthStar

NorthStar Realty Finance Corp. is the proud owner of a premier 2 million-square-foot pan-European office portfolio. Roughly four months after entering into an agreement to acquire the group of office assets from Frankfurt, Germany-based SEB Asset Management, NorthStar has completed the transaction, forking over a 1.1 billion or more than $1.2 billion.

It’s not just any portfolio. The collection encompasses 11 Class A properties spanning seven countries with locations in leading gateway cities, including London, Paris, Milan and Amsterdam. The group of properties, which has an average age of just eight years, is presently 93 percent leased and features a roster of such credit tenants as BNP Paribas, AIG, Barclays, Invesco U.K., Ernst & Young and Deloitte.

NorthStar was joined in the deal by real estate finance and investment firm Cale Street Partners, which supplied certain financing and lent a hand in sourcing the transaction as well. NorthStar relied on €530 million of seven-year senior mortgages to finance the acquisition.

“We believe our ability to execute on a multi-currency, pan-European acquisition of this size provided us with advantageous pricing that is considerably below the portfolio’s intrinsic value. As evidence, we have received unsolicited bids for portions of this portfolio at significant premiums to our allocated purchase price,” David Hamamoto, chairman & CEO of NorthStar, noted in a prepared statement.

Whether NorthStar capitalizes on a hungry investor market and opts to sell some of the assets remains to be seen; however, in the meantime, the entire portfolio has been designated to become part of NorthStar Realty Europe Corp., the proposed spin-off of NorthStar’s European business. The SEB portfolio will be joined in the spin-off by a €450 million portfolio, on which NorthStar plans to close this week.

NorthStar has an appetite for big transactions, and the company has been quite acquisitive over the last couple of years. In the summer of 2014 alone, NorthStar announced plans to purchase a 7,000-room hotel portfolio from Inland American for $1.1 billion, and entered into an agreement to acquire Griffin-American Healthcare REIT II Inc. for $4 billion.





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