NorthStar Earns $37M in 1Q

NorthStar Realty Finance, a real estate investment trust which makes commercial loans and invests in properties, had 1Q13 net income of $37 million, up from a loss of $34 million one year prior. The turnaround is largely due to $30 million of positive non-cash adjustments in the current period, compared with negative adjustments of $74 million in 1Q12.

Year-to-date, NorthStar has originated $204 million in CRE loans, including a $166 million loan for the purchase of New York’s Milford Plaza hotel.

The Milford Plaza transaction was announced on May 1. One of NorthStar's sponsored non-traded REITs, NorthStar Real Estate Income Trust Inc., originated the remaining $89 million of the $255 million total loan amount. It was financed with $130 million from credit facilities with Deutsche Bank AG, split pro-rata between NorthStar and NorthStar Income.

NorthStar expects to earn an initial current yield of 12.5% on its $81 million of invested equity. Furthermore, NorthStar and NorthStar Income will have a 35% ownership interest in the Milford Plaza its retail component. A joint venture between Highgate Hotels and Rockpoint Group holds the remaining 65% ownership interest.

NorthStar intends to ultimately securitize an interest in the senior portion of the $255 million loan.

In its investment activities, year to date, NorthStar made $1.1 billion of equity investments in real estate, including the acquisition of an $865 million portfolio of manufactured housing communities which was financed with eight separate 10-year, nonrecourse mortgages in the aggregate amount of $640 million at a weighted average fixed interest rate of 4.02%.