NorthStar gets 8.6% discount for RE portfolio

The New York-based firm purchased a portfolio of LP stakes valued at $416m.

NorthStar Realty Finance has purchased a portfolio of LP interests in private equity real estate funds, according to the publicly-listed firm’s third quarter earnings report.

NorthStar paid $380 million for the portfolio that was valued at $416 million, an 8.6 percent discount to net asset value.

The portfolio is expected to earn an initial current yield of 16 percent on its invested equity.

Neither the real estate funds in the portfolio nor the portfolio seller are not known and Northstar did not return several requests for comment.

Last year, NorthStar emerged as a top real estate secondaries buyer. In February 2013 it spent $390 million on a 51 percent ownership stake in a portfolio previously owned by TIAA-CREF. The portfolio had 45 real estate fund interests.

The firm also teamed up with Goldman Sachs Asset Management to buy 25 fund interests with a net asset value of $925 million from the New Jersey Division of Investments.

The portfolio sold for roughly par, but the deal had an unusual structure. NorthStar paid $510 million up front but will split distributions from the fund interests 85/15 with New Jersey for three years after the funds close. After four years, NorthStar and Goldman Sachs will receive 100 percent of all distributions, after the remaining $415 million is paid to New Jersey.

NorthStar is based in New York and is led by chairman David Hamamoto, who co-founded NorthStar’s predecessor NorthStar Capital Investment Corporation in 1997, after spending 14 years at Goldman Sachs.

NorthStar is also led by president Albert Tylis, who was previously the director of corporate finance and general counsel at ASA Institute and chief executive officer Daniel Gibert, who co-founded the firm with Hamamoto.