UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported):
November 30, 2012
NorthStar Real Estate Income Trust, Inc.
(Exact Name of Registrant as Specified in Charter)
Maryland |
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000-54671 |
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26-4141646 |
(State or Other Jurisdiction |
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(Commission File Number) |
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(IRS Employer |
of Incorporation) |
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Identification No.) |
399 Park Avenue, 18th Floor, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (212) 547-2600
Not applicable
(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 1.01 Entry into a Material Definitive Agreement.
On November 30, 2012, NSREIT CB Loan, LLC (NSREIT CB), an indirect wholly-owned subsidiary of NorthStar Real Estate Income Trust, Inc. (the Company), entered into an amendment (the Amendment) to that certain Master Repurchase Agreement (the Citi Credit Facility) with Citibank, N.A. (Citibank), dated July 18, 2012. The Amendment increased the available financing under the Citi Credit Facility from $50 million to $100 million. The Amendment requires NSREIT CB to maintain at least $3.75 million and a maximum of $15.0 million in unrestricted cash at all times during the term of the Citi Credit Facility. All other terms of the Citi Credit Facility and the Companys related limited guaranty (the Guaranty) remained the same.
The foregoing summary does not purport to be a complete description and is qualified in its entirety by reference to the Amendment which is filed as an exhibit to this Current Report on Form 8-K as well as the Citi Credit Facility and the Guaranty that were filed as exhibits to the Current Report on Form 8-K filed on July 19, 2012.
Item 8.01 Other Events.
On November 30, 2012 (the Closing Date), the Company, through a subsidiary, directly originated a $72.0 million senior loan (the Senior Loan), $65.5 million of which was funded on the Closing Date and $6.5 million of which will be funded over the next 24 months for leasing expenses and capital expenditures. The proceeds of the Senior Loan were used to partially refinance a two-building office portfolio totaling 432,550 square feet, located in Tysons Corner, Virginia (the Property). The Company believes the Tysons Corner market is highly desirable as it is the largest office market in Virginia, a nexus of various public transportation options, home to several Fortune 500 companies and close to Washington D.C., Dulles International Airport and Reagan National Airport.
The owner of the Property (the Owner) is a subsidiary of a national real estate company (the Parent) that has a long track record of owning and managing commercial real estate properties. According to the Parents website, the Parent started its business in 1972 and is currently responsible for managing over $5.0 billion of commercial, hospitality and residential assets nationwide and over the past 40 years has developed, acquired or managed over $16.0 billion of real estate assets.
The funded amount bears interest at a floating rate of 6.25% over the one-month London Interbank Offered Rate (the LIBOR Rate), but at no point shall the LIBOR Rate be less than 0.50%, resulting in a minimum interest rate of 6.75% per annum. The Company expects to earn a 12.53% leveraged return, inclusive of fees based upon the Companys utilization of its credit facilities. The Company earned an upfront fee equal to 1.0% of the Senior Loan and will earn a fee equal to 1.0% of the outstanding principal amount at the time of repayment.
The initial term of the Senior Loan is 36 months, with two one-year extension options available to the Owner, subject to the satisfaction of certain performance tests and the Owner paying a fee equal to 0.25% of the amount being extended for the first extension option and 0.50% of the amount being extended for the second extension option. The Senior Loan may be prepaid in whole or in part during the first 24 months, provided the Owner pays the remaining interest due on the amount prepaid through the first 24 months. Thereafter, the Senior Loan may be prepaid in whole or in part without penalty.
The Propertys loan-to-value ratio (LTV Ratio) is approximately 76%. The LTV Ratio is the amount loaned by the Company to the Owner over the current appraised value of the Property as of November 9, 2012.
Safe Harbor Statement
Certain items in this Current Report on Form 8-K may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by words like anticipate, believe, plan, hope, goal, expect, future, intend, will, could and should and similar expressions. These statements are based on the Companys 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; the Company 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 the Companys expectations include, but are not limited to, the Owners ability to perform under the terms of the Senior Loan, future property value, income-producing ability, impact of any losses on cash flows and returns, market rental rates, changes in the Tysons Corner market, changes in economic conditions generally and the real estate and debt markets specifically, availability of capital, ability to achieve targeted returns, generally accepted accounting principles and policies and rules applicable to REITs. Additional factors that could cause actual results to differ materially from those in the forward-looking statements are specified in the Companys Annual Report on Form 10-K for the year ended December 31, 2011 and its other filings with the Securities and Exchange Commission. Such forward-looking statements speak only as of the date of this Current Report on Form 8-K. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
ITEM 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is furnished as part of this Current Report on Form 8-K:
Exhibit |
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Description |
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10.1 |
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First Amendment to Master Repurchase Agreement, dated as of November 30, 2012, by and among NSREIT CB Loan, LLC, NorthStar Real Estate Income Trust, Inc. and Citibank, N.A. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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NORTHSTAR REAL ESTATE INCOME TRUST, INC. | |
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Date: December 4, 2012 |
By: |
/s/ Ronald J. Lieberman |
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Ronald J. Lieberman |
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General Counsel and Secretary |
Exhibit 10.1
FIRST AMENDMENT TO MASTER REPURCHASE AGREEMENT
FIRST AMENDMENT TO MASTER REPURCHASE AGREEMENT dated as of November 30, 2012 (this Amendment), by and among NSREIT CB LOAN, LLC, a Delaware limited liability company (Seller), NORTHSTAR REAL ESTATE INCOME TRUST, INC., a Maryland corporation (Guarantor), and CITIBANK, N.A., a national banking association (Buyer). Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the MRA (defined below).
