Colony NorthStar Inc. is flexing its postmerger muscles in a deal the real estate investment trust said would create the country’s second-largest publicly listed commercial mortgage REIT by equity value.
The downtown-based firm said last week that it plans to merge a portfolio of assets and liabilities with two affiliated public nontraded REITs, NorthStar Real Estate Income Trust Inc. and NorthStar Real Estate Income II Inc., known respectively as NorthStar I and II.
Closure of the transaction, pending stockholder approval and a listing of Class A common stock on a national securities exchange, is expected to result in the creation of a real estate investment trust, Colony NorthStar Credit Real Estate Inc., with $5.5 billion in assets and $3.4 billion in equity value, the firm said.
The transaction is expected to close either late this year or the first quarter of 2018.
Colony NorthStar Inc., and NorthStar I and NorthStar II stockholders are expected to own 37 percent, 32 percent and 31 percent, respectively. Colony NorthStar would be the largest single investor in the new venture and will enter into a management agreement on market terms to serve as its external manager.
Firm officials said Kevin P. Traenkle, Colony NorthStar’s executive vice president and chief investment officer, will serve as chief executive of the new trust. Sujan Patel, Colony NorthStar’s managing director and co-head of U.S. investment management, will serve as chief financial officer.
Colony NorthStar Credit Real Estate Inc.’s board is expected to comprise seven directors, including four independent directors.
Colony NorthStar Inc. became the nation’s fifth-largest real estate investment trust in January when it formed from the merger of Colony Capital Inc., NorthStar Asset Management Group Inc. and NorthStar Realty Finance Corp. It has $56 billion in assets and significant property holdings in the health care, industrial and hospitality sectors.
The firm’s executive chairman, Thomas Barrack Jr., was ranked No. 55 on the Business Journal’s Wealthiest Angelenos list this year with a net worth of $1.13 billion.
Veteran Moves
Several veterans from the executive ranks of Colony NorthStar Inc. and Colony Capital are making their own, albeit smaller, business moves.
Paul Fuhrman, Jae Yi and Perry Hariri are forming Santa Monica-based real estate operating and investment firm Miramar Capital.
Miramar’s focus will be teaming up with private and institutional capital sources to pursue real estate investments to redevelop infill properties in primary and secondary markets in California and other select West Coast markets, according to the firm.
It has already acquired a fully leased office building in Mountain View through a joint venture with Grand China Overseas Investment Management Ltd.
The area has seen strong office demand from tech companies, with the potential for re-entitlement of older office properties for residential use.
Miramar also announced an agreement with Colony Northstar to pursue California-based development and re-entitlement opportunities.
Art Deco Acquisition
Century City’s Universe Holdings, a privately held multifamily investment firm, recently acquired the historic Nob Hill Towers apartment community in Westlake for $12.6 million.
The 53-unit art deco property at 2430 Ocean View Ave., originally built in 1929, features a mix of studio, one-, two- and three-bedroom units, according to the firm.
Universe plans to make $917,000 in property improvements, which will include new landscaping and lighting, and modernizing interiors with new flooring, appliance packages, counters, cabinets and other upgrades, the firm said.
“One of the things about Los Angeles, with all the new construction, that as a value-add investor you look for opportunities to capitalize on existing architecture that is unique and truly urban and at the same time can be upgraded to modern standards,” said Universe spokesman Chris Egger.
Universe specializes in acquiring and managing historic art deco properties in Los Angeles and creating value by modernizing unit interiors while maintaining and enhancing the timeless character of these unique assets, according to founder and chief executive Henry Manoucheri.
“Expect Universe to remain active as an investor in the Los Angeles region for the remainder of the year, and we still see a lot of legs in Los Angeles multifamily real estate,” Egger said.
Staff reporter Neil Nisperos can be reached at [email protected] or (323) 556-8337.
