NorthStar buys $273m real estate portfolio

The firm used its $1.8bn REIT to acquire a diversified portfolio of limited partnership interests in 41 private equity real estate funds.

NorthStar Asset Management has bought $273 million-worth of a real estate secondaries through a non-traded real estate investment trust (REIT) it manages, according to a statement.

NorthStar Real Estate Income II, a $1.8 billion REIT, 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.

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

NorthStar also bought a minority stake in a portfolio of 39 industrial real estate properties in 17 states for $98 million. 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 the statement. “These are both institutional quality investments with strong cashflow that we believe will be accretive to our historical dividend and provide value growth.”

NorthStar Real Estate 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.

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.

The firm had announced in February it had hired an advisor to sell all or a portion of its real estate private equity fund interests, worth at least $916 million.

NorthStar Asset Management managed $40.3 billion as of June 30, according to its website.