RECITALS
WHEREAS, Seller and Buyer are parties to that certain Master Repurchase Agreement, dated as of July 18, 2012 (as amended by this Amendment and as the same may be further amended, supplemented, or otherwise modified from time to time, the MRA);
WHEREAS, Seller, Buyer and Guarantor wish to amend the MRA as more particularly set forth herein.
NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller, Buyer and Guarantor hereby agree as follows:
SECTION 1. Amendment to Master Repurchase Agreement. The following definitions in Section 2 of the MRA are hereby deleted in their entirety and the following corresponding definitions are substituted therefor:
Facility Amount shall mean $100,000,000.
Required Liquidity Amount shall mean the amount set forth in the right hand column below determined based upon the aggregate outstanding Purchase Price from time to time set forth in the left hand column below:
Outstanding Purchase Prices |
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Required Liquidity Amount |
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0-15 |
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3.75 |
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>15-35 |
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6.25 |
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>35-50 |
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7.50 |
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>50-65 |
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9.25 |
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>65-70 |
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12.00 |
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>70-85 |
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13.50 |
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>85-100 |
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15.00 |
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SECTION 2. Omnibus Amendment to Transaction Documents. Any references to the MRA in the Transaction Documents shall hereinafter refer to the MRA as modified by this Amendment.
SECTION 3. Reaffirmation of Guaranty. Guarantor and Seller hereby acknowledge and agree that, as a condition to its execution and delivery of this Amendment, Buyer has required that, among other things, Guarantor reaffirms all of the covenants, representations, warranties and indemnities made by Guarantor in the Guaranty and the Non-Recourse Carve Out Guaranty pursuant to a Reaffirmation of Guaranty attached hereto as Exhibit A (the Reaffirmation).
SECTION 4. Conditions Precedent. This Amendment and its provisions shall become effective on the first date on which all of the following conditions precedent are satisfied: (i) execution and delivery of this Amendment by a duly authorized officer of each of Seller, Buyer and Guarantor; (ii) execution and delivery of the Reaffirmation attached hereto as Exhibit A by Guarantor; (iii) payment by Seller to Buyer of the amount contemplated in that certain Fee Letter, dated as of the date hereof, by and between Seller and Buyer and (iv) Sellers payment of Buyers reasonable out of pocket expenses (including reasonable legal fees).
SECTION 5. Counterparts. This Amendment may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment in Portable Document Format (PDF) or by facsimile transmission shall be effective as delivery of a manually executed original counterpart thereof.
SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAWS PRINCIPALS.
SECTION 7. Confidentiality. Buyer and Seller hereby acknowledge and agree that all information regarding the terms set forth in this Amendment, any of the Transaction Documents, or the transactions contemplated thereby (the Confidential Terms) shall be kept confidential and shall not be divulged to any party without the prior written consent of such other party except to the extent that (i) it is necessary to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies or regulatory bodies or in order to comply with any applicable federal or state laws, (ii) any of the Confidential Terms are in the public domain other than due to a breach of this covenant or (iii) such information is disclosed in connection with an assignment of or participation in the MRA and the party to whom such information is disclosed agrees to retain the information received by it as confidential. Notwithstanding the foregoing or anything to the contrary contained herein or in any other Transaction Document, the parties hereto may disclose to any and all Persons, without limitation of any kind, the U.S. federal, state and local tax treatment of the Transactions, any fact that may be relevant to understanding the U.S. federal, state and local tax treatment of the Transactions, and all materials of any kind (including opinions or other tax analyses) relating to such U.S. federal, state and local tax treatment and that may be relevant to understanding such tax treatment.
[NO FURTHER TEXT ON THIS PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered as of the day and year first above written.
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Seller: | ||||
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NSREIT CB LOAN, LLC, | ||||
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a Delaware limited liability company | ||||
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By: |
NorthStar Real Estate Income Trust Operating Partnership, L.P., a Delaware limited partnership, its sole equity member | ||
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By: |
NorthStar Real Estate Income Trust, Inc., | ||
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By: |
/s/ Daniel R. Gilbert | ||
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Name: Daniel R. Gilbert | |||
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Title: President & Chief Investment Officer |
[signatures continued on next page]
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Guarantor: | ||
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NORTHSTAR REAL ESTATE INCOME TRUST, INC., a Maryland corporation | ||
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By: |
/s/ Daniel R. Gilbert | |
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Name: Daniel R. Gilbert | ||
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Title: President & Chief Investment Officer | ||
[signatures continued on next page]
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Buyer: | |
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CITIBANK, N.A. | |
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By: |
/s/ Richard B. Schlenger |
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Name: Richard B. Schlenger |
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Title: Authorized Signatory |