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NorthStar Real Estate Income II Purchases $21 Million Senior Mortgage Loan

NorthStar Real Estate Income II Inc., a publicly registered non-traded real estate investment trust sponsored by NorthStar Asset Management Group (NYSE: NSAM), purchased a $21.1 million senior mortgage loan for $16.9 million, representing a 93 percent discount to the current outstanding principal amount of $18.2 million. NorthStar Income II also assumed a $3 million future funding obligation.

The loan was purchased from an unaffiliated third party and is secured by a 59,000-square-foot retail property located in San Diego, California. The borrower is an affiliate of an experienced developer, owner and operator of retail commercial real estate.

The REIT funded the purchase with proceeds from its ongoing initial public offering and intends to fund the remaining $3 million future funding obligation (approximately $50 per square feet) for capital expenditures, tenant improvements and leasing commissions.

The loan bears interest at a floating rate of 4.10 percent over the one-month LIBOR, which generates an effective current yield of 4.72 percent based on the REIT’s discounted purchase price.

NorthStar Income II will earn an exit fee equal to 0.25 percent of the outstanding principal balance and any unfunded amounts available for disbursement at the time of repayment.

The remaining loan term is 30 months, with two 12-month extension options available, and may not be prepaid prior to November 8, 2016. The loan-to-value ratio is approximately 78.6 percent.

NorthStar Income II was formed to originate, acquire and asset manage a diversified portfolio of commercial real estate debt, select equity and securities investments. The REIT’s primary offering is expected to terminate on May 6, 2016.

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